Vireo Growth Inc. 10-K

Item 1. Business Background Vireo Growth Inc. is a reporting issuer in Canada, with its securities listed for trading on the Canadian Securities Exchange (the “ CSE ”) under the symbol “VREO” and on the OTCQX under the symbol “VREOF”. Vireo Growth is a cannabis company whose mission is to provide safe access, quality products and value to its customers while supporting its local communities through active participation and restorative justice programs. The Company is evolving with the industry and is in the midst of a transformation to being significantly more customer-centric across its operations, which include cultivation, manufacturing, wholesale and retail business lines. With our core operations strategically located in six markets, Vireo Growth cultivates and manufactures cannabis products in environmentally friendly greenhouses and other facilities and distributes these products through our growing network of Green Goods™ and other Vireo Growth branded retail dispensaries, as well as third-party dispensaries in the markets in which our subsidiaries hold operating licenses. As of March 17, 2026, Vireo Growth, through its subsidiaries, has licenses and operates in six states, consisting of Maryland, Minnesota, Missouri, Nevada, New York, and Utah. As of March 17, 2026, we retail cannabis products in 36 dispensaries located across Maryland (2), Minnesota (8), Missouri (11), Nevada (10), New York (4), and Utah (1) and wholesales cannabis products, through third-party companies, in Maryland, Minnesota, Missouri, Nevada, New York, and Utah. Our registered office is located at Suite 2200-1021 West Hastings Street, Vancouver, British Columbia V6E 0C3. Our corporate office is located at 207 South Ninth Street, Minneapolis, Minnesota 55402. History of the Company Our business was established in 2014 as Minnesota Medical Solutions, LLC (“ Minnesota Medical Solutions ”), and we received our first license in December 2014. The Company was incorporated under the Business Corporations Act (Alberta) on November 23, 2004, under the name “Initial Capital Inc.” On May 8, 2007, the Company changed its name to “Digifonica International Inc.” following the completion of a qualifying transaction. On December 9, 2013, the Company continued into British Columbia under the name of “Dominion Energy Inc.”, subsequently changed its name to "Dynamic Oil & Gas Exploration Inc." on June 30, 2014, and to "Darien Business Development Corp." on March 13, 2017. On March 18, 2019, the Company changed its name to "Vireo Health International, Inc." following the completion of a reverse takeover transaction (the " RTO ") with Vireo Health, Inc. (" Vireo U.S. "). Vireo U.S. had previously acquired all the equity of Minnesota Medical Solutions, and Empire State Health Solutions, LLC in an equity interest swap transaction on January 1, 2018. Pursuant to the RTO, on March 18, 2019, the Company acquired all the issued and outstanding shares of Vireo U.S. and, as a result, the former shareholders of Vireo U.S. acquired control of the Company, as they owned a majority of the outstanding shares of the Company, and continued on with our business. On June 9, 2021, we changed our name to “Goodness Growth Holdings, Inc.” On June 25, 2024, we changed our name to “Vireo Growth Inc.” Completed Mergers On December 18, 2024, the Company entered into definitive merger agreements to complete merger transactions with each of Deep Roots Holdings, Inc., a Nevada corporation (“Deep Roots”), Proper Holdings Management, Inc. and NGH Investments, Inc., both Missouri corporations (together, “Proper”), and WholesomeCo, Inc., a Delaware corporation (“Wholesome”) (collectively, the “Mergers”). Each of the Mergers was structured as an all-share transaction pursuant to which, at the applicable closing, newly formed wholly owned subsidiaries of the Company merged with the respective target entities, with each target surviving as a wholly owned subsidiary of the Company in connection with the Deep Roots 5 Table of Contents and Wholesome Mergers, and the wholly-owned subsidiaries of the Company surviving in connection with the Proper Mergers. ​ Each of the Mergers closed during the year ended December 31, 2025. Specifically, the Company completed the merger with Wholesome on May 12, 2025, the Merger with Proper on June 5, 2025, and the Merger with Deep Roots on June 6, 2025. ​ Strategic Rationale The Mergers were undertaken to enhance the Company’s scale, operational efficiencies, and geographic diversification, and to strengthen its competitive position in existing and new markets. Each Merger expanded the Company’s cultivation, manufacturing, retail, and intellectual property capabilities and added experienced management teams and workforces. The Company believes the Mergers position it for improved operating leverage and long-term growth. ​ Consideration Structure The consideration paid in connection with each Merger consisted primarily of the Company’s subordinate voting shares and was based, in part, on an estimated multiple of each target’s 2024 closing EBITDA, pro forma for pending acquisitions, planned retail openings, and expansion projects, using a reference share price of $0.52 per subordinate voting share. The merger agreements also provide for potential earnout payments payable in subordinate voting shares based on post-closing performance metrics, as well as clawback provisions under certain circumstances, all as further described in Note 3 of the consolidated financial statements. ​ Accounting Treatment Each of the Mergers was accounted for as a business combination under applicable accounting standards. The Company recorded goodwill and identifiable intangible assets in connection with the acquisitions, reflecting the expected synergies, assembled workforce, market expansion opportunities, and other benefits of combining the acquired businesses with the Company’s operations. Additional information regarding the purchase accounting, contingent consideration, and pro forma financial information is included in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. ​ Pending Transactions In addition to the completed mergers described above, the Company has entered into definitive agreements and arrangements relating to several pending transactions that had not closed as of December 31, 2025. ​ Schwazze Transaction On October 10, 2025, Vireo Health of Colorado, LLC, a wholly owned subsidiary of the Company (“ VHC ”), entered into a restructuring support agreement (“ RSA ”) with Medicine Man Technologies, Inc. d/b/a Schwazze, a Nevada corporation (“ Schwazze ”), certain of Schwazze’s subsidiaries, the beneficial holders of certain seller notes secured by a first priority security interest in substantially all the assets owned by SBUD LLC, a wholly owned subsidiary of Schwazze, and certain other parties. The RSA was entered into in connection with the Company’s acquisition of a majority of the outstanding principal amount of Schwazze’s 13% senior secured convertible notes due December 7, 2026 for aggregate consideration of approximately 117.9 million subordinate voting shares valued at $78.0 million. The RSA contemplates a restructuring of Schwazze and its subsidiaries, including the sale of certain assets through a public disposition of collateral. ​ On November 13, 2025, a public auction of Schwazze’s collateral was completed, at which the credit bid made on behalf of VHC and the other noteholders was the winning bid. Following the auction, Schwazze entered into an asset purchase agreement with a newly formed entity that as of the closing of the transaction is expected to ultimately be majority owned by the Company. Subject to regulatory approvals and other customary closing conditions, the assets subject to the asset purchase agreement are expected to be transferred in exchange for the assumption of certain specified liabilities and the 6 Table of Contents discharge of the senior secured notes included in the credit bid (collectively, the “ Schwazze Transaction ”). The transaction had not closed as of December 31, 2025. Colorado Dispensary Assets On December 16, 2025, the Company entered into an asset purchase agreement, through its wholly owned subsidiary, Vireo Health, Inc., to acquire certain assets, liabilities, and properties used in cannabis dispensaries operating in the State of Colorado with PharmaCann Inc., a Delaware corporation (“ PharmaCann ”) and related entities. Under the terms of the agreement, the Company expects to issue subordinate voting shares with an estimated value of approximately $49.0 million, subject to certain adjustments (the “ PharmaCann Transaction ”). The transaction had not closed as of December 31, 2025. ​ Eaze Merger On December 22, 2025, the Company entered into an agreement and plan of merger to acquire Eaze Inc., a Delaware corporation (“ Eaze ”), in a business combination transaction (the “ Eaze Merger ”). Eaze is a vertically integrated cannabis retailer and delivery technology platform with operations in California, Florida, and Colorado. ​ The transaction is expected to represent