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Item 1A. Risk Factors

2026-03-17 compared with 2025-03-04 · 683 added, 663 removed, 305 unchanged (82% of the section changed)

Summary of Risk Factors

Investing in our securities involves risks.

In addition to the other information set forth in this Annual Report on Form 10-K, including the information addressed under “Cautionary Statement Regarding Forward Looking Statements,” investors in the Company’s securities should carefully consider the risks described in this section before deciding to invest in our securities.

The following discussion highlights the risks that we believe are material to the Company, but the following discussion does not necessarily include all risks that we may face, and an investor in the Company’s securities should not interpret the disclosure of a risk in the following discussion to state or imply that the risk has not already materialized.

If any of these risks occur, our business, financial condition, and results of operations could be materially and adversely affected.

In such case, the trading price of our securities would likely decline, and you may lose all or part of your investment.

Set forth below is a summary of the principal risks we face:

In addition to the other information contained in this report, including the information contained in “Cautionary Statement Regarding Forward-Looking Statements,” investors in our securities should carefully consider the factors discussed below.

An investment in our securities involves risks.

The factors below, among others, could materially and adversely affect our business, financial condition, results of operations, liquidity or capital position, or cause our results to differ materially from our historical results or the results expressed in or implied by our forward-looking statements.

Additionally, investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.

Below is a condensed, bullet-point summary of the risk factors

● Marijuana remains illegal under U.S.

state and local regulation of cannabis is uncertain and changing.

New state or local laws may be enacted which affect our product offerings or manufacturing processes.

● We are involved in litigation with Verano, the outcome of which is uncertain.

federal law, exposing us to significant risk including possible enforcement actions.

● We operate in a highly regulated sector with complex and at times opposing regulatory regimes and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we conduct business.

● As marijuana and marijuana related activities remain illegal under U.S.

federal law and, in certain state jurisdictions, we may be unable to enforce, or may face significant challenges enforcing, our contracts, including those relating to the Pending Transactions (as defined below).

● Cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services.

Recent events in the banking industry may further restrict our ability to access financial services including obtaining traditional bank financing.

● We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business.

● Investors in the Company who are not U.S.

citizens may be denied entry into the United States.

● There can be no assurance that all of the conditions precedent to closing of each, or any of, the Merger Agreements will be satisfied.

● The required regulatory approvals may not be obtained or, if obtained, may not be obtained on a favorable basis.

● There can be no assurance that each or any of the Merger Agreements will not be terminated by the Company or the applicable target in certain circumstances.

● The uncertainty surrounding the Mergers could negatively impact Vireo's current and future operations, financial condition and prospects.

● The Company and the Merger targets may not integrate successfully.

● It may be challenging for the resulting Company after completion of the Mergers to service the additional indebtedness incurred.

● The Company’s shareholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, a combined company following the completion of the Mergers as compared to their current ownership and voting interests.We intend to issue subordinate voting shares as consideration in the Merger Transactions, which may dilute your interest in our shares and affect the trading price of our subordinate voting shares.

● Our shareholders may not realize a benefit from the Mergers commensurate with the ownership dilution they will experience in connection with the Mergers.

● The Mergers will cause dilution to the combined company, which may negatively affect the market price of subordinate voting shares of the combined company.

● The stockholders of Deep Roots, the stockholders of Wholesome, and Proper and the Proper equityholders and other subsequent recipients of subordinate voting shares from Proper pursuant to the Proper Merger Agreement, have agreed or will agree to indemnify the Company for certain damages arising from certain of the representations, warranties, covenants, and agreements of Deep Roots, Wholesome, and Proper, respectively, in each case as set forth in the Merger Agreements.

However, there can be no assurance that these indemnities will be sufficient to

make the Company whole for the full amount of such damages, or that such indemnifying parties’ ability to satisfy their respective indemnification obligation will not be impaired in the future.

● If the Mergers do not close, the Company will not benefit from the expenses incurred in their pursuit.

● The Company’s ability to use net operating loss carryforwards and other tax attributes may be limited as a result of the Mergers, if approved and effected.

Events in the banking industry may further restrict our ability to access financial services including obtaining traditional bank financing.

● As marijuana is illegal under U.S.

federal law, we may be unable to gain access to U.S.

bankruptcy protections in the event of our bankruptcy or a bankruptcy of an entity in which we invest.

state licensing regimes, collateral rules, and ownership limits could materially and adversely affect our business.

● Local regulation in U.S.

states where cannabis is legal may impose additional or more restrictive requirements that could materially and adversely affect our operations.

● Regulatory uncertainty and potential enforcement by the U.S.

Food and Drug Administration and other authorities with respect to hemp-derived products could materially and adversely affect our business.

● Our business could be materially adversely affected by the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, and related federal restrictions on hemp-derived products.

● Our Pending Transactions are subject to numerous conditions, including regulatory approvals and termination rights, and may not be completed on the anticipated terms or timeline, or at all, which could adversely affect the market price of our Shares and our business, financial condition and prospects.

● The Company and the assets or businesses acquired in connection with the Pending Transactions may not integrate successfully.

● The counterparties in the Pending Transactions have agreed to indemnify the Company for certain damages arising from certain of the representations, warranties, covenants, and agreements of the counterparties in the Pending Transactions.

However, there can be no assurance that these indemnities will be sufficient to make the Company whole for the full amount of such damages, or that such indemnifying parties’ ability to satisfy their respective indemnification obligation will not be impaired in the future.

● There can be no assurance that each or any of the Pending Transactions will not be terminated by the Company or the relevant counterparty target in certain circumstances.

● The uncertainty surrounding the Pending Transactions could negatively impact Vireo's current and future operations, financial condition and prospects.

● It may be challenging for the resulting Company after completion of the Pending Transactions to service the additional indebtedness incurred.

● Our shareholders may not realize a benefit from the Pending Transactions commensurate with the ownership dilution they will experience in connection with the Pending Transactions.

● If the Pending Transactions do not close, the Company will not benefit from the expenses incurred in their pursuit.

● The Company’s ability to use net operating loss carryforwards and other tax attributes may be limited as a result of the Pending Transactions, if approved and effected.

● We incurred net losses in fiscal years 2025 and 2024 and cannot provide assurance as to when or if we will become profitable and generate cash in our operating activities.

● We anticipate requiring additional financing to operate our business and we may face difficulties acquiring additional financing on terms acceptable to us or at all.

● Our senior secured credit facility contains covenant restrictions that may limit our ability to operate our business.

● Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

● We are a holding company, and our earnings are dependent on the earnings and distributions of our subsidiaries.

● The cannabis industry is rapidly evolving and is experiencing intense competition from licensed, unlicensed and well-capitalized market participants offering alternative competitive products and could also be further bolstered by state law regimes.

● Competition for the acquisition and leasing of properties suitable for the cultivation, production, and sale of medical and adult-use cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could materially, adversely affect our operating results and financial condition.

● Public opinion, consumer perception, and adverse publicity regarding cannabis and our products may negatively affect demand for our products, the adoption of cannabis laws, and our business.

● Our business depends on maintaining strong brand recognition and reputation in an industry heavily influenced by volatile public opinion and consumer perceptions of cannabis.

● Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

● We rely on management agreements with third-party license holders, which exposes us to significant regulatory, operational, and counterparty risks.

● We face security risks related to our physical facilities and cash transfers due to the mostly cash nature of the cannabis industry.

● Our business is subject to the risks inherent in agricultural operations.

● We are subject to risks inherent in agricultural operations and are dependent on key inputs, suppliers, and skilled labor for the cultivation, extraction, and production of cannabis products.

● Our cannabis cultivation and production activities require substantial energy consumption and increases or volatility in energy costs could adversely affect our business, financial condition and results of operations.

● We may encounter increasingly strict environmental regulation in connection with our operations and the associated permitting, which may increase the expenses for cannabis production or subject us to enforcement actions by regulatory authorities.

● We face risks related to our information technology systems, including potential cyber-attacks and security and privacy breaches.

● Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

● We are dependent on key inputs, suppliers and skilled labor for the cultivation, extraction, and production of cannabis products.

● Our inability to attract and retain key personnel could materially, adversely affect our business.

● We face an inherent risk of product liability claims as a manufacturer, processor and producer of products that are intended to be ingested by people.

● We are at times subject to HIPAA and other healthcare privacy and data security laws in connection with our collection, use and storage of medical information, and any failure to comply with these laws or to adequately safeguard protected health information could subject us to significant penalties, litigation, and reputational harm.

● Loss of our key management and other personnel, or an inability to attract new management and other personnel, could negatively impact our business, financial condition and results of operations.

● We may be required to disclose personal information to government or regulatory entities.

● We face risks related to our insurance coverage and uninsurable risks.

● Competition for highly skilled employees is intense, and we may not be able to attract and retain the highly skilled employees needed to support our business.

● We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

● We may be subject to growth-related risks.

● Our intellectual property may be difficult to protect.

● We face intense competition in a new and rapidly growing industry by other licensed companies with more experience and financial resources than we have and by unlicensed, unregulated participants.

● There are risks associated with consolidation of the industry by well-capitalized entrants developing large-scale operations.

● We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could subject us to significant liabilities and other costs.

● We are subject to significant product liability, health and safety and misuse-related risks in connection with our cannabis products, which could result in substantial costs, regulatory action, reputational harm and other adverse consequences.

● Our products may be subject to product recalls, which may result in expense, legal proceedings, regulatory action, loss of sales and reputation, and diversion of management attention.

● Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

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subsidiaries, assets, and experts.

● Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions and events.

● Diseases and epidemics may adversely impact our business.

● We may be subject to heightened scrutiny by United States and Canadian authorities, which could ultimately lead to the market for our Subordinate Voting Shares becoming highly illiquid and our shareholders having limited or no ability to effect trades in Subordinate Voting Shares.

● As an “emerging growth company,” we have reduced disclosure requirements that may make our Subordinate Voting Shares less attractive to investors but once we lose emerging growth company status, we will be subject to increased disclosure, internal control and compliance requirements, which could increase our costs and adversely affect our financial condition and results of operations.

● Additional issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting Shares, may result in dilution.

● The market price for the Subordinate Voting Shares may continue to be volatile.

● An investor may face liquidity risks with an investment in our Subordinate Voting Shares.

● Sales of substantial numbers of Subordinate Voting Shares may have an adverse effect on their market price.

● Volatility and limited liquidity in the market for our Subordinate Voting Shares may undermine investor confidence, depress our valuation and impair our ability to raise capital.

● Our Chief Executive Officer’s significant influence over us as both a major shareholder and an affiliate of our principal lending sources creates substantial actual and potential conflicts of interest and permits him, directly and indirectly, to exercise effective control over our Company, which could adversely affect our business and the value of our Subordinate Voting Shares.

● The concentration of ownership of our subordinate voting shares among our existing executive officers, directors, and principal shareholders may prevent new investors from influencing significant corporate decisions and matters submitted to shareholders for approval.

● The Pending Transactions and the issuance of subordinate voting shares as consideration (including earn-out shares as applicable) will dilute existing shareholders’ voting interests and may not provide benefits commensurate with the dilution, potentially adversely affecting the trading price of our subordinate voting shares.

● We are subject to increased costs as a result of being a public company in Canada and the United States.

● Our substantial shareholders can be subject to extensive governmental regulation and, if such shareholder is found unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

Our substantial shareholders may also be required to provide information that is requested by licensing authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities;

we may be forced to use our cash or incur debt to fund such redemption of our securities.

● We do not intend to pay dividends on our Subordinate Voting Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation in the price of our Subordinate Voting Shares.

● Our substantial secured indebtedness could materially adversely affect our financial condition, limit our operational flexibility and reduce the value of our equity.

● Our credit facilities are secured by substantially all our assets, and a default could result in foreclosure, acceleration of indebtedness and loss of control over key assets.

● Interest rate fluctuations on our variable-rate indebtedness could increase our debt service obligations, reduce our cash flow and adversely affect our financial condition and results of operations.

● We are subject to Canadian and United States tax on our worldwide income.

● We may incur significant tax liabilities and a reduction to our tax attributes due to limitations on tax deductions and credits under Section 280E of the Internal Revenue Code.

● Dispositions of the Subordinate Voting Shares are subject to Canadian and/or United States tax.

● Any audit by the IRS with respect to our receipt of an employee retention credit (“ERC”) under The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act could result in additional taxes or costs to the Company.

● Although we do not intend to pay dividends on our Subordinate Voting Shares, any such dividends would be subject to Canadian and/or United States withholding tax.

● Taxation of Non-U.S.

Holders upon a disposition of the Subordinate Voting Shares depends on whether we are classified as a United States real property holding corporation.

● Changes in tax laws may affect the Company and holders of Subordinate Voting Shares.

The following are certain risk factors relating to our business.

These risks and uncertainties are not the only onesthe Company faces.

Additional risks and uncertainties not presently known to us, or currently deemed immaterial by us, may also impair our operations.

If any such risks occur, our shareholders could lose all or part of their investment and our business, financial condition, liquidity, results of operations, and prospects could be materially, adversely affected and our ability to implement our growth plans could be adversely affected.

Our shareholders should carefully evaluate the following risk factors associated with the Subordinate Voting Shares.

● Cannabis products are subject to substantial taxation, and any increases in cannabis-related taxes or adverse tax policy changes could have a material adverse impact on our sales, profitability, and overall business.

● ERISA imposes additional obligations on certain investors.

Risks Related to the Regulatory System and Business Environment for Cannabis

Marijuana remains illegal under U.S.

Our activities are, and will continue to be, subject to evolving regulation by governmental authorities.

The legality of the production, cultivation, extraction, distribution, transportation and use of cannabis differs among states in the United States.

Marijuana remains a Schedule I drug under the Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute, use or possess cannabis in the United States.

In those states in which the cultivation, production, extraction, distribution, transportation, possession or use of marijuana has been legalized, these actions continue to be a violation of federal law pursuant to the Controlled Substances Act.

Due to the current regulatory environment in the United States, new risks may emerge;

management may not be able to predict all such risks.

Since federal law criminalizing the cultivation, production, extraction, distribution, transportation, possession or use of marijuana pre-empts state laws that legalize such actions, enforcement of federal law regarding marijuana is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial condition.

Any proceedings brought against Vireo under federal law may materially, adversely affect our operations and financial performance.

Due to the conflicting views between state legislatures and the federal government regarding cannabis, cannabis businesses are subject to inconsistent laws and regulations.

There can be no assurance that the federal government will not enforce federal laws relating to marijuana and seek to prosecute cases involving marijuana businesses that are otherwise compliant with state laws in the future.

federal law, exposing us significant risk including possible enforcement actions.

The cannabis trade is illegal under U.S.

In those states in which the use of cannabis has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act (“ CSA ”).

Cannabis is presently classified as a Schedule I controlled substance under the CSA, and as a result, the manufacture, distribution, dispensation, and possession of medical and adult-use cannabis is generally illegal under U.S.

In August 2023, the U.S.

Department of Health and Human Services (“ HHS ”) made a recommendation to the Drug Enforcement Agency (“ DEA ”) to reschedule cannabis as a Schedule III drug.

In May 2024, the DEA, in turn, issued a Notice of Proposed Rulemaking (“ NPRM ”) to reschedule cannabis to Schedule III under the CSA.

Following NPRM, the DEA received thousands of comments, and as of this filing, an administrative hearing on the rulemaking remains pending.

In December 2025, President Trump issued an executive order directing the U.S.

Department of Justice (“ DOJ ”) to move forward with rescheduling

cannabis as quickly as possible, consistent with federal law.

If the DEA successfully reschedules cannabis, there may be new regulatory compliance obligations placed upon cannabis operators in the U.S.

Under the Federal Food, Drug, and Cosmetic Act (“ FD&C Act ”), Schedule III cannabis and cannabis-derived products bearing health claims (e.g., under a medical marijuana state regime) would be treated as a “new drug” requiring approval by the U.S.

Food and Drug Administration (“ FDA ”) before they could be dispensed—by prescription only.

The FDA can also enforce against cannabis products unlawfully marketed as conventional foods or dietary supplements or that are otherwise misbranded or adulterated under the FD&C Act.

Even if cannabis is rescheduled to Schedule III under the CSA, the current state-legal medical and adult-use cannabis business activities would remain illegal under U.S.

federal law at the outset.

Rescheduling would allow a potential pathway for federally legal medical cannabis, although this would require approval by the FDA of cannabis and cannabis-derived products, as well as alignment of state regimes with federal requirements.

Therefore, there is a risk that federal authorities through, among others, the DOJ, its sub-agency the DEA, and the U.S.

Internal Revenue Service (“ IRS ”), may enforce federal law.

This enforcement could entail active investigations, auditing, and shutting down cannabis growing facilities, processors, and retailers.

If any such action occurs, we may be deemed to be producing, cultivating or dispensing cannabis and drug paraphernalia in violation of federal law.

Since federal law criminalizing the cultivation, production, extraction, distribution, transportation, possession or use of marijuana applies despite state laws that legalize such actions, enforcement of federal law regarding marijuana is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial condition.

There can be no assurances that the federal government will not seek to enforce the applicable laws against us.

The consequences of such enforcement would be materially adverse to us and our business—including to our reputation, profitability, and the market price of our securities—and have the potential to result in the forfeiture or seizure of all or substantially all our assets.

It is also possible the DOJ or an aggressive federal prosecutor could allege the Company, and members of our Board, our executive officers and, potentially, our shareholders, “aided and abetted” violations of federal law by providing finances and services to our portfolio cannabis companies.

Under these circumstances, federal prosecutors could seek to seize assets, and to recover the “illicit profits” previously distributed to shareholders resulting from any of our financing or services.

In these circumstances, the Company’s operations would cease, shareholders may lose their entire investments and directors, officers and/or shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

There can be no assurance as to the position the current or future administration or federal authorities may take on cannabis, and any administration could decide to enforce federal laws against state-regulated cannabis companies at any time.

Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture.

These results could have a material adverse effect on us, including, but not limited to, our reputation and ability to conduct business, our holding (directly or indirectly) of state-issued cannabis licenses in the United States, the listing of our securities on various stock exchanges, our financial position, operating results, profitability or liquidity or the market price of our Subordinate Voting Shares.

In addition, it is difficult to estimate the time or resources that would be needed for the investigation or final resolution of any such matters because (i) the time and resources that may be needed depend on the nature and extent of any information requested by the authorities involved, and (ii) such time or resources could be substantial.

For discussion on the differences between federal- and state-level law, treatment, enforcement and other matters, See “ Item 1.

Business — Regulation of Cannabis in the United States ”, generally and “— U.S.

Department of Justice and Attorney General Memorandums ” thereunder for discussion on guidance for enforcement agencies and the DOJ with respect to cannabis.

We may be subject to action by the U.S.

federal government through various government agencies for participation in the cannabis industry.

Cultivation, processing, production, distribution, possession and sale of cannabis for any purpose, medical, adult use or otherwise, remains illegal under U.S.

federal government, through, among others, the DOJ, its sub-agency the Drug Enforcement Administration (“ DEA ”) and the U.S.

Internal Revenue Service (“ IRS ”), has the right to actively investigate, audit and shut down cannabis growing facilities, processors, and retailers.

federal government may also attempt to seize our property.

Any action taken by the DOJ, the DEA and/or the IRS to interfere with, seize or shut down our operations will have an adverse effect on our business, prospects, revenue, results of operation and financial condition.

We could face:

(i) seizure of our cash and other assets used to support or derived from our cannabis subsidiaries;

(ii) the arrest of our employees, directors, officers, managers, and investors;

(iii) ancillary criminal violations of the Controlled Substances Act for aiding and abetting, and conspiracy to violate the Controlled Substances Act by providing financial support to cannabis companies that service or provide goods to state-licensed or permitted cultivators, processors, distributors and/or retailers of cannabis.

If aggressive prosecutorial measures and laid against the Company, our operations would cease, shareholders may lose their entire investments and directors, officers and/or shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

Additionally, there can be no assurance as to the position the current or any new federal administration may take on marijuana.

Any enforcement of current federal marijuana laws could cause significant financial damage to the Company and our shareholders.

Further, future presidential administrations may choose to treat marijuana differently and potentially enforce the federal laws more aggressively.

Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture.

These results could have a material, adverse effect on the Company, including our reputation and ability to conduct business, our holding (directly or indirectly) of cannabis licenses in the United States, the listing of our securities on various stock exchanges, our financial position, operating results, profitability or liquidity or the market price of our Subordinate Voting Shares.

In addition, it is difficult to estimate the time or resources that would be needed for the investigation or final resolution of any such matters because:

(i) the time and resources that may be needed depend on the nature and extent of any information requested by the authorities involved;

and (ii) such time or resources could be substantial.

See “ Item 1.

Business — Regulation of Cannabis in the United States — U.S.

Department of Justice and Attorney General Memorandums ” for discussion on guidance for enforcement agencies and the DOJ with respect to cannabis.

state and local regulation of cannabis is uncertain and changing.

New state or local laws may be enacted which affect our product offerings or manufacturing processes.

There is no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions where permitted.

federal government begins to enforce U.S.

federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing state laws are repealed or curtailed, our business or operations in those states or under those laws would be materially and adversely affected.

Federal actions against any individual or entity engaged in the cannabis industry, or a substantial repeal of cannabis related legislation, could materially, adversely affect the Company, our business and our assets or investments.

State and local laws permitting the cultivation, production, extraction, distribution, transportation, possession and/or use of cannabis may also be modified in a manner that is contrary to our interests.

For example, states could authorize the issuance of licenses to cultivate, produce, transport or distribute cannabis to additional parties, or the maximum number of such licenses could be unlimited.

Certain ownership structures, such as the ability to be vertically integrated, could be restricted, thereby affecting our ability to own and control multiple stages of the supply chain.