Vireo’s entry into the California and Florida cannabis markets. In California, Eaze maintains a significant delivery-focused presence, operating four co-located retail and delivery facilities and eight delivery-only locations, providing coverage across most major metropolitan areas in the state. In Florida, Eaze is the sixth-largest cannabis retailer, with 39 active dispensaries and approximately 64,000 square feet of cultivation canopy, with capacity for future expansion. The transaction will also expand Vireo’s retail operations in Colorado through the addition of 14 dispensaries. ​ Pursuant to the merger agreement, following the closing of the transaction, the Company will issue subordinate voting shares as consideration for all of the issued and outstanding equity interests of Eaze. The estimated closing consideration is approximately $47.0 million, subject to customary post-closing adjustments. ​ The merger agreement also provides for potential earnout consideration payable in subordinate voting shares based on Eaze’s future financial performance, subject to contractual limitations. The transaction is subject to customary closing conditions, including regulatory approvals and approval by Eaze’s stockholders, and had not closed as of December 31, 2025 . ​ Description of the Business Overview of the Company Vireo is the holding company for Vireo U.S., a United States-based multi-state cannabis company that operates through its license-holding subsidiaries, with significant operations in the following core markets: Maryland, Minnesota, Missouri, New York, Nevada and Utah. We are committed to a science-focused approach to providing patients and adult-use customers with high-quality cannabis products. Our operations include cultivating cannabis in environmentally friendly environments, manufacturing pharmaceutical-grade cannabis extracts, and distributing our products through both Company-owned and third-party dispensaries. We currently serve thousands of customers each month. All of the states in which we operate have adopted legislation to permit the use of cannabis products for medicinal purposes to treat specific conditions and diseases, which is referred to as medical cannabis or medical marijuana. In addition, with the exception of Utah, all of the states in which we operate have adopted legislation to permit the use of cannabis products by adults ages 21 and older, which is referred to as recreational- or adult-use cannabis or recreational- or adult-use marijuana. 7 Table of Contents Our principal locations and type of operation are listed below: Location Nature and Status of Operations Opened or Acquired Hurlock, Maryland Fully operational processing facility Opened in 2018 Baltimore, Maryland Fully operational dispensary facility Acquired in 2021 Frederick, Maryland Fully operational dispensary facility Opened in 2021 Massey, Maryland Fully operational cultivation facility Opened in 2021 Holland, Massachusetts Cultivation land purchased; pre-development Acquired in 2019 Otsego, Minnesota Fully operational cultivation and processing facility Opened in 2015 Elk River, Minnesota Cultivation and processing facility in development In development Minneapolis, Minnesota Fully operational dispensary facility Opened in 2015 Bloomington, Minnesota Fully operational dispensary facility Opened in 2016 Moorhead, Minnesota Fully operational dispensary facility Opened in 2015 Rochester, Minnesota Fully operational dispensary facility Opened in 2015 Hermantown, Minnesota Fully operational dispensary facility Opened in 2020 Blaine, Minnesota Fully operational dispensary facility Opened in 2020 Burnsville, Minnesota Fully operational dispensary facility Opened in 2020 Woodbury, Minnesota Fully operational dispensary facility Opened in 2020 Kansas City, Missouri Fully operational dispensary facility Acquired in 2025 St. Louis, Missouri Fully operational cultivation and processing facility and dispensary facilities Acquired in 2025 Festus, Missouri Fully operational, manufacturing and transport facility Acquired in 2025 Bridgeton, Missouri Fully operational dispensary facility Acquired in 2025 Ellisville, Missouri Fully operational dispensary facility Acquired in 2025 Olivette, Missouri Fully operational dispensary facility Acquired in 2025 House Springs, Missouri Fully operational dispensary facility Acquired in 2025 Warrenton, Missouri Fully operational dispensary facility Acquired in 2025 Kirkwood, Missouri Fully operational dispensary facility Acquired in 2025 Las Vegas, Nevada Fully operational dispensary facility Acquired in 2025 Henderson, Nevada Fully operational dispensary facility Acquired in 2025 North Las Vegas, Nevada Fully operational dispensary facility Acquired in 2025 Mesquite, Nevada Fully operational cultivation and processing facility and dispensary facility Acquired in 2025 Pahrump, Nevada Fully operational dispensary facility Acquired in 2025 West Wendover, Nevada Fully operational dispensary facility Acquired in 2025 Colonie, New York Fully operational dispensary facility Opened in 2016 Elmhurst, New York Fully operational dispensary facility Opened in 2016 Johnson City, New York Fully operational dispensary facility Opened in 2016 White Plains, New York Fully operational dispensary facility Opened in 2016 Johnstown, New York Fully operational indoor cultivation and processing facility Opened in 2016 Upland, Pennsylvania Land acquired as part of a litigation settlement; in development Acquired in 2025 Centerville, Utah Fully operational indoor cultivation and processing facility Acquired in 2025 Bountiful, Utah Fully operational courier and home delivery facility Acquired in 2025 Grantsville, Utah Fully operational outdoor cultivation facility Acquired in 2025 ​ Our mission is to provide patients and consumers with best-in-class cannabis products and expert advice, informed by medicine and science. We also are seeking to develop intellectual property that is complementary to our mission, including novel product formulations, novel delivery systems and harm-mitigation processes. 8 Table of Contents We have developed proprietary cannabis strains, cultivation methods, carbon dioxide extraction, ethanol extraction, and other processes related to the production, refinement, and packaging of cannabis products. We have documented the relevant processes in the form of standard operating procedures and work instructions, which are shared with third parties only in limited circumstances and then only upon receipt of written non-disclosure agreements. We have sought and continue to seek to protect our trademark and service mark rights. Because the cultivation, processing, possession, transport and sale of cannabis and cannabis-related products remain illegal under the Controlled Substances Act (as defined below) we are not able to fully protect our intellectual property at the federal level. As a result, we have sought and continue to seek federal registrations in limited classes of goods and services and have obtained several state registrations. The Cannabis Industry and Business Lines of the Company According to market research projections by cannabis researcher Grand View Research, U.S. sales of legal cannabis are expected to reach over $76 billion by 2030. As described further below, United States federal law now bifurcates the legality of “hemp” (currently defined as any part of the Cannabis sativa L plant —including any seeds, derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers thereof, whether growing or not —with a delta-9 tetrahydrocannabinol (“ THC ”) concentration of less than 0.3% on a dry weight basis) from “marihuana” (also commonly known as “marijuana”). For purposes of this filing, the term “cannabis” means “marihuana” as set forth in the Controlled Substances Act (21 U.S.C. § 811) (the “ Controlled Substances Act ”) and is used interchangeably with the term “marijuana.” To date, in the United States, medical cannabis has been legalized in 40 states and the District of Columbia, while 24 states and the District of Columbia have approved cannabis for recreational use by adults (also known as “adult-use”). We strive to meet best-in-class health, safety and quality standards relating to the growth, production and sale of cannabis medicines, and consumer products. Our offerings include cannabis flower, cannabis oil, cannabis topicals, orally ingestible tablets and capsules, and vaporizer pens and cartridges. We are a vertically integrated cannabis company that operates from “seed-to-sale.” We have three business lines: i. Cultivation : We grow cannabis in outdoor, indoor and greenhouse facilities. Our expertise in growing enables us to produce award-winning and proprietary strains in a cost-effective manner. We sell our products in company-owned or -managed dispensaries and to third parties where lawful. ii. Production : We convert cannabis biomass into formulated oil using a variety of extraction techniques. Some of this oil is used to produce consumer products such as vaporizer cartridges and edibles, and some is sold to third parties in jurisdictions where