States currently permitting only medical-use cannabis could implement adult-use cannabis laws that give preferences to applicants and/or participants that compete with us, or even prohibit us to participate in portions or the entirety of the adult-use marketplace.

Any such changes would have a material, adverse effect on our business, financial position and/or results of operations.

The rulemaking process at the state level that applies to cannabis operators in any state will be ongoing and result in frequent changes.

As a result, a compliance program is essential to manage regulatory risk.

All operating policies and procedures implemented by the Company are compliance-based and are derived from the state regulatory structure governing cannabis businesses.

Notwithstanding our efforts and diligence, regulatory compliance and the process of obtaining regulatory approvals can be costly and time-consuming.

No assurance can be given that we will receive and maintain the necessary licenses, permits or cards to continue operating our business.

A state implementing an adult-use cannabis program may prohibit participation by the Company in one or more aspects of that program, or require the Company to pay fees to participate, which fees may be material or prohibitive.

Local laws and ordinances could also restrict our business activity.

Although our operations are legal under the laws of the states in which it operates, local governments often have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction.

Land use, zoning, local ordinances, and similar laws could be adopted or changed and have a material, adverse effect on our business.

Multiple states where medical and/or adult use cannabis is legal have imposed or are considering special taxes or fees on businesses in the marijuana industry.

It is uncertain at this time whether other states are in the process of reviewing such additional taxes and fees.

The implementation of special taxes or fees could have a material, adverse effect upon our business, prospects, revenue, results of operation and financial condition.

We currently operate cannabis businesses in Maryland, Minnesota, and New York.

State regulatory agencies may require us to post bonds or significant fees.

There is a risk that a greater number of state regulatory agencies will begin requiring entities engaged in certain aspects of the business or industry of legal marijuana to post a bond or significant fees when applying, for example, for a dispensary license or renewal, as a guarantee of payment of sales and franchise taxes.

We are not able to quantify at this time the potential scope of such bonds or fees in the states in which we currently operate or may in the future operate, but they may be materially adverse to our results of operations, financial condition and ultimate business success, individually or in the aggregate.

We may be subject to heightened scrutiny by United States and Canadian authorities, which could ultimately lead to the market for Subordinate Voting Shares becoming highly illiquid and our shareholders having no ability to effect trades in Subordinate Voting Shares in Canada.

Currently, our Subordinate Voting Shares are traded on the Canadian Securities Exchange and on the OTCQX tier of the OTC Markets in the United States.

Our business, operations, and investments in the United States, and any such future business, operations, or investments, may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada and the United States.

As a result, we may be subject to significant direct and indirect interaction with public officials.

There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on our ability to operate or invest in the United States or any other jurisdiction, in addition to those described herein.

In 2017, there were concerns that the Canadian Depository for Securities Limited, through its subsidiary CDS Clearing and Depository Services Inc.

(“ CDS ”), Canada’s central securities depository (clearing and settling trades in the Canadian equity, fixed income, and money markets), would refuse to settle trades for cannabis issuers that have investments in the United States.

However, CDS has not implemented this policy.

On February 8, 2018, the Canadian Securities Administrators published Staff Notice 51-352 describing the Canadian Securities Administrators’ disclosure expectations for specific risks facing issuers with cannabis-related activities in the U.S.

Staff Notice 51-352 confirms that a disclosure-based approach remains appropriate for issuers with U.S.

cannabis-related activities.

Staff Notice 51-352 includes additional disclosure expectations that apply to all issuers with U.S.

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 U.S.

cannabis industry.

On February 8, 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group, which is the owner and operator of CDS, announced the signing of a Memorandum of Understanding (“ MOU ”) with Aequitas NEO Exchange Inc., the Canadian Securities Exchange, the Toronto Stock Exchange and the TSX Venture Exchange.

The MOU outlines the parties’ understanding of Canada’s regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS as it relates to issuers with cannabis-related activities in the United States.

The MOU confirms, with respect to the clearing of listed securities, that CDS relies on the Canadian securities exchanges to review the conduct of listed issuers.

The MOU notes that securities regulation requires that the rules of each of the exchanges must not be contrary to the public interest and that the rules of each of the exchanges have been approved by the securities regulators.

Pursuant to the MOU, CDS will not ban accepting deposits of or transactions for clearing and settlement of securities of issuers with cannabis-related activities in the United States.

Even though the MOU indicated that there are no plans to ban the settlement of securities through CDS, there can be no guarantee that this approach to regulation will continue in the future.

If such a ban were implemented at a time when the Subordinate Voting Shares are listed on a Canadian stock exchange, it would have a material, adverse effect on the ability of holders of Subordinate Voting Shares to make and settle trades.

In particular, the market for Subordinate Voting

Shares would become highly illiquid until an alternative (if available) was implemented, and investors would have no ability to effect a trade of Subordinate Voting Shares through the facilities of the applicable Canadian stock exchange.

We are involved in litigation with Verano, the outcome of which is uncertain.

On October 13, 2022, the Company received a notice of purported termination of the Arrangement Agreement, which asserted certain breaches of the Arrangement Agreement, including claims the Company’s public filings and communications with respect to its business and ongoing operations were misleading and that the Company breached its representations to Verano under the Arrangement Agreement.

Verano also claimed, as a result of such breaches, it is entitled to payment of the $14,875,000 termination fee and its transaction expenses.

The Company denies all of Verano’s allegations and affirmatively asserts that it has complied with its obligations under the Arrangement Agreement, and with its disclosure obligations under US and Canadian law, in all material respects at all times.

The Company believes that Verano had no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement.

On October 21, 2022, the Company commenced an action in the Supreme Court of British Columbia against Verano arising out of Verano’s repudiation of the Arrangement Agreement, which Vireo believes was wrongful.

The Company is seeking damages, costs and interest, based on Verano's breach of contract and of its duty of good faith and honest performance.

On November 14, 2022, Verano filed counterclaims against the Company for the termination fee and transaction expenses described above.

On May 2, 2024, the Company filed an application with the Supreme Court of British Columbia for summary determination, seeking substantial damages in the amount of $860.9 million, as well as costs and legal fees.

See “ Item 3.

Legal Proceedings — Verano ” for additional information.

Due to uncertainties inherent in litigation, it is not possible for Vireo to predict the timing or final outcome of the legal proceedings against Verano or to determine the amount of damages, if any, that may be awarded to either party.

In addition, the costs of prosecuting the Company’s claims and defending against the claims made by Verano could be material.

We may face state limitations on ownership of cannabis licenses and may be required to divest certain licenses or entities that hold such license in order to comply with applicable regulations.

Certain jurisdictions in which we operate limit the number of cannabis licenses and certain economic or commercial interests in the entity that holds the license that can be held by one entity within that state.

As a result of the completion of certain acquisition transactions that we have entered into or may enter into in the future, we may potentially hold more than the prescribed number of licenses or economic or commercial interests in a licensed entity in certain states, and accordingly may be required to divest certain licenses or entities that hold such license in order to comply with applicable regulations.

The divestiture of certain licenses or entities that hold such licenses may result in a material, adverse effect on our business, financial condition, or results of operations.

We may become subject to FDA and/or ATF regulation.

Marijuana remains a Schedule I controlled substance under U.S.

If the federal government reclassifies marijuana to a Schedule II, Schedule III, Schedule IV, or Schedule V controlled substance or declassifies it as a controlled substance, it is possible that the FDA would seek to regulate cannabis under the Food, Drug and Cosmetics Act of 1938, as amended (the “ FDCA ”).

The FDA is responsible for ensuring public health and safety through regulation of food, drugs, supplements, and cosmetics, among other products, through its enforcement authority pursuant to the FDCA.

The FDA’s responsibilities include regulating the ingredients as well as the marketing and labeling of drugs sold in interstate commerce.

Because marijuana is federally illegal to produce and sell, and because it has few federally recognized medical uses, the FDA has historically deferred enforcement related to cannabis to the DEA;

however, the FDA has enforced the FDCA with regard to industrial hemp-derived products, especially CBD derived from industrial hemp sold outside of state-regulated cannabis businesses.

The FDA had asserted its authority to regulate CBD derived from both marijuana and industrial hemp, and its intention to develop a framework for regulating the production and sale of CBD derived from industrial hemp.

On January 26, 2023, the FDA announced that it would not seek to regulate CBD as a dietary supplement.

Additionally, the FDA may issue rules and regulations, including good manufacturing practices related to the growth, cultivation, harvesting, processing, and production of cannabis.

Clinical trials may be needed to verify the efficacy and safety of cannabis and cannabis products.

It is also possible that the FDA would require facilities where medical-use cannabis is grown to register with the FDA and comply with certain federally prescribed regulations.

If some or all these regulations are imposed, the impact they would have on the cannabis industry is unknown, including the costs, requirements and possible prohibitions that may be enforced.

If we are unable to comply with the potential regulations or registration requirements prescribed by the FDA, it may have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

It is also possible that the federal government could seek to regulate cannabis under the ATF.

The ATF may issue rules and regulations related to the use, transport, sale and advertising of cannabis or cannabis products.

Department of Justice and Attorney General Memoranda ” thereunder for discussion on guidance for enforcement agencies and the DOJ with respect to cannabis.

We operate in a highly regulated sector with complex and at times opposing regulatory regimes and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we conduct business.

Our business and activities are heavily regulated in all jurisdictions where we conduct business.

Our operations are subject to various laws, regulations and guidelines by state and local governmental authorities relating to the manufacture,

marketing, management, transportation, storage, sale, pricing and disposal of cannabis, cannabis oil and consumable cannabis products, and also including laws and regulations relating to health and safety, insurance coverage, the conduct of operations and the protection of the environment.

Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion in establishing regulations over our activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.

Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities and obtaining all necessary regulatory approvals for the manufacture, production, storage, transportation, sale, import and export, as applicable, of our products.

Even among jurisdictions that permit cannabis activities, there is no uniform regulatory framework;

instead, each jurisdiction may impose its own licensing regimes, security requirements, product standards, marketing regulations, packaging and labeling rules, testing protocols, track-and-trace systems, zoning and operating restrictions, ownership and control limitations, and tax and reporting obligations.

The absence of harmonized regulations means that requirements can vary significantly from one jurisdiction to another and may be overlapping, inconsistent or at times directly conflicting.

For example, one jurisdiction may require certain product formulations, testing thresholds or labeling disclosures that differ from, or are not permitted under, the rules of another jurisdiction.

Local ordinances may impose stricter limitations than state law on operating hours, permitted activities, or facility locations.

Federal prohibitions and enforcement priorities may restrict and complicate activities that are permitted under state law, including movement of funds, use of financial institutions, and transportation of products across state lines.

As a result, we may face situations where full compliance with one set of rules creates a risk of non-compliance with another, or where it is unclear which standard will be applied or enforced.

While we endeavor to comply with all applicable laws, regulations and guidelines and, to our knowledge, we are in compliance with or are in the process of being assessed for compliance with all such laws, regulations and guidelines, any failure to comply with the regulatory requirements applicable to our operations may expose us to heightened compliance costs and operational complexity.

We must design, implement and maintain compliance programs, internal controls, information systems and policies tailored to multiple, and sometimes inconsistent, regulatory regimes.

This increases our operating costs, diverts management time and resources from other business initiatives, and may limit our ability to standardize products, processes and systems across our operations.

The number, complexity, and evolving nature of applicable laws and regulations increase the risk that we may inadvertently fail to comply with one or more requirements.

Regulatory changes may be adopted with limited notice, may be subject to differing interpretations, and may require rapid adjustments to our operations, documentation, product offerings or business practices.

Elections, changes in political leadership, or shifts in public sentiment can lead to new or modified legislation or regulations that are more restrictive, more burdensome, or more inconsistently applied.

Courts may also interpret existing laws in ways that materially impacts our operations or the legality of our activities.

We cannot predict how these changes or uncertainties will affect our business or our ability to remain in compliance.

As such, the need to navigate differing and potentially conflicting regulatory regimes may limit the jurisdictions in which we can operate, delay our entry into new markets, require us to exit current markets, or constrain the structure and terms of acquisitions, joint ventures and other strategic transactions.

We may be compelled to forgo business opportunities, modify transaction terms, or implement complex structures to address regulatory concerns, any of which could reduce the attractiveness or anticipated benefits of such opportunities.

Regulatory issues, enforcement actions, or perceived non-compliance in one jurisdiction may affect our reputation with regulators, counterparties, investors, customers and other stakeholders in other jurisdictions.

Counterparties may seek to terminate, modify, or renegotiate agreements based on regulatory developments or enforcement actions, or may be unwilling to enter into new arrangements given perceived regulatory risk.

There can be no assurance that we will be able to continuously anticipate, monitor and adequately respond to all legal and regulatory developments affecting our business or that our compliance systems and controls will be sufficient to prevent all violations, particularly in an environment where legal regimes are fragmented, evolving and occasionally inconsistent or in direct tension with one another.

Any failure, or perceived failure, to comply with applicable laws and regulations, any significant change in the laws or regulations governing cannabis, or any inability to reconcile differing or conflicting requirements across jurisdictions could have a material adverse effect on our business, financial condition, results of operations and prospects.

As marijuana and marijuana related activities remain illegal under U.S.

Aspects of our business, including our contracts and contractual counterparties, are directly or indirectly involved in marijuana and related activities that are illegal under U.S.

federal law and remain illegal or restricted in certain state and local jurisdictions.

These include agreements relating to the Schwazze Transaction, the PharmaCann Transaction and the Eaze Merger (each, a “Pending Transaction” and, collectively, the “ Pending Transactions ”).

Because these activities are prohibited at the federal level and may be prohibited or heavily restricted in some states, we may face uncertainty and risk in enforcing our contractual rights, both in federal courts and in certain state courts.

Courts may refuse to enforce contracts, in whole or in part, where performance involves conduct that is illegal or contrary to public policy.

In the context of marijuana-related businesses, some courts have declined to enforce cannabis-related agreements or to grant certain remedies, even where the contracts themselves are validly formed under applicable state law.

As a result, there is a meaningful risk that a court could determine that one or more of our contracts, including those entered into in connection with the Pending Transactions, are unenforceable or only partially enforceable, or that certain remedies (such as specific performance, injunctive relief or damages tied to cannabis-related revenue streams) are unavailable.

This uncertainty could adversely affect our ability to compel performance or payment by counterparties under our commercial agreements, including those entered into in connection with the Pending Transactions.

As a result, there is a material risk that we could not realize anticipated economic benefits from the Pending Transactions, including contingent or earn-out consideration, performance-based fees, royalties or other cannabis-derived revenue streams reliant on agreements.

Different courts and arbitrators may apply differing interpretations of federal preemption, public policy and illegality doctrines making it difficult to predict and obtain consistent outcomes across jurisdictions.

In addition, even where a court is willing to enforce our agreements, the presence of marijuana-related activities may complicate and delay dispute resolution.

Courts may be reluctant to exercise jurisdiction, may limit available remedies, or may require additional briefing or evidentiary showings regarding the legality of the underlying activities.

Choice-of-law and forum-selection clauses may not be enforced as written if a court concludes that applying the chosen law or forum would require it to approve or facilitate federally illegal conduct.

Arbitration provisions may likewise be subject to challenge, and enforcement of arbitration awards in court may be uncertain where the underlying subject matter involves cannabis-related activities.

If we are unable to enforce, or face significant limitations in enforcing, our contractual rights, we could experience:

(i) loss of expected cash flows and asset value, including the Pending Transactions and other material agreements;

(ii) reduced willingness of counterparties to perform voluntarily, if they believe we have limited practical recourse;

and (iii) increased legal, administrative and transaction costs, including costs associated with structuring around enforceability concerns, negotiating enhanced protections, and resolving disputed matters in more complex or less predictable forums.

While this risk is present for almost every contract we have currently or will enter into, we do not perceive or expect any specific or heighted risk with respect to the underlying agreements related to the Pending Transactions or our present lending arrangements.

Any inability to enforce our agreements, any material limitation on the remedies available to us, or any adverse outcomes in related litigation, arbitration or regulatory proceedings could have a material adverse effect on our business, financial condition, results of operations and the value of our securities.

Cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services.

Recent events in the banking industry may further restrict our ability to access financial services including obtaining traditional bank financing.

Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable U.S.

Events in the banking industry may further restrict our ability to access financial services including obtaining traditional bank financing.

We and financial institutions are subject to extensive U.S.

anti-money laundering (“ AML ”) and financial crime compliance obligations, including under the U.S.

Currency and Foreign Transactions Reporting Act of 1970, commonly known as the Bank Secrecy Act (the “ BSA ”), as amended, the Canadian Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as amended, and any related regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

and Canada including regulations administered by the Financial Crimes Enforcement Network (“ FinCEN ”).

As a result, financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the U.S.

may form the basis for prosecution under applicable U.S.

federal money-laundering laws.

Banks and other depository institutions are currently hindered by federal law from providing financial services to marijuana businesses, even in states where those businesses are regulated.

The Company and our subsidiaries are subject to a variety of laws and regulations domestically and internationally that involve money laundering, financial record-keeping and proceeds of crime, including the U.S.

Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the “ Bank Secrecy Act ”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended, and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

Further, 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, aiding and abetting, or conspiracy.

The Financial Crimes Enforcement Network (“ FinCEN ”) of the U.S.

Department of the Treasury issued the FinCEN Memorandum on February 14, 2014, outlining the pathways for financial institutions to bank cannabis businesses in compliance with federal enforcement priorities.

The FinCEN Memorandum states that, in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws.

The FinCEN Memorandum refers to the Cole Memorandum’s enforcement priorities.

The revocation of the Cole Memorandum has not yet affected the status of the FinCEN Memorandum, nor has FinCEN given any indication that it intends to rescind the FinCEN Memorandum itself.

Shortly after the Sessions Memorandum was issued, FinCEN did state that it would review the FinCEN Memorandum, but FinCEN has not yet issued further guidance.

Although the FinCEN Memorandum remains in effect, it is unclear whether the Biden administration will continue to follow its guidelines.

The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act that occur in any state, including states that have in some form legalized the sale of cannabis.

Further, the conduct of the DOJ’s enforcement priorities could change for any number of reasons.

A change in the DOJ’s priorities could result in the prosecution of banks and financial institutions for crimes that were not previously prosecuted.

If our operations, or proceeds thereof, dividend distributions or profits or revenues derived from our operations were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds from a crime (the sale of a Schedule I drug) under the Bank Secrecy Act’s money laundering provisions.

This may restrict our ability to declare or pay dividends or effect other distributions.

The FinCEN Memorandum does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators.

Thus, most banks and other financial institutions in the United States do not appear willing to provide banking services to cannabis-related businesses or to rely on this guidance.

In addition to the foregoing, banks may refuse to process debit card payments and credit card companies generally refuse to process credit card payments for cannabis-related businesses in the United States.

As a result, we may have limited or no access to banking or other financial services in the United States.

In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it operates in permits cannabis sales.

The inability or limitation of our ability to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for us to operate and conduct our business as planned or to operate efficiently and could subject our businesses to robbery, embezzlement or other crimes related to our possession or transport of cash, sometimes in substantial quantities.

In March 2023, Federal banking regulators closed Silicon Valley Bank and Signature Bank to prevent the banks from failing.

The closures have prompted broader inquiries into the financial health of banks and other financial institutions in the United States and other countries.

While none of the banks with which the Company maintains financial relationships have been identified as a target of such an inquiry or as at risk of closure by regulators, there remains the possibility that one or more of the banks could fail, which would further limit the Company’s access to financial services, which could lead to the need to maintain more cash at some or all of the Company’s locations, increasing the risk of theft or other loss.

Such events could lead to the smaller number of banks that continue to provide financial services to the Company imposing further restrictions, higher fees, or both on the Company’s accounts.

We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business.

Our business and activities are heavily regulated in all jurisdictions where we carry on business.

Our operations are subject to various laws, regulations and guidelines by state and local governmental authorities relating to the manufacture, marketing, management, transportation, storage, sale, pricing and disposal of cannabis, cannabis oil and consumable cannabis products, and also including laws and regulations relating to health and safety, insurance coverage, the conduct of operations and the protection of the environment.

Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion over our activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.

The commercial cannabis industry is still a new industry at the state and local level.

The effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals that may be required may significantly delay or impact the development of markets, products and sales initiatives and could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

While we endeavor to comply with all applicable laws, regulations and guidelines and, to our knowledge, we are in compliance with, or are in the process of being assessed for compliance with all such laws, regulations and guidelines, any failure to comply with the regulatory requirements applicable to our operations may lead to possible sanctions including the revocation or imposition of additional conditions on licenses to operate our business;

the suspension or expulsion from a particular market or jurisdiction of our key personnel;

the imposition of additional or more stringent inspection, testing and reporting requirements;

and the imposition of fines and censures.

In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increase compliance costs or give rise to material liabilities and/or revocation of our licenses and other permits, which could have a material, adverse effect on our business, results of operations and financial condition.

Furthermore, governmental authorities may change their administration, application, or enforcement procedures at any time, which may adversely affect our ongoing costs relating to regulatory compliance.

Because marijuana is illegal under U.S.

federal law, we may be unable to access to U.S.

other depository institutions are currently hindered by federal law from providing financial services to marijuana businesses, even in states where those businesses are regulated.

As cannabis remains illegal under U.S.

federal law, proceeds from state-legal cannabis activity are generally treated as proceeds of unlawful activity for federal purposes.

On February 14, 2014, the FinCEN issued guidance titled “BSA Expectations Regarding Marijuana-Related Businesses” (FIN-2014-G001) (the “ FinCEN Marijuana Guidance ”), which was intended to clarify how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations.

Among other things, the FinCEN Marijuana Guidance:

(i) Emphasizes that, because marijuana remains illegal under federal law, financial transactions involving marijuana-related businesses “generally involve funds derived from illegal activity,” and thus must be treated as suspicious under the BSA;

(ii) Requires financial institutions that choose to bank marijuana-related businesses to conduct enhanced customer due diligence, assess the business against federal enforcement priorities, and file Suspicious Activity Reports (“ SARs ”) in all cases using specific categories, such as “Marijuana Limited,” “Marijuana Priority” and “Marijuana Termination”, with continuing activity reports generally required every 120 days and currency transaction reports for as long as the relationship continues.

FinCEN has confirmed in subsequent guidance the FinCEN Marijuana Guidance remains in effect, and financial institutions are expected to apply its guidance when providing services to marijuana-related businesses.

This framework has the practical effect of increasing the perceived compliance, enforcement and reputational risks for banks, credit unions and other financial intermediaries that serve cannabis businesses, and has caused many institutions to decline to provide, or to severely limit, services to the industry and the Company.

As a result, we rely on a limited number of financial institutions and service providers that are willing to work with cannabis-related businesses under this heightened BSA/AML regime.

These institutions can, and sometimes do, decide to terminate or restrict relationships with cannabis businesses with little or no notice if they conclude that the relationship presents unacceptable BSA or enforcement risk or is not commercially attractive given the cost of compliance.

If any of our banks or payment processors were to close or freeze our accounts, decline to process our transactions, or otherwise materially alter the services they provide to us, we could be forced to operate on a more cash-intensive basis and experience disruptions in cash management, payroll, vendor payments, tax remittances and customer transactions.

Operating with limited or no traditional banking services also increases the risks of theft, fraud, diversion and other security incidents, and may adversely affect our ability to maintain adequate internal controls over financial reporting.

Looking ahead, we do not expect the potential rescheduling of cannabis to Schedule III to have a material effect on our access to banking services.

Given that operating state-legal medical and adult-use cannabis businesses would still be federally illegal after rescheduling, we anticipate that the impact from a banking perspective will be limited.

Our ability to obtain traditional bank financing is similarly constrained.

Many banks remain unwilling to extend credit to cannabis businesses in light of the federal illegality of cannabis, the requirements of the BSA and related AML laws, and the ongoing obligation to treat cannabis-related funds as suspicious and to file SARs under the FinCEN Marijuana Guidance.

Those institutions that do lend to the sector may impose higher interest rates, more restrictive covenants, enhanced reporting and audit requirements, and shorter maturities than would be customary in other industries.

Our limited access to revolving credit facilities, term loans and other forms of traditional bank financing may restrict our ability to fund operations, invest in growth opportunities, pursue acquisitions, refinance existing obligations on favorable terms or withstand periods of operating stress.

In addition, broader events in the banking industry, including heightened regulatory scrutiny of AML programs, enforcement actions related to BSA compliance, shifts in bank risk-management priorities, stress events or failures involving regional or cannabis-focused financial institutions, or changes in how regulators expect institutions to apply the FinCEN Marijuana Guidance, could cause our existing or prospective banking partners to further restrict or terminate services to us or to cannabis businesses generally.

Any of these factors, individually or in the aggregate, could further limit our access to banking and other financial services, increase our cost of capital, constrain our ability to grow or operate our

business as planned, and otherwise have a material adverse effect on our business, financial condition, results of operations and prospects.

Further, if the operations of the Company or our subsidiaries, or any proceeds thereof, any dividend distributions or any profits or revenues derived from these operations in the United States were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the acts noted above, or any other applicable legislation.

This could have a material, adverse effect on the Company and, among other things, could restrict or otherwise jeopardize our ability to declare or pay dividends, affect other distributions, or subsequently repatriate such funds back to Canada.

As marijuana is illegal under U.S.

federal law, we may be unable to gain access to U.S.

bankruptcy protections in the event of our bankruptcy or a bankruptcy of an entity in which we invest.

Many courts have denied cannabis businesses federal bankruptcy protections because the use of cannabis is illegal under federal law.

In the event one or more of our businesses were to become unable to pay its liabilities, federal bankruptcy laws sometimes enable businesses to reorganize, reduce debt and continue to operate, or to wind down in an orderly manner so that creditors and sometimes equity holder realize some return of the funds they have provided to the bankrupt business.

In the event one or more of our businesses were to become unable to pay its liabilities, federal bankruptcy laws sometimes enable businesses to reorganize, reduce debt and continue to operate, or to wind down in an orderly manner so that creditors and sometimes equity holders realize some return of the funds they have provided to the bankrupt business.

If federal bankruptcy laws do not apply to cannabis businesses, it would be very difficult for lenders or other creditors and the owners of Subordinate Voting Shares or other equity to recoup their investments in us.

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In addition, bankruptcy or other similar proceedings are often a complex and lengthy process, the outcome of which may be uncertain and could result in a material, adverse effect on our business, financial condition or results of operations.

Because our contracts involve marijuana and related activities, which are not legal under U.S.

federal law, we may face difficulties in enforcing our contracts, including the Merger Agreements.

Because our contracts involve cannabis and other activities that are not legal under federal law and in some state jurisdictions, we may face difficulties in enforcing our contracts in federal courts and certain state courts.

Therefore, there is uncertainty as to whether we will be able to legally enforce our agreements, which could have a material, adverse effect on the Company.

We may not be able to secure our payment and other contractual rights with liens on the inventory or licenses of our clients and contracting parties under applicable state laws.

In general, the laws of the various states that have legalized cannabis sale and cultivation do not expressly or impliedly allow for the pledge of inventory containing cannabis as collateral for the benefit of third parties, such as the Company and our subsidiaries, that do not possess the requisite licenses and entitlements to cultivate, process, sell, or possess cannabis pursuant to the applicable state law.

Likewise, the laws of those states generally do not allow for transfer of the licenses and entitlements to sell or cultivate cannabis to third parties that have not been granted such licenses and entitlements by the applicable state agency.

Our inability to secure our payment and other contractual rights with liens on the inventory and licenses of our clients and contracting parties increases the risk of loss resulting from breaches of the applicable agreements by the contracting parties, which, in turn, could have a material, adverse effect on our business, financial condition or results of operations.

Because marijuana is illegal under U.S.

federal law, marijuana businesses may be subject to civil asset forfeiture.

Because the marijuana industry remains illegal under U.S.

federal law, any properties owned by participants in the marijuana industry which are either used in the course of conducting such business or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture.

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

We may be subject to constraints on and differences in marketing our products under varying state laws.

There are and may continue to be restrictions on sales and marketing activities imposed by government regulatory bodies that could hinder the development of our business and operating results.

Restrictions may include regulations that specify

what, where and to whom product information and descriptions may appear and/or be advertised.

Marketing, advertising, packaging, and labeling regulations also vary from state to state, potentially limiting the consistency and scale of consumer branding communication and product education efforts.

The regulatory environment in the U.S.

limits our ability to compete for market share in a manner similar to other industries.

If we are unable to effectively market our products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for our products, our sales and operating results could be materially, adversely affected.

The results of future clinical research may be unfavorable to cannabis, which may have a material, adverse effect on the demand for our products.

The cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Consumer perception can be significantly influenced by scientific research or findings regarding the consumption of cannabis products.

There can be no assurance that future scientific research or findings will be favorable to the cannabis market or any particular product, or consistent with earlier research or findings.

Research in Canada, the U.S.

and internationally regarding the medical benefits, viability, safety, efficacy and dosing of cannabis or isolated cannabinoids (such as CBD and THC) remains in early stages.

There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids.

Although we believe that various articles, reports, and studies support our beliefs regarding the medical benefits, viability, safety, efficacy and dosing of cannabis, future research and clinical trials may prove such statements to be incorrect or could raise concerns regarding cannabis.

Future research studies and clinical trials may draw opposing conclusions to those stated in this document or reach negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing, or other facts related to cannabis, which could have a material, adverse effect on the demand for our products, and therefore on our business, prospects, revenue, results of operation and financial condition.

Inconsistent public opinion and perception of the medical and adult-use marijuana industry hinders market growth and state adoption.

Public opinion and support for medical and adult-use cannabis has traditionally been inconsistent and varies from jurisdiction to jurisdiction.

While public opinion and support appears to be rising generally for legalizing medical and adult-use cannabis, it remains a controversial issue subject to differing opinions surrounding the level of legalization (for example, medical cannabis as opposed to adult-use legalization).

Inconsistent public opinion and perception of the medical and adult-use cannabis industry may hinder growth and state adoption, which could have a material, adverse effect on our business, financial condition, or results of operations.

Our ability to generate revenue and be successful in the implementation of our business plan is dependent on consumer acceptance of and demand for our product lines.

Our management believes the medical and adult-use cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Acceptance of our products depends on several factors, including availability, cost, familiarity of use, perceptions of acceptance by other people, convenience, effectiveness, safety, and reliability.

If customers do not accept our products, or if we fail to meet customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.

Consumer perception of our products may be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of medical and adult-use cannabis products.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the medical and adult-use cannabis market or any particular product, or consistent with earlier publicity.

Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material, adverse effect on the demand for our products and our business, results of operations, financial condition, and cash flows.

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect on the Company, the demand for our products, and our business, results of operations, financial condition and cash flows.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or our products specifically, or associating the consumption of cannabis with illness or other negative effects or events, could have such a material, adverse effect or our business, financial position

and results of operations.

Such adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

Investors in the Company who are not U.S.

citizens may be denied entry into the United States.

Because cannabis remains illegal under U.S.

federal law, those individuals who are not U.S.

citizens employed at or investing in legal and licensed U.S.

cannabis companies could face detention, denial of entry or lifetime bans from the United States for their business associations with U.S.

cannabis businesses.

Entry happens at the sole discretion of U.S.

Customs and Border Protection (“ CBP ”) officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a foreign national.

The government of Canada has started warning travelers on its website that previous use of cannabis, or any substance prohibited by U.S.

federal laws, could mean denial of entry to the United States.

Business or financial involvement in the legal cannabis industry in Canada or in the United States could also be reason enough for U.S.

border guards to deny entry.

On September 21, 2018, CBP released a statement outlining its current position with respect to enforcement of the laws of the United States.

It stated that Canada’s legalization of cannabis will not change CBP enforcement of U.S.

laws regarding controlled substances and, because cannabis continues to be a controlled substance under U.S.

law, working in or facilitating the proliferation of the legal cannabis industry in U.S.

states where it is deemed legal or Canada may affect admissibility to the United States.

As a result, CBP has affirmed that, employees, directors, officers, managers, and investors of companies involved in business activities related to cannabis in the United States or Canada (such as the Company), who are not U.S.

citizens face the risk of being barred from entry into the United States for life.

On October 9, 2018, CBP released an additional statement regarding the admissibility of Canadian citizens working in the legal cannabis industry.

CBP stated that a Canadian citizen working in or facilitating the proliferation of the legal cannabis industry in Canada coming into the United States for reasons unrelated to the cannabis industry will generally be admissible to the United States;

however, if such person is found to be coming into the United States for reasons related to the cannabis industry, such person may be deemed inadmissible.

We may incur significant tax liabilities and a reduction to our tax attributes due to limitations on tax deductions and credits under Section 280E of the Internal Revenue Code.

Under Section 280E of the U.S.

Internal Revenue Code of 1986 (together with the Treasury regulations promulgated and the rulings issued thereunder, the “ Code ”), no deduction or credit is allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if the trade or business (or the activities which comprise the trade or business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act), which is prohibited by federal law or the law of any state in which that trade or business is conducted.

The IRS has applied this provision to cannabis operations, prohibiting them from deducting many expenses associated with cannabis businesses other than certain costs and expenses related to cannabis cultivation and manufacturing operations.

Accordingly, Section 280E has a significantly adverse impact on the operations of cannabis companies, including the Company, and an otherwise profitable business may operate at a loss, after taking into account its U.S.

income tax expenses.

The Company filed amended tax returns for periods ending December 31, 2020 through December 31, 2022 to reflect the position that cannabis activities are not subject to Code Section 280E.

Additionally, the Company’s reporting of its United States federal net operating loss carryforward amount and state net operating loss carryforward amount on its Consolidated Financial Statements as of December 31, 2023 and 2024 assumes that such position will be respected by the IRS.

Please see “ Note 21, Income Taxes ” of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of such position and the Company’s net operating losses.

There can be no assurance that the IRS will not challenge such position or that a U.S.

court would not sustain such a challenge.

If the IRS successfully challenged such position, certain of the Company’s tax deductions and credits may be disallowed, thereby reducing the Company’s reporting United States federal net operating loss carryforward amount and state net operating loss carryforward amount.

Any audit by the IRS with respect to our receipt of an employee retention credit (“ERC”) under The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act could result in additional taxes or costs to the Company.

The Company applied for and received an ERC under the CARES Act.

Please see “ Note 21, Income Taxes ” of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a description of the Company’s receipt of the ERC.

In July 2023, the IRS stated its intention to shift its focus to review ERC claims for compliance concerns, including intensifying audit work.

The Company’s eligibility to receive the ERC remains subject to audit by the IRS.

If the IRS audits the Company during the applicable statute of limitations period and finds that the Company was not eligible to receive some or all of the ERC, the Company would be required to return some or all of the ERC to the IRS, with any applicable interest and penalties.

If our operations are found to be in violation of applicable money laundering legislation and our revenues are viewed as proceeds of crime, we may be unable to effect distributions or repatriate funds to Canada.

We are subject to a variety of laws and regulations in the U.S.

and Canada that involve money laundering, financial record-keeping and proceeds of crime, including the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended, and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

If the operations of the Company or our subsidiaries, or any proceeds thereof, any dividend distributions or any profits or revenues derived from these operations in the United States were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above, or any other applicable legislation.

This could have a material, adverse effect on the Company and, among other things, could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions, or subsequently repatriate such funds back to Canada.

Risks Related to the Mergers

There can be no assurance that all of the conditions precedent to closing of each, or any of, the Mergers will be satisfied.

The completion of each Merger is subject to a number of conditions precedent, some of which are outside of our control, including receipt of the Final Order, receipt of the requisite target shareholder approvals and receipt of the required regulatory approvals.

In addition, the completion of each Merger is conditional on, among other things, no material adverse effect having occurred or having been disclosed to the public (if previously undisclosed to the public) in respect of the other party.

There can be no certainty, nor can we provide any assurance, that all conditions precedent to each, or any of, the Mergers will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Merger may not be completed.

If the Mergers are not completed, the market price of our Shares may be adversely affected.

The required regulatory approvals may not be obtained or, if obtained, may not be obtained on a favorable basis.

To complete each of the Mergers, each of the Company and the applicable target must make certain filings with and obtain certain consents and approvals from various governmental and regulatory authorities.

The required regulatory approvals have not been obtained yet.

The regulatory approval processes may take a lengthy period of time to complete, which could delay completion of any or all of the Mergers.

If obtained, the required regulatory approvals may be conditioned, with the conditions imposed by the applicable governmental entity not being acceptable to either the Company or the applicable target, or, if acceptable, not being on terms that are favorable to the resulting company.

There can be no assurance as to the outcome of the regulatory approval processes, including the undertakings and conditions that may be required for approval or whether the required regulatory approvals will be obtained.

If not obtained, or if obtained on terms that are not satisfactory to either the Company or the applicable target, any or all of the Mergers may not be completed.

There can be no assurance that each or any of the Merger Agreements will not be terminated by the Company or the applicable target in certain circumstances.

Each of the Company and each applicable target has the right, in certain circumstances, to terminate the applicable Merger Agreement.

Accordingly, there can be no certainty, nor can we provide any assurance that each or any of the Merger Agreements will not be terminated by either of the Company or the applicable target prior to the completion of the applicable Merger.

Any termination will result in the failure to realize the expected benefits of the Arrangement in respect of the operations and business of the Company.

In certain instances, termination of the applicable Merger Agreement by an applicable target may require the Company to pay a termination fee (of $6,376,240 for Deep Roots, $3,394,217 for Wholesome, and $4,631,012 for Proper) to the applicable target.

The uncertainty surrounding the Mergers could negatively impact Vireo's current and future operations, financial condition and prospects.

As the Mergers are dependent upon receipt, among other things, of the required regulatory approvals and satisfaction of certain other conditions, each Merger's completion is uncertain.

If each or any of the Mergers are not completed for any reason, there are risks that the announcement of the Mergers and the dedication of Vireo's resources to the completion thereof could have a negative impact on its relationships with its stakeholders and could negatively impact current and future operations, financial condition and prospects of Vireo.

In addition, Vireo has, and will continue to, incur significant transaction expenses in connection with the Mergers, regardless of whether each or any of the Mergers are completed.

The Company and the Merger targets may not integrate successfully.

The Company and each of the Merger targets intend to integrate their respective operations together.

state licensing regimes, collateral rules, and ownership limits could materially and adversely affect our business.

Our ability to operate and grow our business and subsidiaries depends in large part on obtaining, maintaining, and renewing in a timely manner the applicable state and local licenses, permits, registrations, and credentials required to cultivate, process, distribute, and/or sell cannabis and cannabis products.

There can be no assurance that we will be able to obtain, renew, or maintain such licenses, permits, registrations, or credentials as needed to conduct our operations.

An increasing number of state regulators have begun to require or indicated they may soon require entities engaged in certain aspects of the legal cannabis industry, such as dispensary operators, to post bonds or pay significant fees as a condition to applying for, renewing, or maintaining licenses, including as a guarantee of payment of sales and franchise taxes.

We are unable to quantify the potential scope or aggregate amount of such bonds or fees in the states in which we currently do, or potentially will, operate.

However, any such requirements, individually or in the aggregate, could be substantial and could have a material adverse effect on our results of operations, financial condition, and ultimate business prospects.

Further, in many of the states that have legalized cannabis, the applicable laws and regulations do not expressly or impliedly permit the pledge of cannabis inventory as collateral in favor of third parties that do not hold the requisite licenses to cultivate, process, sell, or possess cannabis under state law.

State laws also generally do not permit the transfer of state-issued cannabis licenses or entitlements to third parties that have not themselves been granted such licenses or entitlements by the responsible agency.

As a result, in connection with our contractual and financing arrangements with clients, counterparties, or subsidiaries, we may not be able to secure our payment and other contractual rights with liens on cannabis inventory or licenses.

Our inability to obtain customary collateral security for our arrangements increases the risk of loss in the event of a default or breach by such counterparties, which, in turn, could have a material adverse effect on our business, financial condition, or results of operations.

Certain jurisdictions in which we operate also impose limits on the number or type of state-issued cannabis licenses, as well as the level of economic or commercial interests in licensed entities, that a single person or entity may hold within that state.

As we complete acquisitions or other strategic transactions, we may, or could in the future, exceed permitted ownership thresholds or otherwise hold more than the prescribed number or type of licenses or interests in licensed entities in particular jurisdictions.

In such circumstances, we may be required by regulators to divest certain licenses or equity interests, restructure our holdings, or take other remedial actions in order to comply with applicable state law.

Any forced divestiture or restructuring could occur on unfavorable terms, reduce our anticipated returns from acquisitions or investments, limit our growth opportunities in those jurisdictions, and otherwise have a material adverse effect on our business, financial condition, or results of operations.

Local regulation in U.S.

states where cannabis is legal may impose additional or more restrictive requirements that could materially and adversely affect our operations.

states where cannabis is currently legal, our business is subject not only to state-level laws and regulations but also to the ordinances, rules and policies of counties, municipalities and other local governmental authorities.

Even where state law permits and regulates the sale and use of cannabis, local governments often retain broad discretion to regulate, limit or prohibit cannabis-related activities within their jurisdictions, including through zoning, licensing and land use powers.

There can be no assurance that local governmental authorities will not exercise their authority to limit, condition or effectively negate the applicability of state cannabis laws in their jurisdictions where permitted.

For example, local governments may prohibit cannabis businesses entirely within their borders or in particular zones, adopt restrictive zoning or buffer requirements that significantly limit permissible locations, impose operating conditions such as limited hours, security, signage or odor-control requirements that increase costs or reduce the viability of operations, or enact moratoria or temporary bans that delay or prevent licensing or expansion.

Local regulations and policies may change over time due to political developments, community opposition, changes in leadership or shifts in public opinion, and may be adopted or amended with limited notice.

As a result, jurisdictions in which we currently operate, or intend to operate, could adopt new or more restrictive rules that adversely affect us.

We may be required to incur additional costs to comply with changing local requirements, relocate or modify existing facilities, abandon planned facilities or licenses, or reduce or cease operations in certain areas.

Any such local restrictions or changes could limit our ability to enter local markets and result in impairment of assets, increased compliance and legal costs, and operational disruption.

Regulatory uncertainty and potential enforcement by the U.S.

Food and Drug Administration and other authorities with respect to hemp-derived products could materially and adversely affect our business.

The regulatory framework governing hemp and hemp-derived products in the United States is complex, evolving and uncertain.

Although the 2018 Farm Bill removed “hemp” (as defined therein) and its derivatives from the definition of “marijuana” under the CSA, hemp-derived products remain subject to extensive regulation under the FD&C Act and other federal and state laws.

The FDA has asserted broad jurisdiction over many categories of hemp-derived products, including foods, dietary supplements, cosmetics and other consumer products, and has not permitted the marketing of certain hemp-derived ingestible products, such as drinks, gummies and other ingestible products containing certain hemp-derived ingredients.

Our psychoactive hemp-derived products are not intended for use in the diagnosis, cure, mitigation, treatment, or prevention of any disease or medical condition and are not marketed as drugs.

Nevertheless, the FDA may determine that some or all our hemp-derived products, their ingredients, or the manner in which they are manufactured, labeled, promoted, or distributed are not in compliance with applicable federal requirements.

There can be no assurance that our products or operations will be deemed to comply with federal laws and regulations, including those enforced by the FDA, now or in the future.

The FDA has issued warning letters and taken other enforcement actions against companies marketing hemp-derived products that, in the FDA’s view, are unlawfully marketed as conventional foods, dietary supplements, or unapproved drugs, or that are otherwise misbranded or adulterated under the FD&C Act.