this practice is lawful. iii. Retail Dispensaries : We operate retail dispensaries that sell proprietary and, where lawful, third-party cannabis products to retail customers and patients. Cultivation Facilities We have rights to operate cultivation facilities in six states. Although pricing pressure for dried flower in several mature cannabis markets has led some operators to eschew cultivation, in certain markets the transition from medical-only to adult-use cannabis has increased wholesale market prices significantly. We believe that our cultivation operations provide certain other benefits, including: i. Low Cost : We continually seek ways to optimize our growing processes and minimize expenses. By having control over our own cultivation, we can reduce input costs and maximize margins. We believe that production at scale is critical to drive down unit cost. 9 Table of Contents ii. Product Availability : Control over our cultivation facilities allows us to monitor and update the product mix in our dispensaries to meet evolving demand, particularly regarding strain selection and diversity. iii. Quality Assurance : Quality and safety are critically important to us and our customers. Controlling our growing processes greatly reduces the risk of plant contamination or infestation, and we believe that consistently high-quality products can demand higher retail prices. Our focus on quality, potency, strain diversity and scalable production is vital because we believe that the wholesale market for cannabis plant material will become increasingly price-competitive over time as more companies enter this industry segment. We believe that manufacturers and retailers that source high-quality, low-cost plant material will have a significant advantage in the medium and long term. Manufacturing The Company manufactures , assembles, and packages branded cannabis finished goods across a variety of product segments: i. Inhalable : flower and trim; dabbable concentrates ( e.g. , hash, rosin, temple balls); distillate pre-filled vaporizer pens and cartridges; pre-rolls; and distillate syringes. ii. Ingestible : edibles; tablets; softgels; oral solutions; oral sprays; tinctures; and lozenges. iii. Topicals : balms and topical bars. We have wholesale operations in Maryland, Minnesota, Missouri, Nevada, New York, and Utah. Manufactured products are sold to third parties, where allowed, and are also distributed to Company-owned and operated retail dispensaries. Supply Chain We are vertically integrated in the markets in which we operate. In the normal course of our business, we purchase input materials and components used in the cultivation, processing, manufacture, and distribution of our products. No individual supplier represents a significant portion of our purchases or poses a material risk to our operations. ​ Significant Customers Our customers include legal state-licensed cannabis stores within each U.S. state in which we operate. Vireo is not dependent upon a single customer, or a few customers, and the loss of any one or more of our customers would not have a material adverse effect on the business. No customer accounted for 10% or more of our consolidated net revenue during the fiscal years ended December 31, 2025 or 2024. Retail Strategy We have invested substantial resources in developing customer-friendly dispensary store designs and floorplans that emphasize efficient traffic flow, accessibility, and a consistent customer experience. Since 2020, we have constructed new dispensaries using modern layouts and updated design elements, and we have selectively refreshed existing dispensaries to align with evolving brand strategies. ​ Members of our management team have experience in real estate development, which has enabled us to secure premium locations for our dispensaries. We typically target locations with high foot traffic, strong visibility, and proximity to densely populated residential areas, and we evaluate factors such as location characteristics, vehicular traffic patterns, local demographics, and proximity to competitors when selecting retail sites. ​ 10 Table of Contents Principal Business Objectives Our principal business objectives over the next 12-month period include delivering positive operating cash flow through continued cost discipline, operational excellence, and enhancements in product quality and consistency across our markets. We remain focused on optimizing the performance of our cultivation, production, and retail operations and leveraging opportunities to deliver value to our customers and investors. ​ We intend to manage our balance sheet prudently and work collaboratively with capital partners to strengthen our credit profile and financial flexibility. In addition, we will continue to evaluate strategic opportunities to deploy capital in pursuit of disciplined, high-quality acquisitions and other initiatives that align with our operating capabilities, expand our geographic reach, and support long-term growth. ​ Employees and Human Capital Resources As of February 6, 2026 we had 612 employees, 520 of whom were full-time employees. Certain of our employees in Maryland, Minnesota, New York, and Utah are represented by local offices of the United Food and Commercial Workers International Union or the American Federation of Labor and Congress of Industrial Organizations. The collective bargaining agreements with the employees in these states expire as follows: ​ ​ State ​ ​ ​ Agreement Expiration Maryland ​ October 31, 2027 Minnesota ​ November 22, 2026 New York (non-drivers) ​ October 31, 2027 New York (drivers) ​ December 31, 2027 Utah ​ February 29, 2028 ​ Our human capital objectives focus on attracting, developing, retaining, and engaging a talented workforce. Our compensation program is designed to be competitive and aligned with both individual and company performance. We are committed to fostering a collaborative and results-driven culture that supports the execution of our strategic goals. Research and Development Our former research and development activities primarily focused on developing new, innovative, and patent-protectable products for the cannabis market. These efforts have resulted in novel cannabinoid formulations and accessory products that enhance the cannabis consumption experience. We also explored plant spacing, nutrient blends, cannabis variety trials, and advanced pest management techniques, as well as the development of new extracted and infused products. Patents and Trademarks We hold the following patents: ​ Title Patent Number Tobacco Products with Cannabinoid Additives and Methods for Reducing the Harm Associated with Tobacco Use 10,369,178 Tobacco Products with Cannabinoid Additives and Methods for Reducing the Harm Associated with Tobacco Use 10,702,565 Dosage Forms, Packaging & Vaporization Device 12,128,172 Cannabinoid Enriched Personal Lubricant 11,529,301 Oral Cannabinoid Delivery Formulations with Mouthfeel Experience Enhances 11,596,618 Cannabis Based Moist Snuff 11,083,211 ​ 11 Table of Contents We have successfully registered the trademarks Vireo Health®, Green Goods®, 1937®, Deep Roots Harvest®, WholesomeCo®, The Source® with the United States Patent and Trademark Office (“ USPTO ”), and have a number of other trademarks pending with the USPTO. Competitive Conditions and Position Historically, Vireo U.S. won licenses in competitive, merit-based selection processes through wholly-owned subsidiary applicants. We pursued opportunities in limited license markets with higher barriers to entry presenting an opportunity for higher returns or the development of strategic opportunities. The industry is highly competitive with many operators, including large multi-state operators and smaller regional and local enterprises. We face competition from other companies that have greater resources, enhanced access to public equity and debt markets, superior cultivation and manufacturing capabilities, lower operating costs, better-located retail facilities, more experienced management, or that may be more mature as businesses. There are several multi-state operators that we compete directly with in some of our operating markets. Aside from current direct competition, other operators that are sufficiently capitalized to enter the Company’s markets through new licensure or acquisitive growth are also considered potential competitors. Similarly, to the extent we continue to enter new markets, we will encounter new direct competitors. See “ Item 1A. Risk Factors — Risks Related to our Business and Operations — 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. ” Regulation of Cannabis in the United States Below is a discussion of the federal and state-level U.S. regulatory regimes in those jurisdictions where we operate through our subsidiaries. Federal Regulation We currently directly derive a substantial portion of our revenues from the cannabis industry in certain U.S. states, which industry is illegal under U.S. Federal Law. As of December 31, 2025, the Company is directly involved (through licensed subsidiaries) in the medical and/or adult-use