If the FDA were to determine that our products are being marketed in a manner inconsistent with applicable law or guidance, or that our manufacturing, labeling, or promotion practices are non-compliant, we could be subject to a range of enforcement actions, including, without limitation:

(i) warning letters or untitled letters requiring corrective actions;

(ii) product seizures;

(iii) injunctions or

consent decrees restricting or prohibiting certain operations;

(iv) civil or criminal fines and penalties;

and (v) requirements to recall, re-label, reformulate or discontinue certain products.

In addition, in deference to the FDA’s position and related public health concerns, various states and municipalities have declared that the sale of certain hemp-derived products, particularly certain ingestible or psychoactive products, is illegal or subject to additional restrictions.

State and local authorities may adopt and enforce regulations that are more restrictive than, or inconsistent with, federal policy, and such regulations may change with limited notice.

As a result, we may be prohibited or severely limited from selling certain products in particular jurisdictions, may be required to alter formulations, packaging, labeling or marketing, or may need to cease operations in certain markets altogether.

Aggressive law enforcement or regulatory action targeting the hemp-derived products industry by federal, state or local authorities and agencies could materially and adversely affect our revenues, profitability, operations and growth prospects.

Moreover, adverse regulatory actions or heightened enforcement against the hemp-derived products sector generally or against our respective products specifically could negatively impact investor perception and our access to capital and could have a material adverse effect on the trading price and liquidity of our Subordinate Voting Shares.

Our business could be materially adversely affected by the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, and related federal restrictions on hemp-derived products.

Congress has enacted the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, which is set to significantly narrow the federal definition of “hemp” and thereby impose new restrictions on hemp-derived cannabinoid products beginning in November 2026 (the “ 2026 Hemp Restrictions ”).

As currently understood, these measures would move to a “total THC” framework that aggregates multiple forms of tetrahydrocannabinols, sets very low per-container or per-serving THC limits, and excludes many cannabinoids synthesized or manufactured outside the plant.

Specifically, while the current “hemp” definition includes products with a concentration of no more 0.3 percent delta-9 THC on a dry weight basis, the forthcoming “hemp” definition would be limited to only those products with a concentration of no more than 0.3 percent of any THC on a dry weight basis.

As a result, many of our current hemp-derived products could be deemed to meet the definition of “marijuana” under the CSA and, therefore, non-compliant under this framework.

We may be required to reformulate, relabel, reposition or discontinue products, shift certain items into state-regulated cannabis channels, overhaul our supply chain, testing, packaging and marketing, write down or dispose of inventory, modify or terminate commercial relationships, and limit or cease sales in certain channels or jurisdictions.

There can be no assurance that we will be able to successfully adapt our portfolio or that any such efforts will be commercially viable.

The 2026 Hemp Restrictions may also intensify the already complex patchwork of federal and state regulation, as states may align with, diverge from, or add to the new federal standards, creating preemption, conflict-of-law and enforcement uncertainties.

Federal agencies, including the U.S.

Department of Agriculture, FDA, DEA and IRS, appear to have broad discretion in interpreting and enforcing these 2026 Hemp Restrictions, including with respect to testing methodologies, permissible product formats, labeling and claims, and tax treatment.

We could face adverse federal tax consequences if our hemp-derived products are treated as controlled substances.

We could experience increased regulatory scrutiny, enforcement actions, litigation, and challenges in maintaining relationships with retailers, e-commerce platforms and payment processors.

Any of these developments could materially and adversely affect our ability to continue offering some or all of our hemp-derived products, reduce revenues and margins, increase compliance and operating costs, and otherwise have a material adverse effect on our business, financial condition, results of operations and prospects.

Future legislative or regulatory developments, including efforts to amend, delay or expand the 2026 Hemp Restrictions, could further increase uncertainty and compliance costs and may not be favorable to our business.

Risks Related to the Pending Transactions

Our Pending Transactions are subject to numerous conditions, including regulatory approvals and termination rights, and may not be completed on the anticipated terms or timeline, or at all, which could adversely affect the market price of our Shares and our business, financial condition and prospects.

Each of our Pending Transactions are subject to a number of conditions precedent, many of which are outside of our control, including, where applicable, receipt of required shareholder approvals of the target entities and consents and approvals from various governmental and regulatory authorities.

The regulatory approval process may be lengthy and, for certain of the Pending Transactions, required regulatory approvals have not yet been obtained.

There can be no assurance that any required approvals will be obtained on a timely basis, if at all, or that, if obtained, they will not be subject to conditions or undertakings that are unacceptable to us or the applicable counterparty, or that are otherwise unfavorable to the combined business.

Failure to obtain required approvals, or the imposition of burdensome conditions, could result in the delay, modification or termination of some or all of the Pending Transactions.

In addition, we and the counterparties to the Pending Transactions each have termination rights under the applicable transaction agreements upon the occurrence of certain events.

Accordingly, there can be no assurance that any of the Pending Transactions will be completed on the terms currently contemplated, within the expected timeline, or at all.

If any of the Pending Transactions are not completed, we may not realize the anticipated strategic benefits of such transactions, our ability to execute our strategic objectives could be impeded, and the market price of our Shares could be adversely affected.

Moreover, the announcement and pendency of the Pending Transactions, and the dedication of management time and other resources to their completion, may adversely affect our relationships with employees, customers, suppliers, regulators and other stakeholders, and could negatively impact our current and future operations, financial condition and prospects.

We have incurred, and will continue to incur, significant transaction-related costs and expenses in connection with the Pending Transactions, regardless of whether any or all of them are ultimately completed.

If one or more of the Pending Transactions are not completed, the Company will have incurred substantial expenses for which no ultimate benefit will have been received.

The Company and the assets or businesses acquired in connection with the Pending Transactions may not integrate successfully.

The Company intends to integrate its operations together with those of the assets and business to be acquired in the Pending Transactions.

However, operational and strategic decisions and staffing decisions have not yet been made.

As a result, the Mergers will present challenges to management, including the integration of management structures, operations, information technology and accounting systems and personnel of the multiple companies (some, all or none of which may ultimately complete), and special risks, including possible unanticipated liabilities, unanticipated costs, diversion of management’s attention and the loss of key employees or customers.

These decisions and the integration of Vireo's and the Merger targets’ operations may present challenges to management, including the integration of systems and personnel, and special risks, including possible unanticipated liabilities, unanticipated costs, and the loss of key employees.

The ability to realize the benefits of each, or any of, the Mergers may depend in part on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as on the resulting Company’s ability to realize the anticipated growth opportunities and synergies, efficiencies and cost savings from integrating Vireo's and the Merger targets’ businesses following completion of each, or any of, the Mergers.

The performance of the Company after completion of the Mergers could be adversely affected if the Company cannot retain key employees to assist in the ongoing operations.

As a result, the consummation of the Pending Transactions will present challenges to management, including the integration of management structures, operations, information technology and accounting systems and personnel of the various assets and business (some, all or none of which may ultimately be completed), and special risks, including possible unanticipated liabilities, unanticipated costs, diversion of management’s attention and the loss of key employees or customers.

These decisions and the integration of the Company's and the relevant counterparties’ operations may present challenges to management, including the integration of systems and personnel, and special risks, including possible unanticipated liabilities, unanticipated costs, and the loss of key employees.

The ability to realize the benefits of each, or any of, the Pending Transactions may depend in part on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as on the resulting Company’s ability to realize the anticipated growth opportunities and synergies, efficiencies and cost savings from integrating Vireo's and the acquired assets and business following completion of each, or any of, the Pending Transactions.

The performance of the Company after completion of the Pending Transactions could be adversely affected if the Company cannot retain key employees to assist in the ongoing operations.

As a result of these factors, it is possible that the cost reductions and synergies expected will not be realized.

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The amount and timing of the synergies the parties hope to realize may not occur as planned.

As a result of these factors, it is possible that any anticipated benefits from the Mergers will not be realized.

It may be challenging for the resulting Company after completion of the Mergers to service the additional indebtedness incurred.

As a result of these factors, it is possible that any anticipated benefits from the Pending Transactions will not be realized.

These challenges may be exacerbated in those transactions where there are pending earn-out provisions.

The counterparties in certain of the Pending Transactions have agreed to indemnify the Company for certain damages arising from certain of the representations, warranties, covenants, and agreements of the counterparties in the Pending Transactions.

Pursuant to certain of the Pending Transactions, the counterparties agreed to indemnify the Company against damages incurred or suffered by the Company in connection with certain matters, including any inaccuracy in or breach of the representations and warranties made by, or any breach, violation, or non-fulfillment of any covenant, agreement, or obligation to be performed by the counterparties.

However, there can be no assurance that the indemnities set forth in the agreements related to these Pending Transactions will be sufficient to protect the Company against the full amount of such damages incurred by the Company.

Moreover, even if the Company ultimately succeeds in recovering any such indemnifiable amounts under the applicable transaction agreements, the Company may be temporarily required to bear these losses.

Each of these risks could negatively affect the Company’s business, financial condition, results of operations or cash flows.

There can be no assurance that each or any of the Pending Transactions will not be terminated by the Company or the relevant counterparty in certain circumstances.

Each of the Company and each counterparty has the right, in certain circumstances, to terminate the governing agreement related to certain of the Pending Transactions.

Accordingly, there can be no certainty, nor can we provide any assurance that each or any of the Pending Transactions will not be terminated by either of the Company or the applicable counterparty prior to the completion of the applicable Pending Transaction.

Any termination will result in the failure to realize the expected benefits of the applicable Pending Transaction in respect of the operations and business of the Company.

The uncertainty surrounding the Pending Transactions could negatively impact Vireo's current and future operations, financial condition and prospects.

As the Pending Transactions are dependent upon receipt, among other things, of the required regulatory approvals and satisfaction of certain other conditions, each transaction's completion is uncertain.

If each or any of the Pending Transactions are not completed for any reason, there are risks that the announcement of the Pending Transactions and the dedication of Vireo's resources to the completion thereof could have a negative impact on its relationships with its stakeholders and could negatively impact current and future operations, financial condition and prospects of Vireo.

In addition, Vireo has, and will continue to, incur significant transaction expenses in connection with the Pending Transactions, regardless of whether each or any of the Pending Transactions are completed.

It may be challenging for the resulting Company after completion of the Pending Transactions to service the additional indebtedness incurred.

Upon consummation of the applicable Merger, the Company will assume or become liable for certain indebtedness of the applicable Merger targets.

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The additional indebtedness will increase the interest payable by the Company from time to time until such amounts are repaid, which will represent an increase in the Company’s cost and a potential reduction in its income.

In addition, the Company

may need to find additional sources of financing to repay this amount when it becomes due, which could have an adverse effect on the Company.

The Company’s shareholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, a combined company following the completion of the Mergers as compared to their current ownership and voting interests.

After the completion of the Mergers, the current shareholders of Vireo will own a smaller percentage of the combined company than their ownership prior to the transactions.

Thus, our existing stockholders bear the risk of the Mergers and the resulting share issuance diluting their stock holdings, and reducing their respective interests in the Company.

We intend to issue subordinate voting shares as consideration in the Merger Transactions, which may dilute your interest in our shares and affect the trading price of our subordinate voting shares.

We intend to issue subordinate voting shares as consideration in the Merger Transactions, which may dilute your interest in our share capital or result in a decrease in the market price of our subordinate voting shares.

Each of the Merger Agreements also provides that additional subordinate voting shares may be issuable in connection with each of the Mergers through various earn-out mechanisms set forth in each of the Merger Agreements, and the subordinate voting shares issuable pursuant to such earn-out mechanisms may further dilute your interest in our share capital or result in a decrease in the market price of our subordinate voting shares.

Our shareholders may not realize a benefit from the Mergers commensurate with the ownership dilution they will experience in connection with the Mergers.

If the Company is unable to realize the full strategic and financial benefits currently anticipated from the Mergers, our shareholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Mergers.

The Mergers will cause dilution to the combined company, which may negatively affect the market price of subordinate voting shares of the combined company.

In connection with the completion of the Mergers, we expect to issue approximately 764 million subordinate voting shares exclusive of any warrants or options that are expected to be issued.

The issuance of these new subordinate voting shares could have the effect of depressing the market price of the subordinate voting shares of the combined company.

The Deep Roots stockholders, the Wholesome stockholders, and Proper and the Proper equityholders and other subsequent recipients of Subordinate Voting Shares from Proper pursuant to the Proper Merger Agreement, have agreed or will agree to indemnify the Company for certain damages arising from certain of the representations, warranties, covenants, and agreements of Deep Roots, Wholesome, and Proper, respectively, in each case as set forth in the Merger Agreements.

Pursuant to each of the Merger Agreements and the documents, agreements, and instruments to be prepared, executed, and delivered in connection with the Merger Agreements, the Deep Roots stockholders, the Wholesome stockholders, and Proper and the Proper equityholders and other subsequent recipients of Subordinate Voting Shares from Proper pursuant to the Proper Merger Agreement (collectively with Proper, the “Proper Share Recipients”), agreed or will agree to indemnify the Company against damages incurred or suffered by the Company in connection with certain matters, including any inaccuracy in or breach of the representations and warranties made by, or any breach, violation, or non-fulfillment of any covenant, agreement, or obligation to be performed by, each of Deep Roots, Wholesome, and Proper and certain of its subsidiaries, respectively, subject to certain per-claim and overall deductibles.

However, the liabilities of such indemnifying parties in respect of any such indemnification obligations are subject to a deductible of $637,624 and

a maximum liability cap of $12,752,480 with respect to the Deep Roots stockholders as set forth in the Deep Roots Merger Agreement, $339,422 and a maximum liability cap of $6,788,433 with respect to the Wholesome stockholders as set forth in the Wholesome Merger Agreement, and $463,101 and a maximum liability cap of $9,262,024 with respect to the Proper Share Recipients as set forth in the Proper Merger Agreement, in each case for any inaccuracy in or breach of the representations and warranties made by each of Deep Roots, Wholesome, and Proper, respectively, other than certain fundamental representations.

The maximum liability of each stockholder of Deep Roots, each stockholder of Wholesome, and each Proper Share Recipient, is further limited to the pro rata share of the merger consideration that such stockholder or Proper Share Recipient receives under the appliable Merger Agreement, with certain limited exceptions including fraud, intentional misrepresentation, or intentional misconduct.

Therefore, there can be no assurance that the indemnities set forth in the Merger Agreements will be sufficient to protect the Company against the full amount of such damages incurred by the Company.

Moreover, even if the Company ultimately succeeds in recovering any such indemnifiable amounts under the Merger Agreements, the Company may be temporarily required to bear these losses.

Each of these risks could negatively affect the Company’s business, financial condition, results of operations or cash flows.

The fairness opinion obtained by the Board from Moelis & Company LLC will not reflect changes, circumstances, developments or events that have occurred or may occur after the date of the opinion, including the fact that certain of the Mergers may not be consummated.

Moelis & Company LLC, the Board’s financial advisor, in connection with the Mergers, has delivered to the Board a written opinion, dated December 17, 2024, that as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, the consideration to be paid by the Company to Deep Roots, Wholesome, the Proper Companies and Bill’s, pursuant to the Merger Agreements with respect to Deep Roots, Wholesome, the Proper Companies and with respect to a Memorandum of Understanding with respect to Bill’s was fair, from a financial point of view, to Vireo.

The Board has not obtained an updated fairness opinion as of the date of this Information Statement from Moelis & Company LLC, and the Board does not expect to request or receive an updated fairness opinion prior to the completion of the Mergers.

Moelis & Company LLC’s opinion does not reflect changes, circumstances, developments or events that have occurred, or that may occur, after the date of the opinion, including the fact that certain of the Mergers may not be consummated, regulatory or legal changes, changes in the operations and prospects of the Company or Deep Roots, Wholesome or the Proper Companies, general market and economic conditions and other factors, each of which may be beyond the control of the Company, Deep Roots, Wholesome, or the Proper Companies.

As of February 23, 2025, the Company had not entered into a definitive merger agreement with Bill’s Nursery and the exclusivity period under the Memorandum of Understanding with Bill’s Nursey had expired.

The conclusions reached by Moelis & Company LLC in its fairness opinion may have been materially different without the inclusion of Bill’s Nursery.

Moelis & Company LLC’s opinion does not speak as of the time any of the Mergers will be completed or as of any date other than the date of the opinion.

The Board does not anticipate asking Moelis & Company LLC to update its opinion, and Moelis & Company LLC has no obligation or responsibility to update, revise or reaffirm its opinion.

If the Mergers do not close, the Company will not benefit from the expenses incurred in their pursuit.

There is no assurance that any of the Mergers will be completed.

If one or more of the Mergers are not completed, the Company will have incurred substantial expenses for which no ultimate benefit will have been received.

The Company has incurred out-of-pocket expenses in connection with the Mergers, much of which will be incurred even if one or more of the Mergers are not completed.

The Company’s ability to use net operating loss carryforwards and other tax attributes may be limited as a result of the Mergers, if approved and effected.

In addition, the Company may need to find additional sources of financing to repay this amount when it becomes due, which could have an adverse effect on the Company.

The Company’s shareholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, a combined company following the completion of the Pending Transactions as compared to their current ownership and voting interests.

After the completion of the Pending Transactions, the current shareholders of Vireo will own a smaller percentage of the combined company than their ownership prior to the transactions.

Thus, our existing shareholders bear the risk of the

Pending Transactions and the resulting share issuance diluting their share holdings, and reducing their respective interests in the Company.

We intend to issue subordinate voting shares as consideration in certain of the Pending Transactions, which may dilute your interest in our shares and affect the trading price of our subordinate voting shares.

We intend to issue subordinate voting shares as consideration in certain of the Pending Transactions, which may dilute your interest in our share capital or result in a decrease in the market price of our subordinate voting shares.

Some of the operative agreements for the Pending Transactions also provide that additional subordinate voting shares may be issuable in connection with each of such Pending Transactions through various earn-out mechanisms set forth in the operative agreements, and the subordinate voting shares issuable pursuant to such earn-out mechanisms may further dilute the interests of current shareholders in our share capital or result in a decrease in the market price of our subordinate voting shares.

Our shareholders may not realize a benefit from the Pending Transactions commensurate with the ownership dilution they will experience in connection with the Pending Transactions.

If the Company is unable to realize the full strategic and financial benefits currently anticipated from the Pending Transactions , our shareholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Pending Transactions .

If the Pending Transactions do not close, the Company will not benefit from the expenses incurred in their pursuit.

There is no assurance that any of the Pending Transactions will be completed.

If one or more of the Pending Transactions are not completed, the Company will have incurred substantial expenses for which no ultimate benefit will have been received.

The Company has incurred out-of-pocket expenses in connection with the Pending Transactions, much of which will be incurred even if one or more of the Pending Transactions are not completed.

The Company’s ability to use net operating loss carryforwards and other tax attributes may be limited as a result of the Pending Transactions, if approved and effected.

The Company has incurred taxable losses during its history.

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As of December 31, 2025, the Company had U.S.

federal net operating loss (“ NOL ”) carryforwards and state NOL

carryforwards of $28,100,000 and $39,000,000, respectively.

federal net operating loss (“ NOL ”) carryforwards and state NOL carryforwards of $19,200,000 and $27,000,000, respectively.

Under current law, U.S.

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Our long-term success is dependent upon among other things, achieving positive cash flows from operations and augmenting such cash flows using external resources to satisfy our cash needs, and there is no assurance that we will be able to achieve such cash flows.

Our profit growth may be materially adversely impacted if we are unable to introduce new products or enter new markets successfully, to meet the demand for our products with increased production capacity, to raise prices, or to improve the proportion of our sales of higher margin products and in higher margin geographies.

We anticipate requiring additional financing to operate our business and we may face difficulties acquiring additional financing on terms acceptable to us or at all.

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We are a holding company, and our earnings are dependent on the earnings and distributions of our subsidiaries.

We are a holding company and essentially all our assets are the capital stock or membership interests of our subsidiaries or management services agreements with entities in each of the markets in which we operate, including in our core markets of Maryland, Minnesota and New York.

As a result, our shareholders are subject to the risks attributable to our subsidiaries.

As a holding company, we conduct substantially all our business through our subsidiaries, which generate substantially all our revenues.

As a holding company, we conduct substantially all our business through our subsidiaries, which generate effectively all our revenues.

Consequently, our cash flows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of our subsidiaries and the distribution of those earnings to us.

The ability of these entities to pay dividends and other distributions will depend on their operating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by such companies and contractual restrictions contained in the instruments governing their debt.

In the event of a bankruptcy, liquidation, or reorganization of any of our material subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before us.

Our subsidiaries may not be able to obtain necessary permits and authorizations.

Our subsidiaries may not be able to obtain or maintain the necessary licenses, permits, certificates, authorizations, or accreditations to operate their respective businesses, or may only be able to do so at great cost.

In addition, our subsidiaries may not be able to comply fully with the wide variety of laws and regulations applicable to the cannabis industry.

Failure to comply with or to obtain the necessary licenses, permits, certificates, authorizations, or accreditations could result in restrictions on a subsidiary’s ability to operate in the cannabis industry, which could have a material, adverse effect on our business, financial condition, and results of operations.

Disparate state-by-state regulatory landscapes and the constraints related to holding cannabis licenses in various states results in operational and legal structures for realizing the benefit from cannabis licenses that could result in materially detrimental consequences to us.

We realize, and will continue to realize, the benefits from cannabis licenses pursuant to a number of different structures, depending on the regulatory requirements from state-to-state, including realizing the economic benefit of cannabis licenses through management agreements.

Such agreements are often required to comply with applicable laws and regulations or are in response to perceived risks that we determine warrant such arrangements.