cannabis industry in the states of New York, Minnesota, Maryland, Missouri, Nevada, and Utah as permitted within such states under applicable state law. ​ U.S. federal law, however, continues to prohibit cannabis activities. The U.S. Supreme Court has ruled that Congress has the constitutional authority to enact the existing federal prohibition on cannabis. The federal government regulates drugs under the Controlled Substances Act (the “ CSA ”) which places controlled substances—including marijuana—in specific schedules. Marijuana is classified as a Schedule I drug, meaning it is defined as a substance with a high potential for abuse, no currently accepted medical use in treatment in the U.S., and a lack of accepted safety for use under medical supervision. With limited exceptions, such as Epidiolex (a pharmaceutical derived from the cannabis extract cannabidiol (“ CBD ”)), and certain drugs incorporating synthetically derived cannabinoids ( i.e. , Marinol, Syndros, and Cesamet), the U.S. Food and Drug Administration (“ FDA ”) has not approved marijuana as a safe and effective drug for any indication. Moreover, under the Agriculture Improvement Act of 2018 (commonly referred to as the 2018 Farm Bill), marijuana remains a Schedule I controlled substance under the CSA, with the exception of hemp and extracts derived from hemp. ​ Effective November 12, 2026, however, the definition of “hemp” is set to be narrowed substantially. Under the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, the new definition of “hemp” will include only products with a concentration of no more than 0.3 percent of any THC (rather than delta-9 THC) on a dry weight basis. This will result in excluding most, if not all, intoxicating hemp products from the definition of “hemp,” thereby subjecting such products to Schedule I restrictions as “marijuana.” Congress could still act to reverse course or delay the impending effective date of the change, as demonstrated by various pending legislation on this topic. ​ 12 Table of Contents State laws regulating cannabis are in direct conflict with the CSA. Although certain states and territories of the U.S. authorize medical or adult-use cannabis production and distribution by licensed or registered entities, under U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal; any such acts are criminal acts under federal law under the CSA. Notwithstanding the foregoing, since 2014, Congress has included language in spending bills under what is known as the Rohrabacher-Farr (or Rohrabacher-Blumnauer) amendment that prohibits the Department of Justice (the “ DOJ ”) from expending resources to interfere with the implementation of state medical cannabis laws. While our activities comply with applicable state and local laws, strict adherence to those laws does not absolve the Company of liability under federal law nor provide a defense against federal enforcement actions. Furthermore, if Congress were to change its mind regarding the historical protections afforded to state medical cannabis regimes, the Company could face additional potential liability. There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not restrict the applicability of such laws within their jurisdictions. Unless and until the Congress amends the CSA with respect to cannabis—of which the timing and scope are uncertain even after President Trump signed an executive order on December 18, 2025, which, among other things, directed “[t]he Attorney General to take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner”—there is a risk that federal authorities may enforce current federal law, especially as it relates to adult-use cannabis activities. We continue to monitor compliance on an ongoing basis in accordance with our compliance program and standard operating procedures. Although our operations are in material compliance with all applicable state laws, regulations and licensing requirements, they remain subject to federal law. If the DOJ were to aggressively pursue debt or equity owners of adult-use cannabis-related business, or if Congress failed to continue to pass measures to protect state-legal medical cannabis operations from such enforcement, and if U.S. Attorneys acted accordingly, the Company could face: (i) seizure of its cash and other assets used to support, or derived from, its cannabis subsidiaries; and (ii) the arrest of its employees, directors, officers, managers and investors, who could face charges of ancillary criminal violations for aiding, abetting, and conspiring to violate the CSA by virtue of providing financial support to state-licensed or permitted cultivators, processors, distributors and/or retailers of cannabis. Additionally, as affirmed by U.S. Customs and Border Protection, non-citizen employees, directors, officers, managers, and investors in cannabis-related businesses face the risk of being barred from entry into the U.S. for life. U.S. Department of Justice and Attorney General Memoranda In August 2013, then-Deputy Attorney General James Cole authored a memorandum (the “ Cole Memorandum ”) addressed to all United States district attorneys acknowledging that, notwithstanding the designation of cannabis as a controlled substance, several states had enacted laws relating to cannabis for medical purposes. The Cole Memorandum outlined DOJ enforcement priorities, noting that in jurisdictions with robust regulatory and enforcement systems, conduct in compliance with state laws was less likely to trigger federal prosecution. However, the memorandum did not provide specific guidelines for what constituted sufficient regulatory oversight. Rather, DOJ provided eight enforcement priorities which, if implicated, justified federal intervention in state-legal cannabis activities. In light of limited investigative and prosecutorial resources, the Cole Memorandum concluded that the DOJ should be focused on addressing only the most significant priorities related to cannabis (for example, preventing the distribution of cannabis to minors, and preventing revenue from the sale of cannabis from going to criminal enterprises, gangs, and cartels). In March 2017, then-Attorney General Jeff Sessions again noted limited federal resources and acknowledged that much of the Cole Memorandum had merit. However, on January 4, 2018, Mr. Sessions issued a memorandum rescinding and superseding the Cole Memorandum effective immediately (the “ Sessions Memorandum ”). The Sessions Memorandum stated, in part, that current law reflects Congress’ determination that cannabis is a dangerous drug and cannabis activity is a serious crime, and Mr. Sessions directed all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities. Consequently, federal prosecutors now have broad discretion in pursuing cannabis-related prosecutions, even where state laws permit such activities. The ongoing conflict between federal and state laws represents a significant risk factor for the Company. 13 Table of Contents As an industry best practice, despite the rescission of the Cole Memorandum, we continue to: ● Ensure that the operations of our subsidiaries and business partners comply with all licensing requirements set forth with regards to cannabis operations by the applicable state, county, municipality, town, township, borough, and other political/administrative divisions. To this end, we retain appropriately experienced legal counsel to conduct the necessary due diligence to ensure compliance of our operations with all applicable regulations. ● The activities relating to cannabis businesses adhere to the scope of the licensing obtained for such businesses. For example, in the states where only medical cannabis is permitted, the products are only sold to patients who hold the necessary documentation to permit the possession of cannabis. We only work through licensed operators, which must pass a range of requirements, adhere to strict business practice standards, and be subjected to strict regulatory oversight whereby sufficient checks and balances ensure that no revenue is distributed to criminal enterprises, gangs, and cartels. ● We conduct reviews of products and product packaging to ensure that the products comply with applicable regulations and contain necessary disclaimers about the contents of the products to prevent adverse public health consequences from cannabis use and prevent impaired driving. ● Our subsidiaries have implemented inventory-tracking systems and necessary procedures to ensure that inventory is effectively tracked, and the diversion of cannabis and cannabis products is prevented. On May 16, 2024, the Drug Enforcement Administration (“ DEA ”) issued a Notice of Proposed Rulemaking (“ NPRM ”) to reschedule marijuana from Schedule I to Schedule III under the CSA. Following the NPRM, the DEA received tens of thousands of comments, and as of this filing, an administrative hearing on the rulemaking remains pending. On December 18, 2025, President Trump issued an executive order directing the DOJ to move forward with rescheduling marijuana to Schedule III as quickly as possible, consistent with federal law. In