The foregoing structures present various risks to the Company and our subsidiaries, including but not limited to the following risks, each of which could have a material, adverse effect on our business, financial condition, and results of operations:

● A governmental body or regulatory entity may determine that any of these structures are in violation of a legal or regulatory requirement or change such legal or regulatory requirements with the result that a management agreement structure violates such requirements (where it had not in the past).

● There could be a material, adverse impact on the revenue stream we receive from or on account of cannabis licenses (as we will not be the license holder, and therefore any economic benefit is received pursuant to a contractual arrangement).

If a management agreement is terminated, the Company will no longer receive any economic benefit from the applicable dispensary and/or cultivation license.

● These structures could potentially result in the funds invested by the Company being used for unintended purposes, such as to fund litigation.

● If a management agreement structure is in place, we will not be the license holder of the applicable state-issued cannabis license, and therefore, only have contractual rights in respect of any interest in any such license.

If the license holder fails to adhere to its contractual agreement with us, or if the license holder makes, or omits to make, decisions in respect of the license that we disagree with, we will only have contractual recourse and will not have recourse to any regulatory authority.

● The license holder may renege on its obligation to pay fees and other compensation pursuant to a management agreement or violate other provisions of these agreements.

● The license holder’s acts or omissions may violate the requirements applicable to it pursuant to the applicable dispensary and/or cultivation license, thus jeopardizing the status and economic value of the license holder (and, by extension, of the Company).

● The license holder may attempt to terminate the management agreement in violation of its express terms.

In any or all of the above situations, it may be difficult and expensive for us to protect our rights through litigation, arbitration, or similar proceedings.

Our senior secured credit facility contains covenant restrictions that may limit our ability to operate our business.

On March 25, 2021, we entered into the Credit Facility.

The Credit Facility contains, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to, among other things, incur additional debt or issue guarantees, create additional liens, pay cash dividends, repurchase stock or make other restricted payments, make certain voluntary prepayments of specified debt, engage in sale-leasebacks involving certain assets, and enter into mergers or acquisitions or dispose of certain assets.

The Credit Facility also contains, and any of our other future debt agreements may contain, financial covenants regarding our liquidity, minimum consolidated adjusted EBITDA, and consolidated fixed charge coverage ratio.

As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.

Furthermore, our failure to comply with our debt covenants could result in a default under our debt agreements, which could permit the holders to accelerate our obligation to repay the debt.

If any of our debt is accelerated, we may not have sufficient funds available to repay it.

Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

As of December 31, 2024, we had $72,200,424 in aggregate principal indebtedness (refer to “ Note 14, Long-Term Debt ” and “ Note 15, Convertible Debt ” to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K).

Our substantial consolidated indebtedness may increase our vulnerability to any generally adverse economic and industry conditions.

We and our subsidiaries may, subject to the limitations in the terms of our existing and future indebtedness, incur additional debt, secure existing or future debt, or recapitalize our debt.

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our current and future indebtedness, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

Our business has not generated positive cash flow from operations.

If this continues in the future, we may not have sufficient cash flows to service our debt and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our current and future indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

The nature of the medical and adult-use cannabis industry may result in unconventional due diligence processes and acquisition terms that could have unknown and materially detrimental consequences to us.

The uncertainty inherent in various aspects of the medical and adult-use cannabis industry may result in what otherwise would be considered to be inadequate investment due diligence information and uncertain legal consequences relative to arrangements affecting a target investment.

The reluctance of banks and other financial institutions to facilitate financial transactions in the medical and adult-use cannabis industry can result in inadequate and unverifiable financial information about target investments, as well as cash management practices that are vulnerable to theft and fraud.

The lack of established, traditional sources of financing for industry participants can result in unusual and uncertain arrangements

affecting the ownership and obligations of a target investment.

The reluctance of lawyers to represent industry participants in furtherance of financing and other business transactions can result in the lack of appropriate documentation setting forth the terms of the transactions, inadequately documented transactions, and transactions that in whole or in part are illegal under applicable state law, among other detrimental consequences.

We may have invested in, and may in the future invest in, businesses and companies that are or may become party to legal proceedings, may have inadequate financial and other due diligence information, may employ vulnerable cash management practices, lack written or adequate legal documents governing significant transactions, and otherwise have known or unknown conditions that could be detrimental to our business and assets.

Our assets may be purchased with limited representations and warranties from the sellers of those assets.

We will generally acquire assets and businesses, after conducting our due diligence, with only limited representations and warranties from the seller regarding the quality of the assets and the likelihood of payment.

As a result, if defects in the assets or business are subsequently discovered, we may not be able to pursue a claim for all or any of our damages against the owners of such seller, and may be limited to asserting our claims against the seller.

The extent of damages that we may incur as a result of such matters cannot be predicted, but potentially could have a material, adverse effect on the value of our assets and revenue stream and, as a result, on our ability to pay dividends.

Lending by us to third parties may be unsecured, subordinate in interest or backed by unrealizable license assets.

In connection with certain transactions, we may also act as lender to one or more counterparties.

Certain of these loans are unsecured, which places us at a greater risk of not receiving repayment or the equivalent value thereof.

Even for loans that are secured, there is a risk that other lenders may have priority interest to us or that the assets of the borrower may be insufficient to satisfy the loan.

In addition, we may have difficulty putting liens on the assets of a borrower, as the major asset is generally the cannabis license which is not transferrable pursuant to state law.

Any inability of a borrower to repay a loan or of the Company to realize the value of secured assets could have a material, adverse effect on our business, financial condition, or results of operations.

companies and contractual restrictions contained in the instruments governing their debt.

In the event of bankruptcy (if even possible), liquidation, or reorganization of any of our material subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before us.

The cannabis industry is rapidly evolving and is experiencing intense competition from licensed, unlicensed and well-capitalized market participants offering alternative competitive products and could also be further bolstered by state law regimes.

We operate in a new and rapidly growing industry and face intense competition from a variety of participants, including other licensed cannabis companies that may have longer operating histories, greater financial resources, and more extensive manufacturing, distribution and marketing experience than we do.

Because the industry remains in an early stage, we also face additional competition from new entrants, including well-capitalized companies and potential industry consolidators that may develop large-scale operations and gain significant market power, including the ability to influence pricing and costs in ways that could “price out” smaller operators such as us.

To remain competitive, we will require a continued high level of investment in research and development, cultivation and manufacturing facilities, marketing, and sales support, and we may not have sufficient resources to maintain these efforts on a competitive basis, which could materially and adversely affect our business, financial condition and results of operations.

We also face significant competition from unlicensed and unregulated market participants, including illegal dispensaries and black-market sources of cannabis and cannabis products.

These competitors may offer products that some consumers perceive as more desirable than our products, including products with higher concentrations of active ingredients or delivery methods (such as certain edibles and extract vaporizers) that we are prohibited from offering in some of the states in which we operate.

Unlicensed and unregulated operators can often sell products at significantly lower prices due to substantially lower compliance and manufacturing costs.

Any inability or unwillingness of law enforcement or regulatory authorities to enforce existing laws against the unlicensed cultivation, distribution and sale of cannabis could perpetuate the black market and negatively affect public and regulatory perceptions of cannabis, any of which could have a material adverse effect on our business, financial condition and results of operations.

In addition, the pharmaceutical industry may compete with, or seek to dominate, the legal cannabis industry through the development and commercialization of synthetic products that replicate or seek to replicate the effects and potential therapeutic benefits of organic cannabis.

If such synthetic products achieve broad commercial acceptance, they could reduce demand for cannabis and cannabis-derived products, alter industry economics, and adversely impact the volume, pricing and profitability of our products.

Changes in applicable state law can also amplify the effects of competition on our business.

For example, states may impose license limitations where companies are only permitted to have a certain number of licenses or there is a limited number of licenses permitted in the state.

Certain ownership structures, such as the ability to be vertically integrated, could be restricted, thereby affecting our ability to own and control multiple stages of the supply chain.

Any of these competitive dynamics, whether from larger licensed operators, black-market participants, consolidating industry players, synthetic alternatives or alterations in state law, could impair our ability to achieve or maintain profitability and could have a material adverse effect on our business, financial condition and results of operations.

Competition for the acquisition and leasing of properties suitable for the cultivation, production, and sale of medical and adult-use cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could materially, adversely affect our operating results and financial condition.

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These competitors may prevent us from acquiring and leasing desirable properties, may cause an increase in the price we must pay for properties or may result in us having to lease our properties on less favorable terms than we expect.

Our competitors may have greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be prudently managed.

Our competitors may have greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be

prudently managed.

In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

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Increased competition for properties may also preclude us from acquiring those properties that would generate attractive returns.

Public opinion, consumer perception, and adverse publicity regarding cannabis and our products may negatively affect demand for our products, the adoption of cannabis laws, and our business.

Public opinion and support for medical and adult-use cannabis have historically been inconsistent and vary significantly among jurisdictions.

Although support for legalization has generally increased, cannabis remains controversial, including with respect to whether medical use should be permitted, adult-use should be allowed or if there should be access to cannabis in any form.

Inconsistent or negative public opinion and perception of the medical and adult-use cannabis industry may slow or prevent the adoption or expansion of cannabis programs by additional states, result in more restrictive regulatory frameworks, or lead to efforts to roll back existing programs.

Research in Canada, the U.S.

and internationally regarding the medical benefits, viability, safety, efficacy and dosing of cannabis or isolated cannabinoids (such as CBD and THC) remains in early stages.

There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids.

Any of these developments could limit the size and growth of the markets in which we operate and have a material adverse effect on our business, financial condition, and results of operations.

Our ability to generate revenue and implement our business plan depends heavily on public opinion and consumer acceptance of, and demand for, our products.

Management believes that the medical and adult-use cannabis industry is highly dependent upon consumer perception of the safety, efficacy, and quality of cannabis and cannabis products.

If consumers do not accept our products, if we fail to meet their needs and expectations, if our products are perceived as unsafe, or if consumer preferences shift to competing products or formats, demand for our products may decline and our ability to generate revenues could be reduced.

Consumer perception of cannabis and our products is significantly influenced by scientific research and findings, regulatory investigations or proceedings, litigation, media coverage, and other publicity regarding cannabis consumption, including medical and adult-use cannabis.

There can be no assurance that future research, findings, regulatory actions, litigation outcomes, media reports, or other publicity will be favorable to the cannabis market generally, to particular product categories (such as edibles or vape products), or to our products specifically, or that they will be consistent with earlier research or publicity.

Future reports or publicity that are perceived as less favorable than, or that call into question, prior favorable or neutral positions could reduce demand for our products and have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Whether or not accurate, scientifically supported, or attributable to our products (as opposed to improper or excessive use, third-party products, or illicit-market products) negative publicity of cannabis products could materially adversely affect the Company, the demand for our products, and our business, financial condition, and results of operations.

Particularly, the use of vape products and vaping may pose particular health and perception risks.

Public health authorities, including the U.S.

Centers for Disease Control and Prevention, have identified concerns that vape products may contain ingredients that are toxic or otherwise potentially harmful to humans, and clinical studies regarding the long-term safety and efficacy of vape products generally, and cannabis vape products specifically, remain limited.

Consumers may therefore have no reliable way of knowing whether vape products are safe for their intended uses or what types or concentrations of potentially harmful substances they may contain.

Reports of vaping-related illnesses, injuries, or deaths, whether or not involving cannabis, our products, or products from the illicit market, could lead to heightened regulatory scrutiny, product bans or restrictions, litigation, and negative media coverage, and could significantly reduce consumer confidence and

demand for vape products and cannabis products more broadly.

Any of the foregoing developments could have a material adverse effect on our reputation, brand, product sales, business, financial condition, and results of operations.

Our business depends on maintaining strong brand recognition and reputation in an industry heavily influenced by volatile public opinion and consumer perceptions of cannabis.

In the cannabis industry, where legalization remains controversial and public opinion is dynamic and sometimes polarized, consumer perceptions regarding the safety, efficacy, quality, and social acceptability of cannabis products can shift quickly in response to regulatory developments, scientific studies, media coverage, and broader social attitudes.

Within this environment, our brands must not only compete with other cannabis and consumer products, but also overcome lingering stigma, misconceptions, and evolving expectations about cannabis use.

Our ability to generate revenue and execute our business plan depends significantly on consumer trust in, acceptance of, and demand for, our branded cannabis products more so than for other products or industries.

We believe that establishing, protecting and continually enhancing the identities and reputations of our brands is critical to attracting and retaining customers.

Acceptance of and demand for our products depends on a number of factors, including perceived product quality and consistency, value, availability, ease of use, safety, reliability, and alignment with consumer lifestyle and values.

If consumers do not perceive our brands as trustworthy, differentiated and high-quality, our ability to build and sustain brand loyalty may be impaired.

Introducing new products, line extensions, or brand collaborations that are not favorably received by consumers, or that are perceived as inconsistent with our existing brand positioning, could dilute our brand equity and weaken our overall market presence.

Moreover, to respond to competitive pressures and shifts in public opinion, we may need to devote substantial financial and management resources to branding, marketing, education and consumer engagement efforts, and there is no assurance such investments will be effective.

Any failure to establish, maintain and enhance strong brands in the face of changing public sentiment and consumer expectations regarding cannabis could reduce demand for our products and have a material adverse effect on our business, financial condition, and results of operations.

Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

We depend on third-party suppliers to produce and timely ship orders to us.

Some products purchased from our suppliers are resold to our customers, while others are used in the production or packaging of our products.

These suppliers could fail to produce products to our specifications or quality standards and may not deliver units on a timely basis.

Any changes in our suppliers’ ability to timely resolve production issues could impact our ability to fulfill orders and could also disrupt our business significantly due to delays in finding new suppliers.

We rely on management agreements with third-party license holders, which exposes us to significant regulatory, operational, and counterparty risks.

In certain states where permissible, we do not hold cannabis licenses directly and instead realize the economic benefits of those licenses through management agreements with third-party license holders.

These arrangements are often used to comply with, or mitigate perceived risks under, applicable state laws and regulations.

However, due to the ever shifting legal and regulatory environment at the state-level, state regulators may determine that our management agreement structures violate existing laws or regulations or may change those laws or regulations so that structures that were previously compliant are no longer permissible, which could require us to restructure or terminate arrangements and disrupt our operations.

Since we are not the license holder, our revenue from a dispensary and/or cultivation operation is entirely contractual, and if a management agreement is terminated or limited, whether in accordance with its terms, in breach, or as a result of regulatory action, we may lose some or all of the economic benefit associated with the applicable license.

We also have only contractual rights in respect of the applicable license.

If the license holder fails to perform, makes decisions we disagree with, violates its obligations under the agreement, or attempts to terminate the agreement improperly, our primary remedy is to pursue contractual claims.

We generally have no direct recourse to regulatory authorities and may be unable to prevent or reverse actions taken by the license holder.

In addition, the license holder’s own independent acts or omissions, including failures to comply with license conditions or other regulatory requirements, may jeopardize

the status or value of the license and, by extension, our revenues from that license.

Funds we invest or advance in connection with a management agreement may be applied by the license holder in ways we did not intend or approve, [even with comprehensive oversight programs in place], or to carry out other activities that do not directly support the licensed business.

In any of these situations, enforcing our rights may be difficult, time-consuming, and costly, and there is no assurance that litigation, arbitration, or similar proceedings will be successful or that any recovery will be adequate to compensate us for our losses, any of which could have a material adverse effect on our business, financial condition, and results of operations.

See the related risk factor above, “As marijuana and marijuana related activities remain illegal under U.S.

federal law and in certain state jurisdictions, we may be unable to enforce, or may face significant challenges enforcing, our contracts, including those relating to the Pending Transactions.”

We face security risks related to our physical facilities and cash transfers due to the mostly cash nature of the cannabis industry.

The business premises of our operating locations are targets for theft.

While we have implemented security measures at each location and continue to monitor and improve such security measures, our cultivation, production, processing, and

dispensary facilities could be subject to break-ins, robberies, and other breaches in security.

While we have implemented security measures at each location and continue to monitor and improve such security measures, our cultivation, production, processing, and dispensary facilities could be subject to break-ins, robberies, and other breaches in security.

If there were a breach in security and we fell victim to a robbery or theft, the loss of cannabis plants, cannabis oils, cannabis flowers, cannabis products and cultivation, production, processing, and packaging equipment could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

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While we have taken robust steps to prevent theft or robbery of cash and products during transport, there can be no assurance that there will not be a security breach during the transport and the movement of cash or products, involving the theft of product or cash.

We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

We are exposed to the risk that any of our employees, independent contractors and consultants may engage in fraudulent or other illegal activity.

Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates one or more of the following:

(i) government regulations;

(ii) manufacturing standards;

(iii) federal or state privacy laws and regulations;

(iv) laws that require the true, complete, and accurate reporting of financial information or data;

or (v) other laws or regulations.

It may not always be possible for us to identify and prevent misconduct by our employees and other third parties, and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

We cannot provide assurance that our internal controls and compliance systems will protect us from acts committed by our employees, agents, or business partners in violation of U.S.

federal or state or local laws.

If any such actions are instituted against us, and we are not successful in defending the Company or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have a material, adverse effect on our business, financial condition or results of operations.

We face risks related to the novelty of the cannabis industry, and the resulting lack of information regarding comparable companies, unanticipated expenses, difficulties and delays, and the offering of new products and services in an untested market.

As a relatively new industry, there are not many established players in the cannabis industry whose business model we can follow or emulate.

Similarly, there is little information about comparable companies available for potential investors to review in deciding whether to invest in the Company.

Shareholders and investors should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies, like us, that are in their early stages.

For example, unanticipated expenses and problems or technical difficulties may occur, which may result in material delays in the operation of our business.

We may fail to successfully address these risks and uncertainties or successfully implement our operating strategies.

If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of the Subordinate Voting Shares to the point where investors may lose their entire investments.

We have committed and expect to continue committing significant resources and capital to develop and market existing products and services and new products and services.

These products and services are relatively untested in the marketplace, and we cannot provide assurance that we will achieve market acceptance for these products and services, or other new products and services that we may offer in the future.

Moreover, these and other new products and services may be subject to significant competition from offerings by new and existing competitors in the business.

In addition, new products and services may pose a variety of challenges and require us to attract additional qualified employees.

The failure to successfully develop and market these new products and services could materially harm our business, prospects, revenue, results of operation and financial condition.

We are dependent on the popularity and acceptance of our brand portfolio.

Our ability to generate revenue and be successful in the implementation of our business plan is dependent on consumer acceptance of and demand for our products.

Acceptance of and demand for our products depends on several factors, including availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability.

If these customers do not accept our products, or if such products fail to adequately meet customers’ needs and expectations, our ability to continue generating revenues could be reduced.

We believe that establishing and maintaining the brand identities of products is a critical aspect of attracting and expanding a large customer base.

Promotion and enhancement of brands will depend largely on success in providing high-quality products.

If customers and end users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures that are not favorably received by customers and consumers, we will risk diluting brand identities and decreasing their attractiveness to existing and potential customers.

Moreover, in order to attract and retain customers and to promote and maintain brand equity in response to competitive pressures, we may have to increase substantially financial commitment to creating and maintaining a distinct brand loyalty among customers.

If we incur significant expenses in an attempt to promote and maintain brands, this could have a material, adverse effect on our business, financial condition or results of operations.

Our business is subject to the risks inherent in agricultural operations.

Medical and adult-use cannabis is an agricultural product.

There are risks inherent in the cultivation business, such as insects, plant diseases, and similar agricultural risks.

Although our cultivation is substantially completed indoors under climate-controlled conditions, some cultivation is completed outdoors and there can be no assurance that extreme weather and other natural events and conditions will not have a material, adverse effect on the production of our products and, consequentially, on our business, financial condition, or results of operations.

We are subject to risks inherent in agricultural operations and are dependent on key inputs, suppliers, and skilled labor for the cultivation, extraction, and production of cannabis products.

Medical and adult-use cannabis is an agricultural product, and our cultivation activities regardless of if conducted indoors under climate-controlled conditions or outdoors, are subject to many of the risks inherent in agricultural operations.

These risks include, among others, insect infestations, plant diseases, mold and mildew, cross-pollination, nutrient deficiencies, equipment failures, and human error, any of which can reduce yield, potency, or quality, or destroy crops altogether.

Although a substantial portion of our cultivation is conducted indoors, where we are able to control temperature, humidity, lighting, and other environmental variables, our operations remain vulnerable to mechanical breakdowns, power outages, HVAC failures, and other disruptions to our controlled environments.

To the extent we conduct outdoor cultivation or rely on third parties that do so, our crops are additionally exposed to adverse weather conditions, including extreme heat or cold, drought, excessive rainfall, hail, high winds, flooding, and other climate-related events, as well as wildfires and other natural disasters.

There can be no assurance that these agricultural and environmental risks will not have a material adverse effect on the quantity, quality, or consistency of our production and, consequently, on our business, financial condition, and results of operations.

The cultivation, extraction, and production of cannabis and derivative products depend on the timely availability and cost of a number of key inputs, including cannabis genetics and biomass, growing media, nutrients, pest and disease control products, extraction solvents, packaging materials, and the equipment and parts used in our cultivation and processing facilities, as well as critical utilities such as electricity, water, and other local services.

Any significant interruption, contamination event, regulatory restriction, or negative change in the availability, quality, or cost of these inputs could materially impact our operations.

Some inputs and services may be available only from a single supplier or a limited group of suppliers in particular markets due to regulatory constraints, technical specifications, or commercial practices.

If a sole-source or limited-source supplier ceases doing business, experiences quality or compliance issues, suffers operational disruptions, or is acquired by a competitor that elects not to supply us, we may be unable to secure alternative sources on a timely basis, on substantially similar terms, or at all.

We generally purchase key inputs on a purchase order basis at prevailing market prices based on our production requirements and anticipated demand, which exposes us to price volatility

and does not guarantee long-term supply.