the wake of the recent executive order, it still remains to be seen whether the administration will continue the process initiated by the 2024 NPRM or issue a new NPRM altogether. Rescheduling to Schedule III would not automatically deem state cannabis regimes federally compliant. Following rescheduling, the CSA’s restrictions would still apply to dealing in cannabis as a Schedule III substance, albeit with reduced potential penalties relative to dealing in a Schedule I substance. Rescheduling would also allow a potential pathway to federally legalize medical marijuana, although this would require approval by the FDA of cannabis and cannabis-derived products, as well as alignment of state regimes with federal requirements. Importantly, however, rescheduling to Schedule III should allow cannabis companies to deduct ordinary and necessary business expenses in the same manner currently allowed for other industries. As further discussed below, under Section 280E of the U.S. Internal Revenue Code, tax deductions and credits are disallowed for amounts paid or incurred in carrying on any business that consists of trafficking in Schedule I or II controlled substances. Rescheduling would, therefore, represent a meaning opportunity for federal tax relief. The risk of federal enforcement and other risks associated with the Company’s business are described under “ Item 1A. Risk Factors — Risks Related to the Regulatory System and Business Environment for Cannabis.” Regulation of the Cannabis Market at State and Local Levels Below is a summary overview of the licensing and regulatory framework in the states where Vireo or our subsidiaries are currently operating. 14 Table of Contents Maryland Maryland Regulatory Landscape Maryland first enacted legal protections for medical cannabis patients in 2003, setting the maximum penalty in such cases at a $100 fine. In 2011, Maryland created an affirmative defense for patients with debilitating medical conditions charged with possession of less than one ounce of cannabis. In 2013, lawmakers expanded the affirmative defense to protect cannabis caregivers, authorized the use of marijuana for investigational medical purposes, and established the Natalie M. LaPrade Maryland Medical Cannabis Commission (“ MMCC ”) to develop, approve and monitor cannabis academic study programs. In 2014, legislation was enacted to establish a state-regulated medical cannabis program and expand the MMCC’s regulatory authority. Maryland’s medical cannabis program became operational on December 1, 2017. The market at that time was divided into three primary classes of licenses: dispensary, cultivation, and processing. Pre-approvals for medical cannabis dispensary licenses were issued to 102 dispensaries from a pool of over 800 applicants, while 15 processing license pre-approvals were awarded from 124 applicants and 15 cultivation license pre-approvals from 145 applicants. The medical cannabis program was designed to allow access to medical cannabis for patients with qualifying medical conditions, including chronic pain, nausea, seizures, glaucoma, and post-traumatic stress disorder (PTSD). MaryMed LLC, an indirect wholly-owned subsidiary of Vireo, was awarded a vertically integrated medical marijuana license in 2016. In April 2018, Maryland expanded the state’s medical cannabis industry by adding another 20 licenses — 7 for cultivation and 13 for processing. Permitted products for sale and consumption include oil-based formulations, dry flower, edibles, and other concentrates. Maryland voters approved a referendum to legalize adult-use cannabis in November 2022. In May 2023, the Maryland General Assembly repealed the MMCC's authorization under the Cannabis Reform Act of 2023, and the MMCC’s functions were transferred to the newly established Maryland Cannabis Administration (the “ MCA ”). Adult-use legalization went into effect on July 1, 2023. This legislation provided a two-round process by which the MCA would issue cannabis licenses to growers (i.e., cultivators), processors, and dispensaries, as well as two additional license types: incubator space (i.e., a space in which another licensee may operate) and on-site consumption. In April 2024, with HB 253, Maryland lawmakers added seeds, seedlings, immature plants, and clones to the definition of “cannabis,” and required “cannabis nurseries” (which sell such items to cannabis licensees) to register with the MCA. In April 2025, with SB 215, the General Assembly indefinitely delayed the rollout of on-site consumption licenses and preemptively limited on-site consumption to include only edibles and cannabinoid beverages. Licenses in Maryland As of March 1, 2026, we operate two (2) medical and adult-use dispensary licenses, a cultivation license, and a processor license in the State of Maryland. The Company also manages two (2) medical and adult-use dispensary licenses pursuant to management agreements with those licensees. Maryland Licenses and Regulations Maryland licenses are valid for five years after required fees are paid and provided that the business remains in good standing. For any medical cannabis dispensaries that converted to dual-licensed (medical and adult-use) status, those dispensaries are subject to a five-year restriction on transferring ownership or control of their license. This effectively creates a moratorium on selling or transferring control for most operators until July 1, 2028. Renewal requests are typically communicated through email from the MCA and include a renewal form. 15 Table of Contents Maryland Reporting Requirements The State of Maryland uses Marijuana Enforcement Tracking Regulation and Compliance system (METRC) as the state’s computerized track and trace (“ T&T ”) system for seed-to-sale . Individual licensees, whether directly or through third-party integration systems, are required to transmit data to the state to meet all reporting requirements. We use a third-party application for our computerized seed to sale software, which integrates with the state’s METRC program and captures the required data points for cultivation, manufacturing and retail as required under Maryland law. Minnesota Minnesota Regulatory Landscape Minnesota legalized medical marijuana on May 29, 2014, when Governor Mark Dayton signed the Minnesota Medical Cannabis Act into law. The state’s medical program officially launched on July 1, 2015, allowing registered patients to access cannabis products from state-approved dispensaries to treat a set of nine qualifying medical conditions, which has since been expanded to 19, with a catch-all provision that recognizes any condition for which a patient’s health care practitioner has recommended, approved, or authorized the use of cannabis by that individual to treat the condition. The medical program was regulated and administered by the Minnesota Department of Health, which oversaw all cultivation, production, and distribution facilities. The state authorized only two vertically integrated medical cannabis manufacturer licenses—LeafLine Labs and Minnesota Medical Solutions. Initially, each manufacturer was permitted up to four distribution facilities across the state. Minnesota later allowed a manufacturer to operate eight distribution facilities, but the restriction on manufacturers’ operation of distribution facilities was repealed, effective December 1, 2025. ​ Medical cannabis was initially provided to patients in several forms, including dried cannabis, liquid formulations, pills, and topical (lotions, balms, and patches); it was also delivered via vaporized delivery methods that did not require the use of dried leaves, in water-soluble cannabinoid multi-particulates ( e.g. , granules, powders, and sprinkles) and orally dissolvable products ( e.g. , lozenges, gums, mints, buccal tablets, and sublingual tablets). Minnesota has implemented a process for monitoring and evaluating the health impacts of medical cannabis on patients, which will be used to help patients and health professionals grow their understanding of the benefits, risks, and side effects of medical cannabis. On July 1, 2022, food and beverages containing hemp-derived THC became legal in Minnesota. Serving and total package limits were applied to any such products. Earlier in 2022, a new law went into effect allowing medical cannabis patients to access dried cannabis flower. On May 30, 2023, the Governor of Minnesota signed into law House File No. 100 (" H.F. 100 ") of the 2022 Session, Chapter 63, a bill of an act relating to adult-use cannabis. As a result, many marijuana reform laws went into effect August 1, 2023, including adult use legalization, rescheduling under Minnesota's Controlled Substance Act, allowing persons 21 years of age or older to possess or transport two ounces or less of adult-use cannabis, or eight grams or less of adult-use cannabis concentrate, edible cannabis products or lower-potency hemp edibles infused with a combined total of 800 milligrams or less of tetrahydrocannabinol, and legalizing home grow of up to four mature plants per residence. On July 1, 2024, pursuant to H.F. 100, the powers and duties of the Minnesota Department of Health with respect to the medical cannabis program were transferred to the Minnesota Office of Cannabis Management. Effective May 23, 2025, medical cannabis patients from other states may purchase from Minnesota-licensed dispensaries, subject to additional compliance requirements for the dispensary. Retail sales under the adult-use cannabis program commenced in September of 2025. 