Any inability to obtain required supplies, utilities, or services in the quantities and at the quality and prices we require could result in production delays, increased costs, product shortages, or the need to reformulate or discontinue certain products.

In addition, our operations are highly dependent on the availability of qualified and reliable skilled labor, including cultivation specialists, agronomists, extraction technicians, quality assurance personnel, and other trained staff who must often meet stringent regulatory suitability, licensing, and training requirements.

The cannabis industry faces intense competition for such talent, and in certain markets we may experience labor shortages, high turnover, wage inflation, or disruptions arising from workplace disputes or changes in labor laws.

If we are unable to attract, train, and retain sufficient skilled personnel, or if we experience disruptions in our workforce, our ability to maintain consistent product quality, achieve targeted yields, comply with regulatory standards, and operate efficiently could be adversely affected.

Any of the foregoing agricultural, supply chain, or labor-related risks, individually or in the aggregate, could have a material adverse effect on our business, prospects, financial condition, and results of operations.

Our cannabis cultivation and production activities require substantial energy consumption and increases or volatility in energy costs could adversely affect our business, financial condition and results of operations.

Our cannabis cultivation and production operations consume considerable amounts of electricity, natural gas, water and other utilities, including for lighting, heating, cooling, dehumidification, irrigation, extraction and processing.

As a result, we are highly dependent on the availability of reliable, affordable sources of energy.

We are therefore exposed to the risk of rising or volatile energy and utility costs due to factors beyond our control, including changes in market prices for electricity or fuel, shifts in regulatory or environmental policy, carbon or other emissions-related charges, infrastructure constraints, extreme weather events, geopolitical instability, supplier disruptions or changes in utility rate structures and tariffs.

In addition, any interruptions, curtailments or reductions in the supply of energy or utilities to our cultivation or processing facilities, whether due to grid instability, equipment failure, natural disasters, local capacity issues, mandated conservation measures, or other causes, could disrupt our operations, damage crops, reduce yields, impair product quality or require us to make unplanned capital investments in backup systems or efficiency improvements.

We may not be able to pass increased energy or utility costs on to our customers through price without adversely affecting demand for our products, and any mitigation measures we undertake (such as investments in more energy-efficient equipment, on-site generation or alternative energy sources) may be costly, may not be successful in resulting in cost savings and may take time to implement.

Any sustained or significant increase in energy costs, volatility in such costs, or disruptions in energy supply could adversely affect our business, financial condition, results of operations and our ability to operate profitably.

We may encounter increasingly strict environmental regulation in connection with our operations and the associated permitting, which may increase the expenses for cannabis production or subject us to enforcement actions by regulatory authorities.

Our operations will be subject to environmental regulation in the various jurisdictions in which they operate.

These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation.

They also set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste.

Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees.

There is no assurance that future changes in environmental regulation, if any, will not have a material, adverse effect on our business, financial condition, or results of operations of the Company.

Government approvals and permits are currently, and may in the future be, required in connection with our operations.

To the extent such approvals are required and not obtained, we may be curtailed or prohibited from our proposed production of cannabis or from proceeding with the development of our operations as currently proposed.

We may face potential enforcement actions if we fail to comply with applicable laws.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.

The subsidiaries may be required to compensate those suffering loss or damage by reason of their operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing the production of cannabis, or more stringent implementation thereof, could cause increases in expenses, capital expenditures or production costs or reduction in levels

of production or require abandonment or delays in development, and could have a material, adverse effect on our business, financial condition, or results of operations.

Our current and proposed operations are subject to extensive and evolving environmental laws and regulations in the jurisdictions in which we operate, including federal, state/provincial, and local requirements.

These laws and regulations govern, among other things, air emissions, water discharges, wastewater and stormwater management, the use and conservation of water and other natural resources, noise and odor, the generation, handling, storage, transportation, treatment and disposal of solid and hazardous wastes, the use of pesticides and fertilizers, and the protection of environmentally sensitive areas and species.

Environmental legislation, regulation, and policy are changing rapidly and tend to become more stringent over time.

Future developments may:

(i) impose stricter standards and enforcement;

(ii) require more detailed and costly environmental assessments or impact studies for new or modified projects;

(iii) increase monitoring, reporting, recordkeeping, and community engagement obligations;

(iv) mandate reductions in energy use, greenhouse gas emissions, odors, or water consumption;

and (v) heighten personal responsibility and potential liability for us or our officers, directors, and employees.

Legislators and regulators have discussed and could still adopt requirements specifically targeting cannabis cultivation and production, including restrictions on water usage, pesticides, waste disposal, and odor control.

We cannot predict the form or stringency of any future environmental laws or regulations, or the manner in which existing laws or regulations will be interpreted or enforced.

Our operations require, and will continue to require, numerous environmental and related approvals, licenses, registrations, and permits from government authorities, including in connection with construction, expansion, modification, and ongoing operation of our cultivation, processing, and other facilities.

These approvals and permits may contain conditions, limitations, and operational restrictions, may be subject to periodic review and renewal, and may be subject to change at any time.

Governmental authorities have broad discretion in administering and enforcing environmental and land use requirements, and third parties (including neighboring landowners, community groups, and environmental organizations) may challenge the issuance or renewal of permits or seek to impose additional conditions.

To the extent required approvals or permits are not obtained, renewed, or maintained on a timely basis, or are issued on terms that are more restrictive or costly than anticipated, we may be delayed, curtailed, or prohibited from proceeding with our proposed cannabis production or from developing, expanding, or operating our facilities as currently contemplated.

Non-compliance with applicable environmental requirements or permit conditions, or the occurrence of releases of hazardous or regulated substances at or from our facilities (including historical contamination by prior owners or operators of properties we lease or acquire), could result in public notices of violation, administrative orders, fines, penalties, mandatory capital expenditures, requirements to modify or cease certain operations, injunctions, reputational harm, and, in extreme cases, civil or criminal liability which could involve significant and unanticipated, costs and divert management attention.

Environmental requirements may also necessitate substantial ongoing investments in equipment, technology, and personnel, and may increase operating costs in a manner that we cannot fully pass through to customers.

There can be no assurance that existing or future environmental laws, regulations, and policies, or changes in their interpretation or enforcement, will not have a material adverse effect on our business, financial condition, results of operations, or prospects, or on our ability to develop, operate, or expand our cannabis production facilities as planned.

We face risks related to our information technology systems, including potential cyber-attacks and security and privacy breaches.

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Successful cyber-attacks and/or technological malfunctions affecting us or our service providers can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of customer information or other confidential information and reputational risk.

We have not experienced any material losses to date relating to cyber-attacks, other information breaches or technological malfunctions.

We have not experienced any material losses to date relating to cyber-attacks, information breaches and technological malfunctions.

However, there can be no assurance that we will not incur such losses in the future.

As cybersecurity threats continue to evolve, we may be required to use additional resources to continue to modify or enhance protective measures or to investigate and redress security vulnerabilities.

We are subject to laws, rules and regulations in the United States and other jurisdictions relating to the collection, production, storage, transfer and use of personal data.

We are subject to laws, rules and regulations relating to the collection, production, storage, transfer and use of personal data.

We may store and collect personal information about customers and employees.

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Additionally, our ability to execute transactions and to possess and use personal information and data in conducting our business subjects us to legislative and regulatory burdens that may require us to notify regulators and customers, employees, and other individuals of a data security breach.

Evolving compliance and operational requirements under the privacy laws, rules, and regulations of jurisdictions in which we operate impose significant costs that are likely to increase over time.

Evolving compliance and operational requirements under the privacy laws, rules, and regulations of various jurisdictions in which we operate impose significant costs that are likely to increase over time.

In addition, non-compliance could result in proceedings against us by governmental entities and/or the imposition of significant fines, could negatively impact our reputation and may otherwise materially, adversely impact our business, financial condition, and operating results.

We are at times subject to HIPAA and other healthcare privacy and data security laws in connection with our collection, use and storage of medical information, and any failure to comply with these laws or to adequately safeguard protected health information could subject us to significant penalties, litigation, and reputational harm.

In certain jurisdictions in which we operate, we collect, receive, maintain and transmit patient medical information, including information relating to medical cannabis certifications, physician recommendations, patient registry identification numbers, and related health data.

To the extent we qualify as a “covered entity” or “business associate,” we

are subject to the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”), as amended by the Health Information Technology for Economic and Clinical Health Act (“ HITECH ”), and their implementing regulations, including the Privacy Rule, Security Rule and Breach Notification Rule, administered by the U.S.

Department of Health and Human Services through its Office for Civil Rights.

HIPAA establishes detailed requirements governing the use, disclosure, safeguarding and reporting of breaches of protected health information (“ PHI ”), including the implementation of administrative, physical and technical safeguards, workforce training, risk analyses, and documentation and record retention requirements.

Compliance with HIPAA and related state medical privacy laws is complex and costly, particularly given the evolving regulatory landscape applicable to cannabis businesses and the sensitive nature of the medical information we handle.

We rely on information technology systems, third-party service providers, cloud-based platforms and other vendors to process and store PHI.

Any failure by us or our vendors to adequately safeguard PHI from unauthorized access, ransomware attacks, phishing schemes, insider misuse, or other cybersecurity incidents could result in a reportable data breach.

A breach involving PHI may require us to provide notice to affected individuals, state regulators, and federal authorities, including the Office for Civil Rights, and could trigger investigations, audits, corrective action plans, civil monetary penalties and ongoing monitoring obligations.

Civil penalties under HIPAA can be significant and are subject to annual inflation adjustments.

Although HIPAA does not provide a private right of action, individuals affected by a data breach frequently pursue claims under state privacy, consumer protection, negligence or contract laws, and state attorneys general may bring enforcement actions.

In addition, because cannabis remains illegal under federal law notwithstanding state legalization, the regulatory environment in which we operate is subject to heightened scrutiny and uncertainty, and any perceived failure to comply with healthcare privacy standards could attract increased regulatory attention or negatively impact our ability to maintain state licenses or credentials.

Furthermore, compliance with HIPAA and state privacy laws requires ongoing investments in information security infrastructure, internal controls, employee training, risk assessments and incident response capabilities.

As we expand our operations, including potential telehealth, digital ordering, patient engagement platforms or interstate data processing arrangements, our exposure to healthcare privacy and cybersecurity risks may increase.

Any material deficiency in our safeguards, delays in detecting or responding to an incident, or inaccuracies in our public disclosures regarding cybersecurity or data protection could result in regulatory enforcement by the U.S.

Securities and Exchange Commission, shareholder litigation, loss of patient trust, reputational harm and a material adverse effect on our business, financial condition and results of operations.

Loss of our key management and other personnel, or an inability to attract new management and other personnel, could negatively impact our business, financial condition and results of operations.

We depend on our senior executive officers and other key personnel to operate our businesses, develop new products and technologies and service our customers.

The loss of any of these key personnel, including John Mazarakis, our Chief Executive Officer and Co-Executive Chairman, and Tyson Macdonald, our Chief Financial Officer, could adversely affect our operations.

In connection with the close of the Pending Transactions and previous similar transactions, the Company and has integrated new senior leadership into its business and may continue doing so into the future.

Any significant leadership change or senior management transition involves inherent risks, and any failure to successfully transition key roles could impact our ability to execute on our strategic plans and be disruptive to our business, making it difficult to meet our performance and financial objectives.

We may be required to disclose personal information to government or regulatory entities.

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Some states require disclosures of directors, officers, and holders of more than a certain percentage of equity of the applicant.

While certain states include exceptions for investments in publicly traded entities, not all states do so, and some such exceptions are confined to companies traded on a U.S.

While certain states include exceptions for investments in publicly traded

entities, not all states do so, and some such exceptions are confined to companies traded on a U.S.

securities exchange.

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Moreover, insurance against risks such as environmental pollution or other hazards encountered in our operations is not generally available on acceptable terms.

We might also become subject to liability for pollution or other hazards which we may not be insured against or which we may elect not

to insure against because of premium costs or other reasons.

We might also become subject to liability for pollution or other hazards which we may not be insured against or which we may elect not to insure against because of premium costs or other reasons.

Losses from these events may cause the Company to incur significant costs that could have a material, adverse effect upon our financial performance and results of operations.

Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

We depend on third-party suppliers to produce and timely ship orders to us.

Some products purchased from our suppliers are resold to our customers, while others are used in the production or packaging of our products.

These suppliers could fail to produce products to our specifications or quality standards and may not deliver units on a timely basis.

Any changes in our suppliers’ ability to timely resolve production issues could impact our ability to fulfill orders and could also disrupt our business due to delays in finding new suppliers.

We are dependent on key inputs, suppliers and skilled labor for the cultivation, extraction, and production of cannabis products.

The cultivation, extraction and production of cannabis and derivative products is dependent on a number of key inputs and their related costs, including raw materials and supplies related to growing operations, as well as electricity, water and other local utilities.

Any significant interruption or negative change in the availability or economics of the supply chain for key inputs, such as the raw material cost of cannabis, could materially impact our business, financial condition, results of operations or prospects.

Some of these inputs may only be available from a single supplier or a limited group of suppliers.

If a sole source supplier were to go out of business, we might be unable to find a replacement for such source in a timely manner, on substantially similar terms, or at all.

If a sole-source supplier were to be acquired by a competitor of ours, that competitor may elect not to sell to the Company in the future.

Any inability to secure required supplies and services, or to do so on appropriate terms, could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

We purchase key inputs on a purchase order basis from suppliers at market prices based on its production requirements and anticipated demand.

We believe that we will have access to a sufficient supply of the key inputs for the foreseeable future.

Our cannabis growing operations consume considerable energy, which makes us vulnerable to rising energy costs.

Accordingly, rising or volatile energy costs may adversely affect our business and our ability to operate profitably.

The ability to compete and grow our business will be dependent on our continued access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts, and components.

No assurances can be given that we will be successful in maintaining our required supply of skilled labor, equipment, parts, and components.

This could have a material, adverse effect on our financial results.

Loss of our key management and other personnel, or an inability to attract new management and other personnel, could negatively impact our business, financial condition and results of operations.

We depend on our senior executive officers and other key personnel to operate our businesses, develop new products and technologies and service our customers.

The loss of any of these key personnel could adversely affect our operations.

On December 17, 2024, John Mazarakis was appointed Chief Executive Officer and Co-Executive Chairman of the Company and Tyson Macdonald was appointed Chief Financial Officer.

Any significant leadership change or senior management transition involves inherent risks, and any failure to successfully transition key roles could impact our ability to execute on our strategic plans, make it difficult to meet our performance objectives and be disruptive to our business.

Competition for highly skilled employees is intense, and we may not be able to attract and retain the highly skilled employees needed to support our business.

Competition is intense for qualified personnel and the loss of them or an inability to attract, retain and motivate additional highly skilled personnel required for the operation and expansion of our business could hinder our ability to successfully conduct our business, which could have a material adverse effect on our business, financial condition and results of operations.

Our Chief Executive Officer presently has control over key decision making as a result of his control of a majority of our voting stock and exercises significant voting power.

Our CEO, John Mazarakis, has approximately a 29% ownership interest in Chicago Atlantic Group, LP.

Chicago Atlantic Group, LP and its affiliates control approximately 35% of the Company’s subordinate voting shares.

Mazarakis does not have the ability to solely direct the investment and voting decisions of Chicago Atlantic Group, LP, he does have substantial influence over these decisions by the entity.

As a result, through his influence, Mr.

Mazarakis has the ability to substantially control the outcome of matters submitted to our shareholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.

This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other shareholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other shareholders do not support.

This concentrated control could also discourage a potential investor from acquiring our subordinate voting shares due to the limited voting power of such shares.

In addition, Mr.

Mazarakis has the ability to control the management and major strategic decisions of our Company as a result of his position as our CEO and his ability to influence the election or replacement of our directors.

The concentration of ownership of our subordinate voting shares among our existing executive officers, directors, and principal shareholders may prevent new investors from influencing significant corporate decisions and matters submitted to shareholders for approval.

As of the filing date of this Form 10-K, our executive officers, directors, and current beneficial owners of 5% or more of our capital stock and their respective affiliates will, in the aggregate, beneficially own 46% of our outstanding subordinate voting shares on an as converted basis, based on 339,336,633 subordinate voting shares and 278,170 multiple voting shares outstanding.

As a result, these persons, acting together, would be able to significantly influence all matters requiring shareholder approval, including the election and removal of directors, any merger, consolidation, or sale of all or substantially all of our assets, or other significant corporate transactions.

In addition, these persons, acting together, may have the ability to control the management and affairs of our Company.

Accordingly, this concentration of ownership may harm the market price of our subordinate voting shares by:

delaying, deferring, or preventing a change in control;

entrenching our management and/or the board of directors;

impeding a merger, consolidation, takeover, or other business combination involving us;

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

In addition, some of these persons or entities may have interests different than yours.

Our inability to attract and retain key personnel could materially, adversely affect our business.

Our success is dependent upon the ability, expertise, judgment, discretion and good faith of our senior management and key personnel.

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If we cannot maintain qualified employees to meet the needs of our anticipated growth, our business and financial condition could be materially, adversely affected.

Our sales are difficult to forecast due to limited and unreliable market data.

As a result of recent and ongoing regulatory and policy changes in the medical and adult use cannabis industries, the market data that is available is limited and unreliable.

We must rely largely on our own market research to forecast sales, as detailed forecasts are not generally obtainable from other sources in the states in which our business operates.

Additionally, any market research and projections by the Company of estimated total retail sales, demographics, demand, and similar consumer research, are based on assumptions from limited and unreliable market data.

A failure in the demand for our products to materialize as a result of inaccurate research and projections may have a material, adverse effect on our business, results of operations and financial condition.

We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

We are exposed to the risk that any of our employees, independent contractors and consultants could engage in fraudulent or other illegal activity.

Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates one or more of the following:

(i) government regulations;

(ii) manufacturing standards;

(iii) federal or state privacy laws and regulations;

(iv) laws that require the true, complete, and accurate reporting of financial information or data;

or (v) other laws or regulations.

We cannot provide assurance that our internal controls and compliance systems will protect us from acts committed by our employees, agents, or business partners in violation of U.S.

federal or state or local laws.

We may be subject to growth-related risks.

We may be subject to growth-related risks, including capacity constraints and pressure on our internal personnel, processes, systems, and controls.

Our ability to manage growth effectively will require us, among other things, to continue to implement and improve our operational and financial systems and processes, and to expand, train and manage our employee base.

Our ability to manage growth effectively will require us, among other things, to continue to

implement and improve our operational and financial systems and processes, and to expand, train and manage our employee base.

Our inability to manage this growth effectively and efficiently may have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

We are currently involved in litigation, and there may be additional litigation in which we will be involved in the future.

We are currently involved in litigation and may become party to litigation from time to time in the future with various counterparties, including, but not limited to, joint venture partners and other affiliates.

An adverse decision in any litigation could have a material, adverse effect on our business, financial condition or results of operations and could result in negative publicity and reputational harm.

Furthermore, even if we are successful in the litigation, we may incur substantial legal fees, which could have a material, adverse effect on our business, financial condition, or results of operations.

We face an inherent risk of product liability claims as a manufacturer, processor and producer of products that are intended to be ingested by people.

As a cultivator, manufacturer, processor, and distributor of products designed to be ingested by humans, we face an inherent risk of exposure to product liability claims, regulatory action, and litigation if our products are alleged to have caused significant loss or injury.

In addition, the manufacture and sale of our products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination.

Previously unknown adverse reactions resulting from human consumption of our products alone or in combination with other medications or substances could occur.

Although we will continue to have quality control procedures in place, we may be subject to various product liability claims, including, among others, that the products produced by us, or the products that are purchased by us from third-party licensed producers, caused injury, illness, or death, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances.

A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our customers and consumers generally and could have a material, adverse effect on our business, results of operations and financial condition.

There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities.

Such insurance is expensive and may not be available in the future on acceptable terms, or at all.

The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our potential products and have a material, adverse effect on our business, results of operations and financial condition.

Our intellectual property may be difficult to protect.

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The failure to obtain or maintain meaningful intellectual property protection could adversely affect our competitive position.

In addition, effective future patent, trademark, copyright, and trade secret protection may be unavailable or limited in certain countries and may be unenforceable under the laws of certain jurisdictions.

As long as cannabis remains a Schedule I controlled substance pursuant to the Controlled Substances Act, the benefit of certain federal laws and protections which may be available to most businesses, such as federal trademark and patent protection regarding the intellectual property of a business, may not be available to us.

In addition, effective future patents, trademark, copyright, and trade secret protection may be unavailable or limited under the laws of certain jurisdictions.

As long as cannabis remains a Schedule I controlled substance pursuant to the CSA, the benefit of certain federal laws and protections which may be available to most businesses, such as federal trademark and patent protection regarding the intellectual property of a business, may not be available to us.

While many states do offer the ability to protect trademarks independent of the federal government, patent protection is wholly unavailable on a state level, and state-registered trademarks provide a lower degree of protection than would federally registered marks.

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An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability to third parties, require us to seek licenses from third parties, require us to pay ongoing royalties or subject us to injunctions that may prohibit the development and operation of our applications, any of which could have a material, adverse effect on our business, results of operations and financial condition.

We are subject to significant product liability, health and safety and misuse-related risks in connection with our cannabis products, which could result in substantial costs, regulatory action, reputational harm and other adverse consequences.

As a cultivator, manufacturer, processor and distributor of cannabis and cannabis-derived products that are designed to be ingested or otherwise consumed by humans, we face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused injury, illness, property damage or other significant loss.

Our operations involve handling, processing, packaging and distributing products that are ingested, inhaled or otherwise used by consumers, including potentially vulnerable populations.

As a result, we may be subject to claims or proceedings based on, among other things, contamination, mislabeling, incorrect dosing, manufacturing or design defects, failure to meet specifications, failure to comply with applicable child-resistant or tamper-evident packaging requirements, or failure to provide adequate warnings or instructions regarding use, storage, side effects or interactions with other substances.

The manufacture, processing and sale of our products also involves the risk of injury to consumers due to product tampering by unauthorized third parties, adulteration or contamination, improper storage or transportation, or the inclusion of unintended or undisclosed ingredients.

Even if we implement and maintain rigorous quality control, testing, tracking and recall procedures, and even where our products meet applicable regulatory and internal standards, we may nonetheless be subject to product liability and related claims, including claims that:

(i) our products or products we source from third-party licensed producers caused injury, illness or death;

(ii) our products failed to perform as intended;

(iii) our products included inadequate instructions for use;

or (iv) our labeling and marketing materials contained inadequate warnings concerning potential side effects, contraindications or interactions with other substances.

We are unable to control how our customers choose to store, administer or otherwise use our products after purchase, which exposes us to risks arising from misuse and abuse.

For example, customers may use our products in excessive quantities;

combine them with alcohol, prescription drugs, over-the-counter medications or other substances;

allow access by minors;

use them while pregnant or breastfeeding;

or use them before or while operating motor vehicles or heavy machinery.

Some customers may also use our products, or components of our products, in combination with materials obtained from informal or unregulated sources or for inhalation or other hazardous applications.

Misuse or abuse of our products, including use in a manner that is inconsistent with our instructions, warnings or applicable law, could result in significant adverse health effects and could subject us to complaints, product liability claims and negative publicity, even where we did not recommend, authorize or foresee such uses.

Public health authorities, including U.S.

federal and state agencies, caution against the use of cannabis during pregnancy and by other vulnerable populations.

We cannot assure investors that we would not be subject to claims, including claims relating to alleged birth defects or developmental issues, arising from consumption of our products by pregnant consumers or other high-risk individuals, notwithstanding any warnings or contraindications we may provide.

Previously unknown or unanticipated adverse reactions resulting from consumption of our products alone, or when used in conjunction with other medications, supplements, alcohol, nicotine or illicit substances, could also occur.

Applicable product liability or consumer protection laws in some jurisdictions may impose liability without regard to fault, negligence or intent.

Any actual or alleged product-related injury, illness, contamination, defect, misuse, abuse or failure to warn could result in a wide range of claims and proceedings against us, including product liability actions (based on negligence, strict liability, warranty or other theories), consumer fraud or deceptive practices claims, false advertising claims, medical monitoring claims, class actions or multi-party proceedings, as well as civil, administrative or regulatory actions.

Such claims or actions could lead to product recalls, market withdrawals, stop-sale orders, seizures, import or export holds, fines, penalties, injunctions, consent decrees, mandated label changes or other enforcement measures by governmental or regulatory authorities.

Even if successfully defended or the claims were frivolous, these matters could be costly and time-consuming to investigate and resolve, divert management’s attention and resources, damage our reputation with regulators, customers, patients and consumers, and result in loss of consumer confidence, reduced demand for our products, the termination of commercial relationships and increased scrutiny or stricter regulation of our business.

We may not be able to obtain or maintain product liability, recall or other insurance on terms, in amounts or with coverage limits that we consider adequate, or at all, and such insurance may contain significant exclusions or limitations (including for certain cannabis-related risks).

Insurance coverage, if obtained, may not be sufficient to cover all claims that may be brought against us, and we could be required to pay damages, defense costs, fines, penalties or settlement amounts that exceed our policy limits or are not covered by insurance.

In addition, premiums for such insurance are often expensive and may increase significantly as our business grows, as the cannabis industry evolves or as we experience actual or perceived product-related issues.

The inability to obtain or maintain sufficient insurance coverage on acceptable terms, or to otherwise mitigate or transfer the risks associated with product liability, health and safety and misuse-related claims, could constrain our ability to develop, commercialize and market our products and could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our products may be subject to product recalls, which may result in expense, legal proceedings, regulatory action, loss of sales and reputation, and diversion of management attention.

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Additionally, product recalls may lead to increased scrutiny of our operations by the FDA or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

We may face unfavorable publicity or consumer perception of the safety, efficacy, and quality of our cannabis products as a result of research, investigations, litigation and publicity.

Management believes the cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market or any particular product, or consistent with earlier publicity.

Future research reports, findings, regulatory proceedings, litigation, media attention or

other publicity that is perceived as less favorable than, or questions earlier research reports, findings or publicity could have a material, adverse effect on the demand for our products and our business, results of operations, financial condition, and cash flows.

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect on the Company, the demand for our products and our business, results of operations, financial condition and cash flows.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or our products specifically, or associating the consumption of adult use cannabis with illness or other negative effects or events, could have such a material, adverse effect.

Adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

In addition, the use of vape products and vaping may pose health risks.

According to the Centers for Disease Control, vape products may contain ingredients that are known to be toxic to humans and may contain other ingredients that may not be safe.

Because clinical studies about the safety and efficacy of vape products have not been submitted to the FDA, consumers currently have no way of knowing whether they are safe for their intended uses or what types or concentrations of potentially harmful substances are found in these products.

We face intense competition in a new and rapidly growing industry by other licensed companies with more experience and financial resources than we have and by unlicensed, unregulated participants.

We face intense competition from other companies, some of which have longer operating histories and more financial resources and manufacturing and marketing experience than we have.

Increased competition by larger and better-financed competitors could materially, adversely affect our business, financial condition, and results of operations.

Because of the early stage of the industry in which we operate, we face additional competition from new entrants.

If the number of consumers of cannabis in the states in which we operate increases, the demand for products will increase and we expect that competition will become more intense as current and future competitors begin to offer an increasing number of diversified products.

To remain competitive, we will require a continued high level of investment in research and development, facilities, marketing, and sales support.

We may not have sufficient resources to maintain research and development, facilities, marketing, and sales support efforts on a competitive basis, which could materially, adversely affect the business, financial condition, and results of our operations.

We also face competition from illegal dispensaries and black market sources of cannabis and cannabis products, which are unlicensed and unregulated, and which may sell products that are deemed more desirable than ours by certain consumers, including products with higher concentrations of active ingredients, and using delivery methods, including edibles and extract vaporizers, that we are prohibited from offering to individuals in certain of the states in which we operate as they are not currently permitted by the laws of such states.

Such unlicensed and unregulated products can often be sold at a significantly lower price than our competing products due to substantially lower manufacturing costs.

Any inability or unwillingness of law enforcement authorities to enforce existing laws prohibiting the unlicensed cultivation and sale of cannabis and cannabis-based products could result in the perpetuation of the black market for cannabis and/or have a material, adverse effect on the perception of cannabis use.

Any or all these events could have a material, adverse effect on our business, financial condition, and results of operations.

There are risks associated with consolidation of the industry by well-capitalized entrants developing large-scale operations.

Currently, the cannabis industry generally is comprised of individuals and small to medium-sized entities, like the Company;

however, the risk remains that large conglomerates and companies who also recognize the potential for financial success through investment in this industry could strategically purchase or assume control of larger dispensaries and cultivation facilities.

In doing so, these larger competitors could establish price setting and cost controls which would effectively “price out” many of the individuals and small to medium sized entities who currently make up the bulk of the participants in the varied businesses operating within and in support of the medical and adult-use cannabis industry.

While the trend in most state laws and regulations seemingly deters this type of takeover, this industry remains quite nascent, so what the landscape will be in the future remains largely unknown.

Synthetic products from the pharmaceutical industry may compete with cannabis products.

The pharmaceutical industry may attempt to dominate the cannabis industry, and in particular, legal cannabis, through the development and distribution of synthetic products that emulate the effects and treatment of organic cannabis.

If they are successful, the widespread popularity of such synthetic products could change the demand, volume, and profitability of the cannabis industry.

This could adversely affect our ability to secure long-term profitability and success through the sustainable and profitable operation of the anticipated businesses and investment targets and could have a material, adverse effect on our anticipated business, financial condition, and results of operations.

Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

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If Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process.

Our past performance may not be indicative of our future results.

Our prior investment and operational performance may not be indicative of our future operating results.

There can be no assurance that the historical operating results achieved by us or our affiliates will be achieved by us, and our performance may be materially different.

Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions and events.

Disruptions and volatility in global financial markets and declining consumer and business confidence could lead to decreased levels of consumer spending.

Our operations could be affected by the economic context should the unemployment level, interest rates or inflation reach levels that influence consumer spending and, consequently, impact our sales and profitability.

pandemic), climate risks and weather catastrophes or other events outside of our control, consumer spending could significantly decrease for a sustained period.

Our operations could be affected by the economic context should the unemployment level, interest rates or inflation reach levels that influence consumer spending and, consequently, impact

our sales and profitability.

Moreover, in the event of war (such as the military conflict between Russia and Ukraine and in the Middle East), acts of terrorism or the threat of terrorist attacks, public health crises, climate risks and weather catastrophes or other events outside of our control, consumer spending could significantly decrease for a sustained period.

These macroeconomic developments could negatively impact our business, which depends on the general economic environment and levels of consumer spending.

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Diseases and epidemics may adversely impact our business.

Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases (such as the COVID-19 pandemic) could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions (including as a result of government regulation and prevention measures), labor shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or regulatory actions or inactions, increased insurance premiums, decreased demand or the inability to sell and deliver the Company’s products, delays in permitting or approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts.

Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions (including as a result of government regulation and prevention measures), labor shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or regulatory actions or inactions, increased insurance premiums, decreased demand or the inability to sell and deliver the Company’s products, delays in permitting or approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts.

In addition, governments may impose strict emergencies measures in response to the threat or existence of an infectious disease.

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Risks Related to Our Securities

A return on our securities is not guaranteed.

There is no guarantee that our securities will earn any positive return in the short term or long term.

A holding of our securities is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment.

A holding of our securities is appropriate only for holders who have the capacity to absorb a loss of some or all of their investment.

We may be subject to heightened scrutiny by United States and Canadian authorities, which could ultimately lead to the market for our Subordinate Voting Shares becoming highly illiquid and our shareholders having limited or no ability to effect trades in Subordinate Voting Shares.

Our Subordinate Voting Shares are currently traded on the Canadian Securities Exchange and on the OTCQX tier of the OTC Markets in the United States.

Because our business, operations, and investments include cannabis-related activities in the United States, and may in the future include additional cannabis-related activities in the United States or other jurisdictions, we are subject to heightened scrutiny by securities regulators, stock exchanges, clearing agencies, and other authorities in Canada and the United States.

This scrutiny may increase over time as the legal and regulatory framework applicable to cannabis-related activities continues to evolve.

As a result, we may be subject to significant direct and indirect interaction with public officials, stock exchanges, clearing agencies, and other market participants in connection with our cannabis-related activities and the listing, trading, clearing, and settlement of our securities.

There can be no assurance that this heightened scrutiny will not lead to the imposition of additional or more stringent disclosure obligations, listing conditions, governance expectations, or other regulatory requirements on us or on cannabis issuers generally.

Nor can there be any assurance that future regulatory or policy developments will not result in restrictions or prohibitions on our ability to operate or invest in the United States or other jurisdictions, or on the ability of investors to trade, clear, or settle transactions in our Subordinate Voting Shares.

In the past, concerns were raised that Canada’s central securities depository, CDS Clearing and Depository Services Inc.

(“ CDS ”), might refuse to settle trades in securities of issuers with cannabis-related activities in the United States.

Following discussions among Canadian securities regulators and recognized Canadian securities exchanges, CDS and several Canadian exchanges entered into a memorandum of understanding confirming that, with respect to the clearing of listed securities, CDS relies on the exchanges’ regulation of listed issuers and would not, as a matter of policy, unilaterally refuse to accept deposits of or clear and settle trades in securities of issuers with U.S.

cannabis-related activities.

Canadian securities regulators have also issued guidance, including staff notices addressing issuers with U.S.

cannabis-related

activities, that confirm a disclosure-based approach to such issuers while imposing enhanced disclosure and governance expectations.

However, there can be no assurance that this framework will continue in the future in its current form or at all.

Securities regulators, stock exchanges (including the Canadian Securities Exchange and any other exchange on which our Subordinate Voting Shares may in the future be listed), CDS, OTC Market, other clearing agencies, and market exchange stakeholders in Canada or the United States may at any time adopt new or more restrictive rules or policies with respect to issuers with cannabis-related activities in the United States.

This could require additional or different disclosures or governance practices as a condition of continued listing or trading or result in trading halts, suspensions, delisting, refusing to settle trades, or placing unappealing conditions on trading our Subordinate Voting Shares.

In addition, because cannabis remains illegal under U.S.

federal law, changes in U.S.

federal or state enforcement priorities, banking or anti-money-laundering guidance applicable to broker-dealers, or policies of U.S.

over-the-counter markets, national securities exchanges, custodians, or other securities exchange intermediaries could cause some or all such intermediaries to decline to trade in, clear, custody, or otherwise support transactions in securities of cannabis issuers with U.S.

operations, including our Subordinate Voting Shares.

If CDS or another clearing agency were to refuse to settle trades in our Subordinate Voting Shares, if a stock exchange or marketplace on which our Subordinate Voting Shares are traded were to suspend trading in or delist our Subordinate Voting Shares, or if broker-dealers, custodians, or other intermediaries were to refuse to carry, clear, or settle trades in our Subordinate Voting Shares, the market for our Subordinate Voting Shares could become highly illiquid or effectively unavailable for a considerable period of time.

In that event, holders of Subordinate Voting Shares may be unable to effect trades in Subordinate Voting Shares in Canada or the United States, may be able to do so only in very limited circumstances or on alternative markets (if any) with substantially reduced liquidity, and could suffer a significant decline in the value of their investment.

As an “emerging growth company,” we have reduced disclosure requirements that may make our Subordinate Voting Shares less attractive to investors but once we lose emerging growth company status, we will be subject to increased disclosure, internal control and compliance requirements, which could increase our costs and adversely affect our financial condition and results of operations.

We currently qualify as an “emerging growth company” (“ EGC ”) under the Jumpstart Our Business Startups Act of 2012 (the “ JOBS Act ”) and have elected to take advantage of certain reduced reporting and other regulatory requirements that are applicable to public companies that qualify as EGCs.

These accommodations include, among other things, (i) exemption from the auditor attestation requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 with respect to internal control over financial reporting, (ii) reduced executive compensation disclosure obligations, (iii) exemption from certain requirements relating to advisory votes on executive compensation, and (iv) the ability to take advantage of extended transition periods for complying with new or revised accounting standards.

We cannot predict if investors will find the Subordinate Voting Shares less attractive because we may rely on these exemptions.

If some investors find the Subordinate Voting Shares less attractive as a result, there may be a less active trading market for the Subordinate Voting Shares, and the share price may be more volatile.

However, we will lose EGC status upon the earliest of (i) the last day of the fiscal year following the fifth anniversary of the completion of our initial offering under the U.S.

Securities Act of 1933, as amended (the “ Securities Act ”), (ii) the date on which our annual gross revenues exceed $1.235 billion, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in any rolling three-year period.

Upon losing EGC status, we would be required to comply with additional public company reporting and governance requirements that are not currently applicable to us.

Our initial offering under the Securities Act occurred in 2021 resulting in the expected loss of EGC status on the last day of this fiscal year.

Following the loss of EGC status, we expect to be required to obtain an auditor attestation report on the effectiveness of our internal control over financial reporting under Section 404(b), which could require significant additional time and expense to implement and maintain effective internal controls.

We would also be required to provide expanded executive compensation disclosures and comply with other enhanced disclosure requirements under the federal securities laws.

Compliance with these additional requirements will likely increase our legal, accounting, auditing and other compliance

costs, may require the hiring of additional personnel or the engagement of external consultants, and could divert management’s attention from our business operations.

Though we are subject to complex and evolving regulatory regimes at both the state and federal levels, the incremental compliance burden associated with the loss of EGC status could still be particularly significant and burdensome.

If we are unable to implement and maintain the required internal controls or otherwise comply with the increased reporting obligations in a timely and effective manner, we could be subject to regulatory enforcement actions by the SEC, investor litigation, reputational harm, or limitations on our ability to access the capital markets, any of which could materially and adversely affect our business, financial condition and results of operations.

Additional issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting Shares, may result in dilution.

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Our Board of Directors has discretion to determine the price and the terms of further issuances, and such terms could include rights, preferences, and privileges superior to those existing holders of our securities.

Moreover, additional Subordinate Voting Shares will be issued by the Company on the conversion of the Multiple Voting Shares in accordance with their terms.

To the extent holders of our options or other convertible securities convert or exercise their securities and sell Subordinate Voting Shares they receive, the trading price of the Subordinate Voting Shares may decrease due to the additional amount of Subordinate Voting Shares available in the market.

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If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities.

The market price for the Subordinate Voting Shares may continue to be volatile.

The market prices for securities of cannabis companies generally have been volatile.

In addition, the market price for the Subordinate Voting Shares has been and may be subject to wide fluctuations in response to numerous factors within and beyond our control including, but not limited to:

● actual or anticipated fluctuations in our results of operations;

● recommendations by securities research analysts;

● changes in the economic performance or market valuations of companies in the industry in which we operate;

● addition or departure of our executive officers and other key personnel;

● release or expiration of transfer restrictions on outstanding Multiple Voting Shares or Subordinate Voting Shares;

● sales or expected sales of additional Subordinate Voting Shares;

● exercise of options or warrants to purchase Subordinate Voting Shares;

● operating and financial performance that deviates from the expectations of management, securities analysts or investors;

● regulatory changes affecting our industry generally and/or our business and operations;

● announcements of developments and other material events by us or our competitors;

● fluctuations in the costs of vital production materials and services;

● changes in global financial markets, global economies, and general market conditions, such as interest rates and pharmaceutical product price volatility;

● significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving us or our competitors;

● operating and share price performance of other companies that investors deem comparable to us or from a lack of market comparable companies;

● news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in our industry or markets.

Financial markets have at times historically experienced significant price and volume fluctuations that:

(i) have especially affected the market prices of equity securities of companies and (ii) have often been unrelated to the operating performance, underlying asset values or prospects of such companies.

Accordingly, the market price of the Subordinate

Voting Shares from time to time may decline even if our operating results, underlying asset values and prospects have not changed.

Additionally, these factors, as well as other related factors, may cause decreases in asset values that may result in impairment losses to us.

There can be no assurance that further fluctuations in price and volume of Subordinate Voting Shares traded will not occur.

If increased levels of volatility and market turmoil continue, our operations could be adversely impacted, and the trading price of the Subordinate Voting Shares may be materially, adversely affected.

A further decline in the price or trading volume of the Subordinate Voting Shares could affect our ability to raise further capital and adversely impact our ability to continue operations.

The market price for the Subordinate Voting Shares has historically been volatile, with relatively few shares traded on most trading days.

Because a significant portion of our operations have been and may continue to be financed through the sale of equity securities, a decline in the price or trading volume of our Subordinate Voting Shares could be especially detrimental to our liquidity and our operations.

Such reductions may force us to reallocate funds from other planned uses and may have a material, adverse effect on our business plan and operations, including our ability to operationalize existing licenses and complete planned capital expenditures.

If the price or trading volume of our Subordinate Voting Shares materially declines, there can be no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

If we are unable to raise sufficient capital in the future, we may not have the resources to continue to operate all of our current businesses, or at all.

If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate, or unfavorable research about us, our business or our market, our share price and trading volume could decline.

The trading market for our Subordinate Voting Shares may be influenced by the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors.

If no or few securities or industry analysts cover our Company, as is currently the case, the trading price and volume of our Subordinate Voting Shares is likely negatively impacted and will likely continue to be negatively impacted for so long as analyst coverage is minimal or no analysts cover us.

If one or more of the analysts who covers us downgrades our Subordinate Voting Shares or publishes unfavorable research about our business, or provides more favorable relative recommendations about our competitors, the price of our Subordinate Voting Shares would likely decline.

If any analyst ceases coverage of us or fails to publish reports on us regularly, demand for our Subordinate Voting Shares could decrease, which could cause our share price or trading volume, or both, to decline further.

An investor may face liquidity risks with an investment in our Subordinate Voting Shares.

There is a significant liquidity risk associated with an investment in our Subordinate Voting Shares.

The Subordinate Voting Shares currently trade on the Canadian Securities Exchange and are quoted on the OTCQX tier of the OTC Markets in the United States.

We cannot predict at what prices the Subordinate Voting Shares will continue to trade, and there is no assurance that an active trading market will be sustained.

The Subordinate Voting Shares do not currently trade on any U.S.

national securities exchange.

In the event the Subordinate Voting Shares begin trading on any U.S.

national securities exchange, we cannot predict at what prices the Subordinate Voting Shares will trade and there is no assurance that an active trading market will develop or be sustained.

Trading in securities quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations or business prospects.

This volatility could depress the market price of Subordinate Voting Shares for reasons unrelated to operating performance.

Moreover, the OTC Markets is not a U.S.

national securities exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a U.S.

national securities exchange like the Nasdaq or the NYSE.

These factors may result in investors having difficulty reselling Subordinate Voting Shares on the OTC Markets.

Volatility and limited liquidity in the market for our Subordinate Voting Shares may undermine investor confidence, depress our valuation and impair our ability to raise capital.

The trading price of our Subordinate Voting Shares has been, and may continue to be, highly volatile and subject to wide fluctuations, and the market for our shares may remain thin and illiquid.

A volatile and sporadic trading market can undermine investor confidence, depress our valuation, cause significant losses for investors and make it more difficult, costly or dilutive for us to raise capital or use our equity as consideration in strategic transactions.