16 Table of Contents Licenses and Permits in Minnesota Today, Vireo Health of Minnesota, LLC (“ Vireo Minnesota ”) (f/k/a Minnesota Medical Solutions and an indirect wholly-owned subsidiary of Vireo) is one of two medical cannabis combination licensees in the state, cultivating, processing, and dispensing medical cannabis to registered patients through its eight medical cannabis dispensaries in the state. Our manufacturer license was awarded in 2015 through merit-based license application processes. Merit-based license awards require limited investment and thus present high-return opportunities. We believe that our medical and scientific expertise helped us develop a competitive advantage in the marketplace. Vireo Minnesota holds one vertically-integrated medical cannabis combination license to operate one cultivation and production facility in Otsego, MN and eight retail medical cannabis dispensaries in the state of Minnesota, located in Blaine, Bloomington, Burnsville, Hermantown, Rochester, Minneapolis, Moorhead, and Woodbury. By virtue of its medical cannabis combination business, is approved to engage in: medical and adult-use cannabis cultivation, manufacturing, and retail sales; extraction/concentration and medical cannabis processing activities; handling of cannabinoid products; packaging; and internal transport. Minnesota Licenses and Regulations We currently operate eight retail dispensaries and one cultivation and production facility of approximately 90,000 square feet. Changes to the state’s qualifying conditions for medical cannabis patients have contributed to increases in patient enrollment. Minnesota state licenses are renewed every year. Provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and no material violations are noted, the Company expects to receive the applicable renewed license in the ordinary course of business. While the Company’s compliance controls are designed to mitigate the risk of any material violations, there is no assurance that our license will be renewed in a timely manner. Any unexpected delays or costs in the renewal process could materially and adversely affect our operations and financial results. Minnesota Reporting Requirements The State of Minnesota uses Marijuana Enforcement Tracking Regulation and Compliance system (METRC) as the state’s computerized T&T system for seed-to-sale. Individual licensees whether directly or through third-party integration systems are required to push data to the state to meet all reporting requirements. We use a third-party application for our computerized seed to sale software, which integrates with the state’s METRC program and captures the required data points for cultivation, manufacturing and retail as required. New York New York Regulatory Landscape In 2014, the New York State Senate passed legislation to fully legalize medical marijuana, leading to the establishment of the Medical Cannabis Program. The Compassionate Care Act was signed into law on July 5, 2014. In July 2015, Vireo Health of New York LLC (f/k/a Empire State Health Solutions LLC) (“ Vireo New York ”), an indirect wholly-owned subsidiary of Vireo, secured one of the five available medical cannabis licenses (known as a registered organization) in the state, enabling the company to cultivate, process, and dispense medical cannabis products to registered patients. In January 2022, the law was expanded to remove a previous list of qualifying conditions, allowing patients to use medical cannabis for any condition that could be treated with it as recommended by their doctor. The Marihuana Regulation & Taxation Act was signed into law on March 31, 2021, legalizing adult-use cannabis in New York State. MRTA established the Office of Cannabis Management (“ OCM ”), governed by a Cannabis Control Board to comprehensively regulate adult-use, medical, and hemp cannabis. The OCM released its final rules and regulations governing the adult-use industry in September 2023, and has begun to issue licenses. 17 Table of Contents Physicians, nurse practitioners, and physician assistants must complete a New York State Department of Health (“ NYSDOH ”)–approved course (either a two-hour or four-hour program, as applicable) and register with the NYSDOH Medical Marijuana Program to certify patients for medical cannabis. Before issuing a certification, practitioners are required to consult the New York State Prescription Monitoring Program Registry to review the patient’s controlled substance history. Once a patient is certified, they are automatically registered and provided with a registry identification number—which, along with a government-issued photo ID, enables them to purchase medical cannabis at licensed dispensaries. Furthermore, certified patients may designate up to five caregivers to assist with the acquisition, transportation, and administration of medical cannabis products. These designated caregivers must also register with the NYSDOH to obtain their own registry identification. All registered organizations can hold a vertically integrated license permitting the cultivation, manufacture, transport, distribution, and dispensation of medical cannabis. Registered organizations may only manufacture medical cannabis products in forms approved by the OCM. Approved forms currently include concentrates ( e.g. , shatters, waxes, resins and any other concentrates that are not gel-based or water soluble); edibles ( e.g. , capsules, beverages, tablets, tinctures, baked goods, gummies, chocolates, and any other edibles); and flower products ( e.g. whole flower, ground flower, shake, pre-rolls, and any other flower); vaporization cartridges or single use pens; and topicals ( e.g. , transdermal patches). Each registered organization may have up to four dispensing facilities, owned and operated by the registered organization, where approved medical cannabis products will be dispensed to certified patients or their designated caregivers, who have registered with the Department. A registered organization may have four additional dispensing facilities, but only if the first two additional dispensing facilities are located in underserved or unserved geographic locations, as determined by OCM. Dispensing facilities must report dispensing data to the New York State Prescription Monitoring Program Registry and consult the registry prior to dispensing approved medical cannabis products to certified patients or their designated caregivers. In November 2025, the state enacted S3294A, which included various updates to the medical cannabis program that could serve to increase access to medical dispensaries. Under the new law, out-of-state medical cannabis patients are generally permitted to purchase from New York dispensaries. This law also eliminated the requirement for patients to obtain registry identification cards, instead allowing patients to purchase from medical dispensaries using a valid government-issued photo identification and a valid certification from a medical practitioner. Licenses and Permits in New York In New York, we were one of the original five registered organizations, placing second in the initial selection process, and are currently one of ten registered organizations (vertically integrated medical cannabis licensees) in the state. On July 11, 2024, Vireo New York was issued a registered organization non-dispensing license, authorizing the company to operate a medical and adult-use cultivation/manufacturing facility and up to four medical cannabis dispensaries. All licenses are, as of the date hereof, active with the State of New York. The licenses are independently issued for each approved activity for use at our facilities in New York. Today, through our subsidiary Vireo Health New York, we hold one vertically integrated cannabis license. We currently have a cultivation and processing facility in Johnstown, NY and four dispensaries throughout the State in New York City (Queens County), Johnson City, White Plains and Albany. We also operate a home-delivery service based out of our Queens dispensary. While we believe the long-term opportunity in New York is substantial, recent performance has been impacted by neighboring states transitioning to adult-use jurisdictions, as well as by increasing competition from other developing operators. New product introductions and the beginning of wholesale revenue streams may contribute to improving profit margins in the future. We anticipate additional growth of our home delivery service. 18 Table of Contents New York registered organization licenses expire two years after the date of issuance. An application to renew must be filed with the Department not more than six months nor less than four months prior to the expiration thereof. Registration fees are $200,000 and are refundable if the applicant is not granted a renewal registration. New York Reporting Requirements The state of New York Marijuana Enforcement Tracking Regulation and Compliance system (METRC) as the state’s computerized T&T system for seed-to-sale. Individual licensees whether directly or through third-party integration systems are required to push data to the state to meet all reporting requirements. We use a third-party application for our computerized seed to sale software, which integrates with the state’s Metrc program and captures the required data points for cultivation, manufacturing and retail as required. Missouri Missouri Regulatory Landscape In 2014, the Missouri Senate passed Senate Bill 491. The legal effect of SB 491 was to reduce the punishments and penalties that marijuana-related offenses had hitherto attracted. SB 491 also created a new classification for marijuana-related felonies to be known as Class E and a new classification for marijuana-related misdemeanors to be known as Class D. Individuals caught in possession of marijuana weighing 10 grams or less would under SB 491 be charged with the lesser Class D misdemeanor rather than the more serious Class A misdemeanor. In the same year, 2014, the Missouri Medical Marijuana Bill, HB 2238, was passed into law. This bill made it legal in Missouri to use an active ingredient in marijuana, cannabidiol, to treat patients suffering from epileptic seizures. Patients were required to obtain a registration card by providing a signed statement from a neurologist attesting to their epilepsy and their potential to benefit from treatment with hemp extract. The bill, accordingly, excused card-holders from the punishments and penalties for possession or use of hemp extract, provided that their possession or use was in compliance with the bill. In November 2018, the Missouri electorate voted to pass Amendment 2. It made the use of marijuana for medical purposes legal in Missouri and was enshrined as Article XIV of the state constitution. Article XIV gave leave to Missouri residents to access medical marijuana, provided they met the criteria. The article also included requirements for the cultivation, testing, and dispensation of medical marijuana. Notably, the article also includes a tax on medical marijuana, charged at four percent of the retail price. On November 8, 2022, Amendment 3 appeared on the ballot, raising the question of whether to legalize recreational marijuana in the state. The amendment passed, and provisions for a recreational marijuana program were enshrined as a newly created Section 2 of Article XIV one month later. This legalized recreational use of marijuana in Missouri for adults aged 21 or older. The Missouri Department of Health and Senior Services (“ MDHSS ”) began granting requests from existing medical marijuana dispensaries to become comprehensive (i.e., medical and adult-use) facilities on February 3, 2023. Since the establishment of Article XIV, Section 2, the frameworks for both medical and adult-use marijuana remain in place, with statutory and regulatory implementation taking place shortly thereafter. For instance, the MDHSS now requires all employees, contractors, owners, and volunteers of marijuana facilities to submit fingerprints to the Missouri State Highway Patrol for a background check. Within the MDHSS, the Division of Cannabis Regulation has implemented regulations covering a wide range of industry medical and adult-use industry activity, including testing, facility security, packaging/labeling, seed-to-sale tracking, transportation and storage, and waste disposal. Licenses and Permits in Missouri We currently operate one cultivation and processing facility, a second processing facility, and eleven retail dispensaries. 19 Table of Contents Our cultivation license expires in October 2027. All dispensary licenses expire in January 2029, with the exception of the license for the Bridgeton, MO location which expires in October 2027. The processing manufacturing licenses expire in January 2029. The transport licenses expire in December 2028. Provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and no material violations are noted, the Company expects to receive the applicable renewed license in the ordinary course of business. While the Company’s compliance controls are designed to mitigate the risk of any material violations, there is no assurance that our license will be renewed in a timely manner. Any unexpected delays or costs in the renewal process could materially and adversely affect our operations and financial results. Missouri Reporting Requirements The State of Missouri uses Marijuana Enforcement Tracking Regulation and Compliance system (METRC) to provide the state’s seed-to-sale system for end-to-end plant and product monitory, and Tyler Technologies provides the licensing platform support and individual cardholder registration, credentialing and licensing. Nevada Nevada Regulatory Landscape Medical marijuana became legal in Nevada in 2000. Individuals with certain medical conditions, such as anxiety, cancer, glaucoma, HIV, seizures, autism, and chronic pain may possess up to 2.5 ounces of marijuana every 14 days. They can also cultivate up to 12 marijuana plants. However, marijuana cultivation is prohibited for patients living within 25 miles of a licensed dispensary. Qualifying patients must register with the Division of Public and Behavioral Health (“DPBH” and obtain a medical marijuana card. Medical marijuana approved by the DPBH includes concentrates, topicals, edibles, and flowers. In November 2016, Nevadans voted in favor of Question 2, which sought to legalize, regulate and tax recreational marijuana for persons aged 21 or older. Recreational cannabis became legal in Nevada on January 1, 2017, and the first licensed sale occurred in the state on July 1, 2017. This allowed adults to buy and possess up to 1 oz. of cannabis flower and one-eighth of an ounce of cannabis concentrate. In June 2021, Governor Steve Sisilak signed Assembly Bill 341 into law, permitting the licensing and regulation of cannabis consumption lounges. The law allows the purchase and public consumption of marijuana at designated marijuana lounges. In 2022, the Cannabis Compliance Board (“ CCB ”) issued regulations for the licensing and operations of marijuana consumption lounges and issued the first cannabis consumption license in December 2022. The first marijuana consumption lounge in Nevada became operational in 2023. In June 2023, Governor Joe Lombardo signed Senate Bill 277 to raise the limits on possession for adult-use cannabis. The new limits are 2.5 ounces of cannabis flower and one-quarter of an ounce of concentrate. This legislation also deems each adult-use cannabis establishment to be a dual licensee, thereby authorizing the establishment to engage in medical cannabis activities as if the adult-use establishment held a medical cannabis license of the same type. Thus, adult-use licensees no longer require a separate medical license to operate in the capacity of a medical cannabis licensee. Licenses and Permits in Nevada We currently operate twelve retail dispensaries, and one retail, cultivation and production facility. Nevada state cannabis establishment licenses are renewed every year. Provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and no material violations are noted, the Company expects to receive the applicable renewed license in the ordinary course of business. While the Company’s compliance controls are designed to mitigate the risk of any material violations, there is no assurance that our license will be renewed in a timely manner. Any unexpected delays or costs in the renewal process could materially and adversely affect our operations and financial results. 20 Table of Contents Nevada Reporting Requirements The State of Nevada uses Marijuana Enforcement Tracking Regulation and Compliance system (METRC) as the state’s inventory tracking and compliance system for marijuana establishments. Effective November 1, 2017, all medical and adult-use marijuana establishments in Nevada must report their establishment data to the state of Nevada via METRC. This includes cultivators, product manufacturers, testing labs, distributors, dispensaries/retail stores, and consumption lounges. Utah Utah Regulatory Landscape In 2014, Utah HB 105 was passed by the state, creating a legal right for persons diagnosed by neurologists with intractable epilepsy and registered with the state to have and use hemp extracts to treat their conditions. Per HB 105, hemp extracts must contain a minimum 15% CBD and but no more than 0.3% THC. The extracts must also be free of any form of psychoactive substance. In 2017, Utah HB 130 was passed, allowing persons with approvals from an institutional review board of the United States Department of Health and Human Services to import and distribute cannabis and cannabis products for purposes of conducting a research study. In November 2018, Utah voters approved Proposition 2, allowing patients to have and use medical cannabis subject to certain restrictions. The law also allowed licensed facilities to cultivate, process, test, and sell medical cannabis. In December 2018, the Utah governor signed into law HB 3001 (i.e., the Utah Medical Cannabis Act), which included provisions to ease the requirements for renewing medical cannabis cards, establish stricter qualifications for caregivers and guardians, provide employment protections for patients, and regulate the consumption of medical marijuana. In 2019, Utah lawmakers approved SB 1002 to increase the number of medical cannabis pharmacies to 14. In 2020, Governor Herbert signed SB 121, overhauling the state cannabis laws. First, SB 121 eliminates raw cannabis flower "blister" packaging requirements for raw cannabis flower. The law also changes provisions related to driving under the influence of cannabis, such that drivers will no longer be penalized solely for having inactive cannabis metabolites. The apparent rationale for this change is that the presence of metabolites does not necessarily indicate intoxication. SB 121 also extends medical cannabis eligibility to include patients suffering from conditions other than the previously approved diseases and conditions. In the same year, Governor Herbert also signed HB 425 into law, delaying until the end of 2020 the requirement from 2018 HB 3001 for patients to obtain medical cannabis cards from the Utah Department of Health. Under HB 425, patients could continue using recommendations in the form of a doctor's letter. In 2021, Governor Spencer Cox signed SB 192, making the following amendments to the Utah Medical Cannabis Act: (a) the Utah Department of Health was authorized to issue a 15th Medical Cannabis pharmacy license, (b) medical cannabis transactions are to be reviewed by Pharmacy Medical Providers, (c) medical cannabis card holders are not permitted to alter or remove product processor’s labels from medical cannabis containers, and (d) Qualified Medical Providers (“ QMPs ”) now have the option to submit treatment and medication history to the state’s Electronic Verification System, if the QMP determines the information is relevant. Also in 2021, Governor Cox signed SB 170, allowing podiatrists to become QMPs and recommend medical cannabis within the course of their practice. QMPs who are PAs (physician assistants) also no longer require supervision from physicians who are QMPs. In 2022, the state expanded access to medical cannabis with SB 195. In relevant part, this bill mandated that hospice programs provide at least one QMP, thereby making medical cannabis recommendations more readily available in the hospice setting. In 2025, Governor Cox signed HB 357, which notably repealed the requirement for a practitioner to register with the state as a QMP before recommending medical cannabis. Instead, the same types of licensed professionals—physicians, PAs, and podiatrists—may recommend medical cannabis if they are duly licensed, complete four hours of continuing medical 21 Table of Contents education specific to medical cannabis, and acknowledge completion of such training every two years in a communication to the Utah Department of Health and Human Services. In 2025, Governor Cox also signed HB 54, increasing the number of medical cannabis pharmacies to 17. Licenses and Permits in Utah We currently operate one co-located cultivation and processing facility, one outdoor cultivation facility consisting of a warehouse used for storage and other post-harvest medical cannabis activities and a 2.4 acre outdoor field, one home delivery pharmacy location, and one medical cannabis courier location (co-located with the pharmacy). Utah state licenses are renewed every year. Provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and no material violations are noted, the Company expects to receive the applicable renewed license in the ordinary course of business. While the Company’s compliance controls are designed to mitigate the risk of any material violations, there is no assurance that our license will be renewed in a timely manner. Any unexpected delays or costs in the renewal process could materially and adversely affect our operations and financial results. Utah Reporting Requirements Leaf Data Systems, otherwise known as MJ Freeway, was selected by Utah in 2019 as the initial medical cannabis seed-to-sale tracking system. In 2024, Utah switched to an updated Electronic Verification System (EVS). EVS is used to manage medical cannabis card applications and other recordkeeping for patients and providers. Compliance with Environmental Laws Expenditures for compliance with federal, state, and local environmental laws and regulations have remained consistent year-over-year and are not material to our financial results. We comply with all applicable environmental regulations and properly dispose of all toxic and hazardous substances used in our operations. Compliance with Cannabis Regulations The Company is classified as having “direct” involvement in the U.S. marijuana industry and is in material compliance with applicable licensing requirements and the regulatory frameworks enacted by each state in which we operate. We are not subject to any material citations or notices of violation that could adversely impact our licenses, business activities, or operations. Compliance Program and Oversight Under the oversight of our General Counsel, our legal and compliance team develops, maintains, and implements our comprehensive compliance program. In addition to our General Counsel and legal and compliance team, we engage state-specific regulatory compliance counsel and other legal specialists as needed. Our team is responsible for training cultivation, production, and dispensary managers, employees, department leaders, and other designated persons on state and local laws and regulations. The team also monitors all compliance notifications from regulators and inspectors and leads efforts to promptly resolve any identified issues. We maintain detailed records of all notifications received and document the resolution of each issue. Inventory Management and Auditing We have established comprehensive standard operating procedures that detail instructions for receiving inventory shipments, tracking inventory, maintaining records, and retaining records related to inventory. These procedures also outline the steps for performing inventory reconciliation and ensuring the accuracy of our inventory tracking systems. We maintain accurate inventory records at all licensed facilities and conduct audits of our cannabis and cannabis product inventories as required by law and/or regulations to detect any potential diversion. In addition to scheduled audits, our security and staff perform unscheduled, unannounced audits to prevent complacency. Adherence to our standard operating procedures is mandatory, ensuring compliance with all applicable state and local laws, regulations, ordinances, licenses, 22 Table of Contents and other requirements. We conduct internal inspections to verify adherence and resolve any issues quickly and thoroughly. 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. As an industry best practice and in accordance with prior guidance, we continue to: ● Ensure Licensing Compliance . We ensure that the operations of our subsidiaries and business partners comply with all licensing requirements imposed by applicable state, county, municipal, town, township, borough, and other local authorities. To achieve this, we retain experienced legal counsel to perform due diligence and verify compliance with all applicable regulations. ● Adhere to Licensed Scope . We strictly confine our cannabis-related activities to the scope of the licenses obtained. For example, in states where only medical cannabis is permitted, our products are sold exclusively to patients who possess the required documentation. In states permitting adult-use cannabis, we intend to sell products only to individuals who meet the requisite age requirements. ● Maintain Strict Regulatory Oversight . We implement compliant business practices and rigorous regulatory oversight to ensure that no revenue is directed to criminal enterprises, gangs, or cartels. ● Conduct Product Reviews . We regularly review product packaging and labeling to ensure that all products comply with applicable regulations and include the necessary disclaimers regarding product contents. This helps prevent adverse public health consequences and impaired driving. We will continue to monitor compliance on an ongoing basis in accordance with our compliance program and standard operating procedures. While our operations are materially compliant with all applicable state laws, regulations and licensing requirements, such activities remain illegal under United States federal law. For the reasons described above and the risks further described in Risk Factors below, there are significant risks associated with our business. Readers are strongly encouraged to carefully read all the risk factors contained in “ Item 1A. Risk Factors ,” below. ​ ​