The market prices for securities of cannabis companies generally have been volatile, and our Subordinate Voting Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

(i) actual or anticipated fluctuations in our operating and financial results;

(ii) changes in the market valuations or performance of cannabis and other comparable companies;

(iii) sales or expected sales of Subordinate Voting Shares (including by significant shareholders) and the release or expiration of transfer restrictions on Multiple Voting Shares or Subordinate Voting Shares;

(iv) issuances of additional equity, or the exercise of options, warrants or other convertible securities;

(v) changes in our executive officers or other key personnel;

(vi) changes in laws, regulations or enforcement priorities affecting the cannabis industry or our business;

or broader conditions in the equity, credit and capital markets, including interest rate changes, sector-specific sentiment toward cannabis and related industries, and general economic, political or market volatility.

Periods of extreme volatility and disruption in financial markets have, in the past, led to sharp declines in the market prices of many companies’ securities, often unrelated or disproportionate to operating results.

Our Subordinate Voting Shares may be similarly affected, and there can be no assurance that they will not experience further significant price and volume volatility.

Trading in securities quoted on the OTC Markets is often thin, sporadic and characterized by wide bid-ask spreads and significant price swings, many of which may have little to do with the underlying performance or prospects of the issuer.

As such, investors in our Subordinate Voting Shares may experience reduced liquidity, greater difficulty reselling their shares and increased vulnerability to price manipulation or other trading anomalies.

These factors may further discourage institutional and other investors from purchasing or holding our Subordinate Voting Shares, which could depress our trading price and trading volume which could materially impair our ability to access the public or private capital markets on acceptable terms, or at all, and increase the cost and dilutive impact of any equity or equity-linked financings.

Volatility may also hinder our ability to use our equity as acquisition currency or to attract and retain employees through equity-based compensation.

Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and our ability to execute our growth strategy.

Our Chief Executive Officer’s significant influence over us as both a major shareholder and an affiliate of our principal lending sources creates substantial actual and potential conflicts of interest and permits him, directly and indirectly, to exercise effective control over our Company, which could adversely affect our business and the value of our Subordinate Voting Shares.

Our Chief Executive Officer, John Mazarakis, has approximately a 28% ownership interest in Chicago Atlantic Group, LP (“Chicago Atlantic”).

Chicago Atlantic and its affiliates collectively control approximately 10% of our Subordinate Voting Shares.

Mazarakis does not have the unilateral ability to direct the investment and voting decisions of Chicago Atlantic, he has substantial influence over those decisions.

As a result, through his influence over Chicago Atlantic and his role as our Chief Executive Officer, Mr.

Mazarakis has the practical ability to substantially determine the outcome of matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation, or sale of all or substantially all of our assets.

This level of concentrated ownership and influence could also discourage, delay, or prevent a potential acquisition or other change of control transaction and may deter investors from acquiring our Subordinate Voting Shares due to the limited practical voting power of such shares.

Chicago Atlantic and its affiliates are among our largest shareholders and are also one of our primary financing sources through various credit facilities and term loans secured by our assets.

Accordingly, Chicago Atlantic and its affiliates sit on both sides of our balance sheet and, through his ownership interest and influence in Chicago Atlantic and its affiliates, Mr.

Mazarakis exerts considerable influence over our management, strategic direction, capital structure, and major corporate transactions.

In many circumstances, this influence could allow Mr.

Mazarakis, directly and indirectly, to determine or effectively control whether we incur, refinance, amend, or repay indebtedness;

whether we enter into, modify, or terminate material contracts;

whether we pursue, delay, or decline strategic transactions;

and how we respond to financial or operational distress.

Chicago Atlantic and its affiliates have interests as both lenders and shareholders so their interests may at times diverge from, or conflict with, the interests of our other shareholders or even the best interests of the Company.

In a distress or default scenario, Chicago Atlantic and its affiliates, acting in their capacity as lenders, may seek to maximize the recovery on their loans—including by accelerating indebtedness, exercising remedies, or foreclosing on or otherwise realizing on our assets—even where such actions could result in little or no recovery for, or otherwise be materially detrimental to, our other shareholders.

In addition, Mr.

Mazarakis’ level of influence and control may discourage, delay, or prevent a change of control or other strategic transaction that could be beneficial to minority shareholders, or could influence, or be perceived to influence, the negotiation, structuring, and approval of such a transaction on terms that are viewed as less favorable by unaffiliated shareholders.

Actual or perceived conflicts of interest arising from these overlapping roles and relationships including Mr.

Mazarakis’ position as our Chief Executive Officer, his influence over the composition of our Board of Directors, his significant indirect stake in Chicago Atlantic and its affiliates, and Chicago Atlantic’s dual role as a significant shareholder and a key creditor could result in increased scrutiny from investors, regulators, and other stakeholders, as well as litigation,

governance challenges, and diminished investor confidence.

Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, and the trading price of our Subordinate Voting Shares.

As of the filing date of this Form 10-K, our executive officers, directors, and current beneficial owners of 5% or more of our capital stock and their respective affiliates will, in the aggregate, beneficially own 31% of our outstanding subordinate voting shares on an as converted basis, based on 1,057,131,571 subordinate voting shares and 233,192 multiple voting shares outstanding.

In addition, these persons, acting together, may have the ability to control the management and affairs of our Company.

Accordingly, this concentration of ownership may harm the market price of our Subordinate Voting Shares by delaying, deferring, or preventing a change in control;

entrenching our management and/or the board of directors;

impeding a merger, consolidation, takeover, or other business combination involving us;

or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

In addition, some of these persons or entities may have interests that conflict or deviate from shareholders.

The Pending Transactions and the issuance of subordinate voting shares as consideration (including earn-out shares as applicable) will dilute existing shareholders voting interests and may not provide benefits commensurate with the dilution, potentially adversely affecting the trading price of our subordinate voting shares.

Upon completion of the Pending Transactions, our existing shareholders will own a smaller percentage of the outstanding share capital of the combined company than they currently own, and will therefore have reduced ownership and voting interest in, and ability to influence the management and policies of, the combined company.

In connection with certain of the Pending Transactions, we expect to issue subordinate voting shares as consideration, and, under certain of the operative agreements, additional subordinate voting shares may become issuable pursuant to earn-out or similar contingent consideration mechanisms.

These issuances will dilute the ownership interests of our current shareholders and could adversely affect the market price of our subordinate voting shares.

There is no assurance that we will realize the strategic or financial benefits currently anticipated from the Pending Transactions.

If the combined company does not achieve the expected synergies, growth, or other benefits, our shareholders will have experienced substantial dilution of their ownership and voting interests without receiving any commensurate benefit, or may receive benefits that are materially less than currently anticipated, while still bearing the full dilutive and market price impact of the share issuances related to the Pending Transactions.

We are subject to increased costs as a result of being a public company in Canada and the United States.

As a public company both in Canada and the United States, we are subject to the reporting requirements, rules and regulations under the applicable Canadian and United States securities laws and rules of stock exchange(s) on which our

securities may be listed.

We incur increased costs associated with legal, accounting, and other expenses related to such regulatory compliance.

Securities legislation and the rules and policies of the Canadian Securities Exchange require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to our legal and financial compliance costs.

We may also elect to devote greater resources than we otherwise would have on communication and other activities typically considered important by publicly traded companies.

As a public company in both Canada and the United States, we are subject to extensive reporting, disclosure, internal control, and corporate governance requirements under applicable Canadian and U.S.

securities laws and the rules of the different stock exchanges or markets on which our securities are listed or quoted.

These requirements include the preparation and filing of annual and interim financial statements and MD&A, continuous disclosure of material information, certification of disclosure controls and internal control over financial reporting, the maintenance of independent board committees, and adherence to detailed corporate governance and related-party transaction standards.

Complying with these obligations results in significant recurring costs, including increased legal, accounting, audit, insurance, investor relations, and other professional fees, as well as costs associated with implementing and maintaining appropriate systems, policies, and personnel to support our public company obligations in two jurisdictions.

The regulatory framework applicable to public companies is complex, frequently evolving, and often imposes overlapping or differing requirements in Canada and the United States, which can increase the difficulty and cost of compliance.

We may be required to invest in additional finance, legal, compliance, and internal audit resources;

upgrade our information technology and reporting systems;

and devote substantial management time and attention to public company reporting and

compliance matters.

These demands may divert resources from the development, expansion, and operation of our core business and could be disproportionately burdensome given our size and stage of development.

If we fail to maintain or are unable to timely meet our reporting and other obligations as a dual public company, we could be subject to regulatory inquiries, enforcement actions, penalties, or orders, and we could experience delays or restatements in our financial reporting.

Any actual or perceived deficiencies in our compliance, governance, or reporting could also damage our reputation, impair investor confidence, increase the risk of shareholder litigation, and adversely affect the liquidity and market price of our securities.

Collectively, the costs and burdens associated with being a public company in Canada and the United States, and any failure to manage them effectively, could have a material adverse effect on our business, financial condition, and results of operations.

Our substantial shareholders can be subject to extensive governmental regulation and, if such shareholder is found unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

we may be forced to use our cash or incur debt to fund such redemption of our securities.

As a cannabis company, shareholders with an ownership interest of five percent (5%) or more of the Company’s issued and outstanding shares (calculated on as-converted to Subordinate Voting Shares basis) are subject to certain conditions and we are entitled to redeem our securities held by such shareholders in order to permit the Company to comply with applicable state licensing regulations.

The purpose of the redemption right is to provide the Company with a means of protecting itself from having a shareholder (an “ Unsuitable Person ”):

(i) who a state governmental authority granting licenses to the Company (including to any subsidiary) has determined to be unsuitable to own shares, or

(ii) whose ownership of our securities may result in the loss, suspension or revocation (or similar action) with respect to any licenses relating to the conduct of our business relating to the cultivation, processing or dispensing of cannabis or cannabis-derived products in the United States or in the Company being unable to obtain any new licenses in the course of its business, in each case including, but not limited to, as a result of such person’s failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a governmental authority, as determined by the Board of Directors in its sole discretion after consultation with legal counsel and, if a license application has been filed, after consultation with the applicable governmental authority.

In the event a shareholder’s background or status jeopardizes our current or proposed licensure, we may be required to redeem such shareholder’s securities in order to continue our operations or obtain licenses in the future.

This redemption may divert our cash resources from other productive uses and require us to obtain additional financing that may not be on the best terms for the Company.

The inability to obtain additional financing to redeem an Unsuitable Person’s securities may result in the loss of a current or potential license.

We do not intend to pay dividends on our Subordinate Voting Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation in the price of our Subordinate Voting Shares.

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There is no guarantee that our Subordinate Voting Shares will appreciate in value or even maintain the price at which they were purchased.

We are an “emerging growth company” as defined in the JOBS Act and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of some other public companies.

As a result of this and other reduced disclosure requirements applicable to emerging growth companies, the Subordinate Voting Shares may be less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies may take advantage of certain reduced disclosures and may, as hawse have, elect to delay adopting new or revised accounting standards until such time as those standards apply to private companies, which may result in our financial statements not being comparable to those of some other public companies.

For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up to five years, although circumstances could cause the Company to lose that status earlier, including if we are deemed to be a large accelerated filer under the rules of the SEC of any fiscal year, if we have total annual gross revenue of $1.235 billion as of the end of a fiscal year, or if we issue more than $1.0 billion in non-convertible debt during any three-year period.

We cannot predict if investors will find the Subordinate Voting Shares less attractive because we may rely on these exemptions.

Our shareholders are subject to extensive governmental regulation and, if a shareholder is found unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

Our shareholders may also be required to provide information that is requested by licensing authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities;

we may be forced to use our cash or incur debt to fund such redemption of our securities.

The Company is, subject to certain conditions, entitled to redeem its securities held by certain shareholders in order to permit the Company to comply with applicable licensing regulations.

The purpose of the redemption right is to provide the Company with a means of protecting itself from having a shareholder (an “ Unsuitable Person ”) with an ownership interest of five percent (5%) or more of the Company’s issued and outstanding shares (calculated on as-converted to Subordinate Voting Shares basis):

(i) who a governmental authority granting licenses to the Company (including to any subsidiary) has determined to be unsuitable to own shares, or

This redemption may divert our cash resources from other productive uses and require us to obtain additional financing which, if in the form of equity financing, would be dilutive to our shareholders.

Further, any debt financing may involve additional restrictive covenants and further leveraging of our fixed assets.

The inability to obtain additional financing to redeem an Unsuitable Person’s securities may result in the loss of a current or potential license.

Risks Related to Our Indebtedness and Lending Arrangements

Our substantial secured indebtedness could materially adversely affect our financial condition, limit our operational flexibility and reduce the value of our equity.

We have incurred significant secured indebtedness under multiple credit facilities, including (i) a $33,000,000 term loan with Chicago Atlantic which includes a $50,000,000 accordion feature bearing interest at prime plus 5.5%, (ii) a $10,000,000 convertible note issued to Chicago Atlantic Opportunity Finance, LLC bearing interest at prime plus 5% and maturing October 2, 2028, and (iii) a first lien term loan with East West Bank and Western Alliance Bank, as administrative agents, providing for up to $120,000,000 in aggregate principal amount and requiring quarterly amortization payments of $3,000,000.

Collectively, these facilities represent a material level of leverage and create significant fixed obligations.

Our indebtedness could require us to dedicate a substantial portion of cash flow from operations to interest and principal payments, thereby reducing funds available for working capital, capital expenditures, acquisitions and other strategic initiatives.

This could greatly limit our flexibility in planning for, or reacting to, changes in our business or industry and increase our vulnerability to adverse economic, regulatory, competitive pressures or market conditions.

Further, our indebtedness limits our ability to obtain additional financing on acceptable terms or at all which could impede our ability to carry out or meet strategic objectives in the future.

If our operating performance does not meet expectations, or if market conditions deteriorate, our ability to service our debt could be materially impaired, which could have an adverse effect on our business, financial condition and results of operations.

Our credit facilities are secured by substantially all our assets, and a default could result in foreclosure, acceleration of indebtedness and loss of control over key assets.

The Chicago Atlantic term loan and the first lien term loan with East West Bank and Western Alliance Bank, as administrative agents, are secured by liens on substantially all our present and future assets.

As a result, in the event of a default, the lenders may exercise remedies against our collateral, including foreclosure on real estate, seizure of inventory, control over deposit accounts and forced asset sales.

As the collateral package includes substantially all our assets, a default could effectively transfer control of material operating assets to our lenders or their designees.

Foreclosure proceedings or forced asset dispositions could occur at distressed valuations and could materially impair shareholder value.

Additionally, enforcement actions carried out by the lenders could materially disrupt operations, damage customer and supplier relationships and negatively impact regulatory standing in certain jurisdictions.

Interest rate fluctuations on our variable-rate indebtedness could increase our debt service obligations, reduce our cash flow and adversely affect our financial condition and results of operations.

We have indebtedness that bear interest at variable rates, tied to the prime rate plus applicable margins.

As a result, our interest expense and the amount of cash required to service our debt obligations will fluctuate with changes in the prime rate.

Any increase in the prime rate will directly increase the interest rates applicable to our outstanding borrowings, which would, in turn, increase our interest expense and the overall cost of our indebtedness.

Interest rates are largely unpredictable and entirely outside of our control.

In a rising or volatile interest rate environment, our borrowing costs could increase significantly and unexpectedly.

Such increases could:

(i) materially increase our debt service obligations, including cash interest payments;

(ii) reduce our available cash flow from operations that could otherwise be used for working capital, capital expenditures, research and development, strategic acquisitions, or other corporate purposes;

(iii) limit our financial and operating flexibility, including our ability to pursue our business strategy, respond to competitive pressures, or invest in growth opportunities;

and (iv) adversely affect our ability to comply with financial covenants, maintain required financial ratios or meet scheduled amortization and other payment requirements under our credit agreements and other debt instruments.

If we are unable to generate sufficient cash flow to meet increased interest and principal payment obligations, we may be forced to curtail or reduce expenditures, seek additional debt or equity financing on unfavorable terms, or pursue other alternatives, any of which could have a material adverse effect on our business, financial condition, and results of operations.

In extreme cases, sustained increases in interest rates and resulting higher debt service obligations could cause us to breach covenants, require us to seek waivers or amendments from our lenders, or result in events of default under our debt agreements, which could accelerate the maturity of our indebtedness and have a material adverse effect on our

Although interest rates may decline in the future, there can be no assurance that rates will decrease or, if they do, that any decreases will be sustained or sufficient to offset prior or future increases.

In addition, continued volatility in interest rates, even if rates do not remain at historically elevated levels, could create uncertainty regarding our future borrowing costs and complicate our financial planning and capital allocation decisions.

Any of these developments could materially and adversely affect our cost of capital, financial performance, and the market price of our securities.

Certain Tax Risks

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As a result, we are subject to taxation both in Canada and the United States, which could have a material, adverse effect on our business, financial condition, or results of operations.

We may incur significant tax liabilities and a reduction to our tax attributes due to limitations on tax deductions and credits under Section 280E of the Internal Revenue Code.

Under Section 280E of the U.S.

income tax expenses.

Changes in tax laws or interpretations may also adversely affect our effective tax rate and after-tax profitability.

For example, any modification, expansion, or stricter interpretation of Section 280E (or analogous provisions at the state level), or changes in state conformity with federal tax rules, could increase our tax liability.

Conversely, if federal law changes such that Section 280E no longer applies to our U.S.

cannabis operations but new federal excise taxes are imposed, the net impact on our financial condition and results of operations could be uncertain and may not be favorable.

Furthermore, legislative or regulatory changes could be adopted with limited notice and may apply retroactively or in ways that we did not anticipate, making it difficult to plan and price our products effectively.

Any increase in cannabis-related taxes, imposition of new tax regimes, adverse interpretation or application of existing tax rules (including Section 280E), or expansion of tax-like fees and assessments could materially increase our cost of doing business, compress margins, and reduce consumer demand for our products.

If we are unable to adjust our pricing, cost structure, or product mix to offset these impacts without losing market share, our sales, profitability, liquidity, and overall business could be materially and adversely affected.

The Company filed amended tax returns for periods ending December 31, 2020 through December 31, 2022 to reflect the position that cannabis activities are not subject to Code Section 280E.

Additionally, the Company’s reporting of its United States federal net operating loss carryforward amount and state net operating loss carryforward amount on its Consolidated Financial Statements as of December 31, 2024 and 2025 assumes that such position will be respected by the IRS.

There can be no assurance that the IRS will not challenge such position or that a U.S.

court would not sustain such a challenge.

If the IRS successfully challenged such position, certain of the Company’s tax deductions and credits may be disallowed, thereby reducing the

Company’s reporting United States federal net operating loss carryforward amount and state net operating loss carryforward amount.

Dispositions of the Subordinate Voting Shares are subject to Canadian and/or United States tax.

Dispositions of the Subordinate Voting Shares are subject to Canadian tax.

Dispositions of the Subordinate Voting Shares held by Canadian Holders are subject to Canadian tax.

In addition, dispositions of the Subordinate Voting Shares by U.S.

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Holder or partnership.

The Company applied for and received an ERC under the CARES Act.

Refer to Note 18 “Other Income (Expense)” of the Notes to the Consolidated Financial Statements for a description of the Company’s receipt of the ERC.

In July 2023, the IRS stated its intention to shift its focus to review ERC claims for compliance concerns, including intensifying audit work.

The Company’s eligibility to receive the ERC remains subject to audit by the IRS.

Although we do not intend to pay dividends on our Subordinate Voting Shares, any such dividends would be subject to Canadian and/or United States withholding tax.

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federal income tax treatment of the Company or an investment in the Company will not be modified, prospectively or retroactively, by legislative, judicial, or administrative action, in a manner adverse to us or holders of our Shares.

Cannabis products are subject to substantial taxation, and any increases in cannabis-related taxes or adverse tax policy changes could have a material adverse impact on our sales, profitability, and overall business.

Cannabis products are currently subject to significant taxation at the state and local levels, and in some cases at the municipal or county level, and may be subject to additional or increased taxes in the future.

These taxes may include excise taxes (based on price, weight, THC content, or other metrics), cultivation taxes, gross receipts taxes, sales and use taxes, special local cannabis business taxes, and regulatory or licensing fees that function like taxes.

The total tax burden on cannabis products can be substantial, and, in many cases, materially higher than the tax burden imposed on comparable non-cannabis consumer products.

High tax rates on cannabis products increase the retail price paid by consumers and may reduce overall demand, encourage consumers to purchase from illicit or unregulated markets where products are untaxed or less heavily taxed, or shift consumer purchases to lower-priced and value formats.

If consumers are unwilling or unable to absorb tax-driven price increases, we may be forced to reduce our prices or accept lower margins, either of which could negatively impact our revenue, profitability, and cash flows.

There is no assurance that current tax rates applicable to cannabis products or cannabis businesses will remain at existing levels.

State, local, or federal authorities may adopt new cannabis-specific taxes, increase existing tax rates, change the methodology used to calculate taxes (for example, by moving from a price-based excise tax to a weight- or THC-based tax), or impose new fees and assessments related to licensing, testing, tracking, or regulatory oversight.

Jurisdictions facing budgetary shortfalls may view cannabis businesses as attractive sources of additional tax revenue and may increase taxes or fees accordingly.

In addition, future federal legislation that legalizes or decriminalizes cannabis could introduce federal excise taxes or other cannabis-specific taxes, which could further increase the total tax burden on our products.

ERISA imposes additional obligations on certain investors.

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and (v) whether an investment in the Shares complies with the “indicia of ownership” requirement set forth in ERISA Section 404(b).

Fiduciaries and other persons responsible for the investment of certain governmental and church plans that are subject to any provision of federal, state, or local law that is substantially similar to the fiduciary responsibility provisions of Title I of ERISA or Section 4975 of the Code that are considering the investment in the Shares should consider the applicability of the provisions of such similar law and whether the Shares would be an appropriate investment under such similar law.

considering the investment in the Shares should consider the applicability of the provisions of such similar law and whether the Shares would be an appropriate investment under such similar law.

The responsible fiduciary must take into account all of the facts and circumstances of the plan and of the investment when determining if a particular investment is prudent.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors