Vireo Growth Inc. 10-Q

Table of Contents ​ ​ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ​ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ​ For the quarterly period ended September 30, 2024 OR ​ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ​ For the transition period from to Commission File Number: 000-56225 VIREO GROWTH INC. (Exact name of registrant as specified in its charter) ​ ​ ​ ​ British Columbia, Canada 82-3835655 (State or other jurisdiction of incorporation or organization) ​ (I.R.S. Employer Identification No.) ​ ​ ​ 207 South 9 th Street , Minneapolis , MN ​ 55402 (Address of principal executive offices) ​ (Zip Code) ​ ​ ​ ​ ​ ​ (612) 999-1606 ​ ​ (Registrant’s telephone number, including area code) ​ ​ N/A (Former name, former address and former fiscal year, if changed since last report) ​ Securities registered pursuant to Section 12(b) of the Act: ​ ​ ​ ​ ​ ​ Title of each class Trading Symbol(s) Name of each exchange on which registered None ​ None ​ None ​ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ◻ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ​ Large accelerated filer ◻ Accelerated filer ◻ Non-accelerated filer þ ​ Smaller reporting company þ ​ ​ ​ Emerging growth company þ ​ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No þ ​ ​ Table of Contents As of November 11, 2024, the registrant had the following number of shares of each of its classes of registered securities outstanding: Subordinate Voting Shares – 200,464,196 ; Multiple Voting Shares – 298,314 ; and Super Voting Shares – 0 . ​ ​ ​ ​ Table of Contents VIREO GROWTH INC. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION 4 ITEM 1 – FINANCIAL STATEMENTS 4 Consolidated Balance Sheets – September 30, 2024 (unaudited) and December 31, 2023 4 Consolidated Statements of Net Loss and Comprehensive Loss – Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) 5 Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) - Three Months Ended September 30, 2024 and 2023 (unaudited) 6 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023 (unaudited) 7 Notes to Unaudited Consolidated Financial Statements 8 ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 26 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 35 ITEM 4 - CONTROLS AND PROCEDURES 35 PART II – OTHER INFORMATION 35 ITEM 1 - LEGAL PROCEEDINGS 35 ITEM 1A – RISK FACTORS 36 ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 36 ITEM 5 - OTHER INFORMATION 36 ITEM 6 - EXHIBITS 36 SIGNATURES 37 ​ ​ ​ ​ 3 Table of Contents PART I - FINANCIAL INFORMATION Item 1. Financial Statements VIREO GROWTH INC. CONSOLIDATED BALANCE SHEETS (In U.S Dollars, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2024 ​ 2023 Assets ​ ​ Current assets: ​ ​ Cash ​ $ 7,279,864 ​ $ 15,964,665 Accounts receivable, net of credit losses of $ 259,011 and $ 254,961 , respectively ​ 2,848,625 ​ 3,086,640 Income tax receivable ​ ​ 11,916,964 ​ 12,278,119 Inventory ​ 19,845,927 ​ 19,285,870 Prepayments and other current assets ​ 1,832,991 ​ 1,336,234 Notes receivable, current ​ — ​ 3,750,000 Warrants held ​ 5,221,971 ​ 1,937,352 Assets held for sale ​ 95,017,740 ​ 91,213,271 Total current assets ​ 143,964,082 ​ 148,852,151 Property and equipment, net ​ 30,509,180 ​ 23,291,183 Operating lease, right-of-use asset ​ 10,757,904 ​ 2,018,163 Intangible assets, net ​ 8,104,140 ​ 8,718,577 Deposits ​ 533,745 ​ 383,645 Total assets ​ $ 193,869,051 ​ $ 183,263,719 Liabilities ​ ​ Current liabilities ​ ​ Accounts payable and accrued liabilities ​ $ 9,168,748 ​ $ 7,674,389 Long-term debt, current portion ​ ​ 1,144,000 ​ ​ 60,220,535 Right of use liability ​ 1,254,672 ​ 890,013 Uncertain tax liability ​ ​ 28,766,000 ​ 22,356,000 Liabilities held for sale ​ 88,437,021 ​ 88,326,323 Total current liabilities ​ 128,770,441 ​ 179,467,260 Right-of-use liability ​ 19,051,693 ​ 10,543,934 Other long-term liabilities ​ ​ 216,938 ​ ​ 155,917 Convertible debt, net ​ ​ — ​ ​ 9,140,257 Long-term debt, net ​ 56,833,206 ​ — Total liabilities ​ ​ 204,872,278 ​ ​ 199,307,368 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (refer to Note 17) ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ deficiency ​ ​ Subordinate Voting Shares ($- par value, unlimited shares authorized; 200,464,196 shares issued and outstanding at September 30, 2024 and 110,007,030 at December 31, 2023) ​ — ​ — Multiple Voting Shares ($- par value, unlimited shares authorized; 298,314 shares issued and outstanding at September 30, 2024 and 331,193 at December 31, 2023) ​ — ​ — Super Voting Shares ($- par value; unlimited shares authorized; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023) ​ — ​ — Additional paid in capital ​ 204,731,053 ​ 187,384,403 Accumulated deficit ​ ( 215,734,280 ) ​ ( 203,428,052 ) Total stockholders' deficiency ​ $ ( 11,003,227 ) ​ $ ( 16,043,649 ) Total liabilities and stockholders' deficiency ​ $ 193,869,051 ​ $ 183,263,719 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements ​ 4 Table of Contents VIREO GROWTH INC. CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share amounts, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 ​ 2024 2023 Revenue ​ $ 25,165,343 ​ $ 24,675,145 ​ $ 74,360,905 ​ $ 63,960,125 Cost of sales ​ ​ ​ ​ ​ ​ ​ ​ Product costs ​ 12,448,373 ​ 10,493,561 ​ 36,111,865 ​ 30,347,357 Inventory valuation adjustments ​ 393,000 ​ 984,196 ​ 130,000 ​ 1,563,872 Gross profit ​ 12,323,970 ​ 13,197,388 ​ 38,119,040 ​ 32,048,896 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 6,911,278 ​ 6,749,314 ​ 21,527,122 ​ 21,965,576 Stock-based compensation expenses ​ 1,304,919 ​ 296,617 ​ 1,424,140 ​ 4,009,415 Depreciation ​ 76,292 ​ 99,929 ​ 222,763 ​ 377,121 Amortization ​ 180,034 ​ 180,034 ​ 540,101 ​ 498,828 Total operating expenses ​ 8,472,523 ​ 7,325,894 ​ 23,714,126 ​ 26,850,940 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 3,851,447 ​ 5,871,494 ​ 14,404,914 ​ 5,197,956 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) on disposal of assets ​ — ​ ( 50,686 ) ​ ( 218,327 ) ​ ( 2,798,567 ) Interest expenses, net ​ ( 7,363,655 ) ​ ( 7,915,658 ) ​ ( 23,604,746 ) ​ ( 22,795,242 ) Other income (expenses) ​ 970,850 ​ 345,824 ​ 3,881,931 ​ 6,166,472 Other income (expenses), net ​ ( 6,392,805 ) ​ ( 7,620,520 ) ​ ( 19,941,142 ) ​ ( 19,427,337 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss before income taxes ​ ( 2,541,358 ) ​ ( 1,749,026 ) ​ ( 5,536,228 ) ​ ( 14,229,381 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current income tax expenses ​ ( 2,385,000 ) ​ ( 3,980,000 ) ​ ( 6,770,000 ) ​ ( 7,357,871 ) Deferred income tax recoveries ​ — ​ 500,000 ​ — ​ 623,000 Net loss and comprehensive loss ​ ( 4,926,358 ) ​ ( 5,229,026 ) ​ ( 12,306,228 ) ​ ( 20,964,252 ) Net loss per share - basic and diluted ​ $ ( 0.02 ) ​ $ ( 0.04 ) ​ $ ( 0.08 ) ​ $ ( 0.16 ) Weighted average shares used in computation of net loss per share - basic and diluted ​ ​ 201,377,275 ​ ​ 141,332,852 ​ ​ 162,836,874 ​ ​ 132,576,879 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements ​ ​ 5 Table of Contents VIREO GROWTH INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (In U.S. Dollars, except share amounts, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SVS ​ MVS ​ Super Voting Shares ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional Paid- ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Shares Amount in Capital Deficit Equity (deficiency) Balance, January 1, 2023 ​ 86,721,030 ​ $ — 348,642 ​ $ — 65,411 ​ $ — ​ $ 181,321,847 ​ $ ( 177,880,963 ) ​ $ 3,440,884 Conversion of MVS shares 70,200 ​ — ( 702 ) ​ — — ​ — ​ — ​ — ​ — Conversion of Super Voting Shares ​ 6,541,100 ​ ​ — ​ — ​ ​ — ​ ( 65,411 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,765,011 ​ ​ — ​ 2,765,011 Warrants issued in financing activities — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 497,055 ​ ​ — ​ 497,055 Shares issued in financing activities 15,000,000 ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1,407,903 ​ ​ — ​ 1,407,903 Net Loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 20,964,252 ) ​ ( 20,964,252 ) Balance at September 30, 2023 108,332,330 ​ $ — 347,940 ​ $ — — ​ $ — ​ $ 185,991,816 ​ $ ( 198,845,215 ) ​ $ ( 12,853,399 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, January 1, 2024 ​ 110,007,030 ​ ​ — 331,193 ​ ​ — — ​ ​ — ​ ​ 187,384,403 ​ ​ ( 203,428,052 ) ​ ​ ( 16,043,649 ) Conversion of MVS shares ​ 3,287,900 ​ ​ — ​ ( 32,879 ) ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ — — ​ — — ​ — ​ 1,424,140 ​ — ​ 1,424,140 Options exercised ​ 50,000 ​ — — ​ — — ​ — ​ ​ 16,500 ​ ​ — ​ ​ 16,500 Warrants exercised ​ 303,127 ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 43,953 ​ ​ — ​ ​ 43,953 Shares issued ​ 13,800,078 ​ — — ​ — — ​ — ​ ​ 6,087,500 ​ ​ — ​ ​ 6,087,500 Conversion of convertible debt ​ 73,016,061 ​ ​ — — ​ — — ​ — ​ ​ 9,774,557 ​ ​ — ​ ​ 9,774,557 Net Loss — ​ — — ​ — — ​ — ​ — ​ ( 12,306,228 ) ​ ( 12,306,228 ) Balance at September 30, 2024 200,464,196 ​ $ — 298,314 ​ $ — — ​ $ — ​ $ 204,731,053 ​ $ ( 215,734,280 ) ​ $ ( 11,003,227 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SVS ​ MVS ​ Super Voting Shares ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional Paid- ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Shares Amount in Capital Deficit Equity (deficiency) Balance, July 1, 2023 86,721,030 ​ $ — 348,642 ​ $ — 65,411 ​ $ — ​ $ 185,691,379 ​ $ ( 193,616,189 ) ​ $ ( 7,924,810 ) Conversion of MVS shares ​ 70,200 ​ ​ — ​ ( 702 ) ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Conversion of Super Voting Shares ​ 6,541,100 ​ ​ — ​ — ​ ​ — ​ ( 65,411 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ — — ​ — — ​ — ​ 300,437 ​ — ​ 300,437 Shares issued in financing activities 15,000,000 ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — Net Loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 5,229,026 ) ​ ( 5,229,026 ) Balance at September 30, 2023 ​ 108,332,330 ​ $ — ​ 347,940 ​ $ — ​ — ​ $ — ​ $ 185,991,816 ​ $ ( 198,845,215 ) ​ $ ( 12,853,399 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, July 1, 2024 ​ 114,605,008 ​ $ — ​ 300,714 ​ $ — ​ — ​ $ — ​ $ 188,249,124 ​ $ ( 210,807,922 ) ​ $ ( 22,558,798 ) Conversion of MVS shares ​ 240,000 ​ ​ — ​ ( 2,400 ) ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1,304,919 ​ ​ — ​ ​ 1,304,919 Warrants exercised ​ 103,127 ​ ​ — — ​ — — ​ — ​ ​ 14,953 ​ ​ — ​ ​ 14,953 Shares issued ​ 12,500,000 ​ ​ — — ​ — — ​ — ​ ​ 5,387,500 ​ ​ — ​ ​ 5,387,500 Conversion of convertible debt ​ 73,016,061 ​ ​ — — ​ — — ​ — ​ ​ 9,774,557 ​ ​ — ​ ​ 9,774,557 Net Loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 4,926,358 ) ​ ​ ( 4,926,358 ) Balance at September 30, 2024 ​ 200,464,196 ​ $ — ​ 298,314 ​ $ — ​ — ​ $ — ​ $ 204,731,053 ​ $ ( 215,734,280 ) ​ $ ( 11,003,227 ) ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements ​ 6 Table of Contents VIREO GROWTH INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended September 30, ​ 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ Net loss ​ $ ( 12,306,228 ) ​ $ ( 20,964,252 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Inventory valuation adjustments ​ 130,000 ​ 1,563,872 Depreciation ​ 222,763 ​ 377,121 Depreciation capitalized into inventory ​ 1,678,434 ​ 1,846,418 Non-cash operating lease expense ​ 323,309 ​ 423,821 Amortization of intangible assets ​ 540,101 ​ 498,828 Amortization of intangible assets capitalized into inventory ​ ​ 74,336 ​ ​ 24,779 Stock-based payments ​ 1,424,140 ​ 4,009,415 Warrants receivable ​ ​ — ​ ​ ( 1,566,445 ) Warrants held ​ ​ ( 3,284,619 ) ​ ​ — Interest Expense ​ 3,806,093 ​ 5,111,930 Bad debt expense ​ 230,818 ​ — Deferred income tax ​ — ​ ( 623,000 ) Accretion ​ 168,464 ​ 800,392 Loss on disposal of Red Barn Growers ​ ​ — ​ ​ 2,909,757 Loss (gain) on disposal of assets ​ ​ 120,856 ​ ​ ( 111,190 ) Change in operating assets and liabilities: ​ ​ ​ ​ Accounts Receivable ​ 173,047 ​ ( 902,709 ) Prepaid expenses ​ ( 496,757 ) ​ 684,987 Inventory ​ ( 482,192 ) ​ ( 1,932,554 ) Income taxes ​ ​ 361,154 ​ ​ 6,379,831 Uncertain tax position liabilities ​ ​ 6,410,000 ​ ​ — Accounts payable and accrued liabilities ​ 1,213,360 ​ 1,079,519 Changes in operating lease liabilities ​ ​ ( 404,556 ) ​ — Change in assets and liabilities held for sale ​ ( 3,693,771 ) ​ ( 116,882 ) Net cash provided by (used in) operating activities ​ ​ ( 3,791,248 ) ​ ​ ( 506,362 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ PP&E Additions ​ ​ ( 8,974,901 ) ​ ​ ( 2,630,724 ) Proceeds from note receivable (Note 6) ​ ​ 3,600,000 ​ ​ ​ Intangible license additions ​ ​ — ​ ​ ( 1,090,919 ) Proceeds from sale of Red Barn Growers net of cash ​ ​ — ​ ​ 439,186 Proceeds from sale of property, plant, and equipment ​ ​ — ​ ​ 242,088 Deposits ​ ​ ( 150,100 ) ​ ​ ( 263,545 ) Net cash provided by (used in) investing activities ​ ​ ( 5,525,001 ) ​ ​ ( 3,303,914 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ Proceeds from long-term debt, net of issuance costs ​ ​ 1,131,400 ​ ​ — Proceeds from convertible debt, net of issuance costs ​ ​ — ​ ​ 5,348,140 Proceeds from issuance of shares ​ ​ 700,000 ​ ​ — Proceeds from warrant exercises ​ ​ 43,953 ​ ​ — Proceeds from option exercises ​ ​ 16,500 ​ ​ — Debt principal payments ​ ​ ( 1,098,000 ) ​ ​ ( 1,976,362 ) Lease principal payments ​ ​ ( 162,405 ) ​ ​ ( 1,414,698 ) Net cash provided by (used in) financing activities ​ ​ 631,448 ​ ​ 1,957,080 ​ ​ ​ ​ ​ ​ ​ Net change in cash ​ ​ ( 8,684,801 ) ​ ​ ( 1,853,196 ) ​ ​ ​ ​ ​ ​ ​ Cash, beginning of period ​ ​ 15,964,665 ​ ​ 15,149,333 ​ ​ ​ ​ ​ ​ ​ Cash, end of period ​ $ 7,279,864 ​ $ 13,296,137 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements ​ 7 Table of Contents VIREO GROWTH INC. Notes to Unaudited Condensed Consolidated Financial Statements 1. Description of Business and Summary Vireo Growth Inc. (“ Vireo Growth ” or the “ Company ”) (formerly, Goodness Growth Holdings, Inc. ) was incorporated under the Alberta Business Corporations Act on November 23, 2004. The Company was previously listed on the Canadian Securities Exchange (the “ CSE ”) under ticker symbol “GDNS”. On July 8, 2024, the Company changed its name to Vireo Growth Inc., its ticker symbol on the CSE to “VREO” and its ticker symbol on the OTCQX to “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. Vireo Growth operates cannabis cultivation, production, and dispensary facilities in Maryland, Minnesota, and New York, and formerly in Arizona and New Mexico. While marijuana and CBD-infused products are legal under the laws of several U.S. states (with vastly differing restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision. Recently some federal officials have attempted to distinguish between medical cannabis use as necessary, but adult-use as “still a violation of federal law.” At the present time, the distinction between “medical marijuana” and “adult-use marijuana” does not exist under U.S. federal law. ​ Update on Verano Litigation ​ On October 21, 2022, Vireo Growth commenced an action in the Supreme Court of British Columbia against Verano Holdings Corp. (" Verano ") after Verano repudiated the Arrangement Agreement with the Company dated January 31, 2022. 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 May 2, 2024, the Company filed an application with the Supreme Court of British Columbia for summary determination. The Company is seeking substantial damages, specifically $ 860.9 million, as well as other costs and legal fees, based on Verano’s breach of contract and of its duty of good faith and honest performance. ​ Due to uncertainties inherent in litigation, it is not possible for Vireo Growth 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. ​ The termination of the Arrangement Agreement gives rise to substantial doubt about the Company’s ability to continue as a going concern. Company management is working with the Company’s lenders, counsel, and other applicable parties to implement a plan to effectively mitigate the conditions giving rise to substantial doubt. Elements of this plan may include, but are not limited to, asset sales, debt restructuring, and capital raises. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the Company’s continuance as a going concern is dependent on its future profitability and implementation of the aforementioned plan. The Company may not be successful in these efforts. ​ ​ 2. Summary of Significant Accounting Policies Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the United States Securities and Exchange Commission (“ SEC ”) on April 1, 2024, (the " Annual Financial Statements "), as amended on April 29, 2024. There have been no material changes to the Company’s significant accounting policies. 8 Table of Contents Basis of presentation The accompanying unaudited condensed consolidated financial statements reflect the accounts of the Company. The information included in these statements should be read in conjunction with the Annual Financial Statements. The unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“ U.S. GAAP ”) and pursuant to the rules and regulations of the SEC. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year. These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates. Basis of consolidation These unaudited condensed consolidated financial statements include the accounts of the following entities wholly owned, or effectively controlled by the Company during the period ended September 30, 2024: ​ ​ ​ ​ Name of entity Place of incorporation EHF Cultivation Management, LLC ​ Arizona, USA Elephant Head Farm, LLC Arizona, USA HiColor, LLC Minnesota, USA MaryMed, LLC Maryland, USA Mayflower Botanicals, Inc. Massachusetts, USA Minnesota Medical Solutions, LLC Minnesota, USA MJ Distributing C201, LLC ​ Nevada, USA MJ Distributing P132, LLC ​ Nevada, USA Resurgent Biosciences, Inc. Delaware, USA Retail Management Associates, LLC Arizona, USA Verdant Grove, Inc. Massachusetts, USA Vireo Health de Puerto Rico, Inc. Puerto Rico Vireo Health of Nevada 1, LLC Nevada, USA Vireo Health of New Mexico, LLC Delaware, USA Vireo Health of New York, LLC New York, USA Vireo Health of Puerto Rico, LLC Delaware, USA Vireo Health, Inc. Delaware, USA Vireo of Charm City, LLC ​ Maryland, USA XAAS Agro, Inc. Puerto Rico ​ The entities listed are wholly owned or effectively controlled by the Company and have been formed or acquired to support the intended operations of the Company, and all intercompany transactions and balances have been eliminated in the Company's unaudited condensed consolidated financial statements. Red Barn Growers, Inc. and all New Mexico assets and liabilities were divested in June of 2023. Recently adopted accounting pronouncements None. ​ Net loss per share Basic net loss per share is computed by dividing reported net loss by the weighted average number of common shares outstanding for the reported period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during the reporting period. Diluted net loss per share is computed by dividing net loss by the sum of the weighted average number of common shares and the number of potential dilutive common share equivalents outstanding during the period. Potential 9 Table of Contents dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of vested share options and the incremental shares issuable upon conversion of the convertible notes. Potential dilutive common share equivalents consist of stock options, warrants, and restricted stock units. In computing diluted earnings per share, common share equivalents are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive. The Company recorded a net loss for the three and nine month periods ended September 30, 2024, and 2023, presented in these financial statements, and as such there is no difference between the Company’s basic and diluted net loss per share for these periods. The anti-dilutive shares outstanding for the nine month periods ended September 30, 2024, and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ 2024 2023 Stock options ​ 31,440,328 29,633,217 Warrants ​ 19,134,522 9,437,649 RSUs ​ 4,107,749 ​ 2,714,491 Convertible debt ​ — ​ 42,074,926 Total ​ 54,682,599 83,860,283 ​ Revenue Recognition The Company’s primary source of revenue is from wholesale of cannabis products to dispensary locations and direct retail sales to eligible customers at Company-owned dispensaries. Substantially all of the Company’s retail revenue is from the direct sale of cannabis products to adult-use and medical customers. The following table represents the Company’s disaggregated revenue by source: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2024 2023 ​ 2024 2023 Retail ​ $ 19,740,787 ​ $ 20,147,074 ​ $ 60,159,246 ​ $ 53,761,973 Wholesale ​ 5,424,556 ​ 4,528,071 ​ 14,201,659 ​ 10,198,152 Total ​ $ 25,165,343 ​ $ 24,675,145 ​ $ 74,360,905 ​ $ 63,960,125 ​ New accounting pronouncements not yet adopted ASU 2023-07 In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures (Topic 280) . This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has not adopted the standard for the interim periods presented herein, but will adopt the standard on or before December 31, 2024. This ASU will result in additional required disclosures when adopted, where applicable. ASU 2023-09 In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) . The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. ​ 10 Table of Contents ​ ​ 3. Business Combinations and Dispositions Assets Held for Sale ​ As of September 30, 2024, the Company identified property and equipment, deposits, and lease assets and liabilities associated with the businesses in New York, Nevada, and Massachusetts with carrying amounts that are expected to be recovered principally through sale or disposal rather than through continuing use. The sale of these assets and liabilities is highly probable, they can be sold in their immediate condition, and the sales are expected to occur within the next twelve months. As such, these assets and liabilities have been classified as “held for sale.” Management does not believe these divestitures represent a strategic shift that has or will have a major effect on an entity’s operations and financial results, and as such, none of these divestitures are considered a discontinued operation. The carrying value of these net assets did not exceed fair value less expected cost to sell, and as such, the Company recorded no impairment loss. Assets and liabilities held for sale are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets held for sale September 30, December 31, ​ ​ 2024 ​ 2023 Property and equipment ​ $ 88,793,895 ​ $ 86,864,965 Intangible assets ​ ​ 972,000 ​ ​ 662,500 Operating lease, right-of-use asset ​ ​ 3,381,612 ​ ​ 3,381,612 Deposits ​ ​ 1,870,233 ​ ​ 304,194 Total assets held for sale ​ $ 95,017,740 ​ $ 91,213,271 ​ ​ ​ ​ ​ ​ ​ Liabilities held for sale ​ ​ ​ Right of Use Liability ​ $ 88,437,021 ​ $ 88,326,323 Total liabilities held for sale ​ $ 88,437,021 ​ $ 88,326,323 ​ ​ ​ ​ ​ Current assets and liabilities held by our New York business have not been classified as held for sale. Pre-tax operating losses attributable to the New York business were $ 12,152,587 and $ 10,099,014 for the nine months ended September 30, 2024 and 2023, respectively. ​ ​ 4. Fair Value Measurements The Company complies with ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability. Items measured at fair value on a non-recurring basis The Company’s non-financial assets, such as prepayments and other current assets, long lived assets, including property and equipment and intangible assets, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized. No indicators of impairment existed as of September 30, 2024, and therefore no impairment charges were recorded. The carrying value of the Company’s accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature, and the carrying value of notes receivable, long-term debt, and convertible debt approximates fair value as they bear a market rate of interest. ​ 11 Table of Contents The carrying value of the Company’s warrants held utilize Level 3 inputs given there is no market activity for the asset. The inputs used are further described in Note 19. ​ ​ 5. Accounts Receivable Trade receivables are comprised of the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Trade receivable ​ $ 2,673,965 ​ $ 2,256,763 Tax withholding receivable ​ ​ 174,660 ​ ​ 174,660 Other ​ — ​ 655,217 Total ​ $ 2,848,625 ​ $ 3,086,640 ​ Included in the trade receivables, net balance at September 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 99,736 and $ 95,686 , respectively. Included in the tax withholding receivable, net balance at September 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 159,275 . ​ 6. Notes Receivable ​ As of September 30, 2024, the Company had $ 0 (December 31, 2023 - $ 3,750,000 ) in notes receivable. During the nine months ended September 30, 2024, the Company received $ 3,600,000 in proceeds related to the repayment of the $ 3,750,000 note receivable, which was consideration received in connection with the divestiture of the Company’s Pennsylvania operations in 2020. The Company considers the note receivable to be fully paid. The $ 150,000 difference between the face value of the note and proceeds received is included in other expense on the unaudited condensed consolidated statements of net loss and comprehensive loss. ​ ​ ​ 7. Inventory Inventory is comprised of the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30 ​ December 31, ​ 2024 2023 Work-in-progress ​ $ 13,118,519 ​ $ 13,058,348 Finished goods ​ 5,805,958 ​ 5,278,331 Other ​ 921,450 ​ 949,191 Total ​ $ 19,845,927 ​ $ 19,285,870 ​ Inventory is written down for any obsolescence, spoilage and excess inventory or when the net realizable value of inventory is less than the carrying value. Inventory valuation adjustments included in cost of sales on the statements of net loss and comprehensive loss is comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2024 2023 ​ 2024 2023 Work-in-progress ​ $ 433,283 ​ $ 1,024,225 ​ $ 231,583 ​ $ 1,580,264 Finished goods ​ ( 40,283 ) ​ ( 40,029 ) ​ ( 101,583 ) ​ ( 16,392 ) Total ​ $ 393,000 ​ $ 984,196 ​ $ 130,000 ​ $ 1,563,872 ​ ​ ​ 12 Table of Contents 8. Prepayments and other current assets Prepayments and other current assets are comprised of the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Prepaid Insurance ​ $ 1,015,178 ​ $ 806,610 Other Prepaid Expenses ​ 817,813 ​ 529,624 Total ​ $ 1,832,991 ​ $ 1,336,234 ​ ​ ​ 9. Property and Equipment, Net Property and equipment, net consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30 ​ December 31, ​ 2024 2023 Land ​ $ 863,105 ​ $ 863,105 Buildings and leasehold improvements ​ 16,259,882 ​ 15,124,915 Furniture and equipment ​ 7,240,644 ​ 7,807,250 Software ​ 39,388 ​ 242,204 Vehicles ​ 447,478 ​ 284,000 Construction-in-progress ​ 7,770,507 ​ 128,220 Right of use asset under finance lease ​ 7,572,566 ​ 7,938,138 ​ ​ 40,193,570 ​ 32,387,832 Less: accumulated depreciation ​ ( 9,684,390 ) ​ ( 9,096,649 ) Total ​ $ 30,509,180 ​ $ 23,291,183 ​ For the nine months ended September 30, 2024, and 2023, total depreciation on property and equipment was $ 1,901,198 and $ 2,223,540 , respectively. For the nine months ended September 30, 2024, and 2023, accumulated amortization of the right of use asset under finance lease amounted to $ 2,408,998 and $ 2,221,116 , respectively. The right of use asset under finance lease of $ 7,572,566 consists of leased processing and cultivation premises. The Company capitalized into inventory $ 1,678,435 and $ 1,846,419 relating to depreciation associated with manufacturing equipment and production facilities for the nine months ended September 30, 2024, and 2023, respectively. The capitalized depreciation costs associated are added to inventory and expensed through cost of sales product cost on the unaudited condensed consolidated statements of net loss and comprehensive loss. ​ As of September 30, 2024 and 2023, in conjunction with the Company’s held for sale assessment and disposal of certain long-lived assets, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets was above book value. As a result, the Company recorded no impairment charge on property and equipment, net. ​ ​ 13 Table of Contents 10. Leases Components of lease expenses are listed below: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2024 ​ 2023 Finance lease cost ​ ​ ​ ​ ​ Amortization of ROU assets ​ $ 410,013 ​ $ 557,817 Interest on lease liabilities ​ 10,654,530 ​ 8,409,687 Operating lease costs ​ 1,412,489 ​ 1,472,588 Total lease costs ​ $ 12,477,032 ​ $ 10,440,092 ​ Future minimum lease payments (principal and interest) on the leases are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Leases Finance Leases ​ ​ ​ September 30, 2024 September 30, 2024 Total 2024 ​ $ 560,981 ​ $ 3,416,902 ​ $ 3,977,883 2025 ​ 3,047,603 ​ 13,773,155 ​ 16,820,758 2026 ​ 2,727,346 ​ 14,183,661 ​ 16,911,007 2027 ​ 2,474,144 ​ 14,606,527 ​ 17,080,671 2028 ​ 2,254,049 ​ 15,042,128 ​ 17,296,177 Thereafter ​ 7,824,515 ​ 218,572,918 ​ 226,397,433 Total minimum lease payments ​ $ 18,888,638 ​ $ 279,595,291 ​ $ 298,483,929 Less discount to net present value ​ ​ ( 4,111,939 ) ​ ( 185,628,604 ) ​ ( 189,740,543 ) Less liabilities held for sale ​ ​ ( 2,837,202 ) ​ ​ ( 85,599,819 ) ​ ​ ( 88,437,021 ) Present value of lease liability ​ $ 11,939,497 ​ $ 8,366,868 ​ $ 20,306,365 ​ The Company has entered into various lease agreements for the use of buildings used in production and retail sales of cannabis products. On February 22, 2024, the Company executed a lease for cannabis cultivation and manufacturing facilities. Per the terms of the lease the landlord agreed to provide the Company with $ 2,000,000 of tenant improvement allowances. Rent will not commence until January 1, 2025, at which time monthly base rent will be $ 82,500 . Starting January 1, 2025, the Company has the option to purchase the property. The initial purchase price is $ 13,000,000 increasing by 3 % at the start of each calendar year until the option expires on December 31, 2028. The lease expires on December 31, 2034. On February 24, 2023, the Company signed the fourth amendment to the existing lease agreements for the cultivation and processing facilities in New York. The amendment provides for additional tenant improvements of $ 4,000,000 and increases base rent by $ 50,000 a month. Supplemental cash flow information related to leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ Lease principal payments - finance ​ $ 162,405 ​ $ 1,414,698 Lease principal payments - operating ​ ​ 633,540 ​ ​ — Non-cash additions to ROU assets ​ 9,270,915 ​ — Amortization of operating leases ​ 531,359 ​ 670,782 ​ 14 Table of Contents Other information about lease amounts recognized in the financial statements: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ 2024 2023 ​ Weighted-average remaining lease term (years) – operating leases ​ 7.85 4.27 ​ ​ Weighted-average remaining lease term (years) – finance leases ​ 16.34 17.14 ​ ​ Weighted-average discount rate – operating leases ​ 8.16 % 15.00 % ​ Weighted-average discount rate – finance leases ​ 16.20 % 15.31 % ​ ​ ​ ​ ​ ​ ​ ​ ​ 11. Intangibles Intangible assets are comprised of the following items: ​ ​ ​ ​ ​ ​ Licenses & Trademarks Balance, December 31, 2022 ​ $ 8,776,946 Divestitures ​ ( 409,239 ) Additions ​ ​ 1,090,919 Amortization ​ ​ ( 728,419 ) Write off ​ ​ ( 11,630 ) Balance, December 31, 2023 ​ $ 8,718,577 Amortization ​ ( 614,437 ) Balance, September 30, 2024 ​ $ 8,104,140 ​ Amortization expense for intangibles was $ 204,813 and $ 614,437 during the three and nine months ended September 30, 2024, respectively, and $ 204,813 and $ 523,607 during the three and nine months ended September 30, 2023, respectively. The Company capitalized into inventory $ 24,778 (2023 - $ 24,779 ) and $ 74,336 (2023 - $ 24,779 ) of amortization for the three and nine months ended September 30, 2024, respectively. Amortization expense is recorded in operating expenses on the unaudited condensed consolidated statements of net loss and comprehensive loss. ​ The Company estimates that amortization expense will be $ 819,655 per year for the next five fiscal years. ​ ​ 12. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities are comprised of the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Accounts payable – trade ​ $ 3,757,200 ​ $ 1,769,346 Accrued Expenses ​ 4,297,047 ​ 4,852,648 Taxes payable ​ 192,716 ​ 218,563 Contract liability ​ 921,785 ​ 833,832 Total accounts payable and accrued liabilities ​ $ 9,168,748 ​ $ 7,674,389 ​ ​ ​ 15 Table of Contents 13. Long-Term Debt During 2017, the Company signed a promissory note payable in the amount of $ 1,010,000 . The note bears interest at a rate of 15 % per annum with interest payments required on a monthly basis. In 2019, the Company’s promissory note payable in the amount of $ 1,010,000 was modified to increase the amount payable to $ 1,110,000 . The Company repaid the note in full during the nine months ended September 30, 2024. ​ On November 19, 2021, the Company signed a promissory note payable in the amount of $ 2,000,000 in connection with the acquisition of Charm City Medicus, LLC. The note bears an interest rate of 8 % per annum with interest payments due on the last day of each calendar quarter. On November 19, 2023, the Company and lender amended the note. Per the terms of the amendment, the interest rate was modified to 15 %, and the Company paid off $ 1,000,000 of principal. The remaining principal balance of $ 1,000,000 is due on November 19, 2024 , and the note is secured by 25 % of the membership interests in Vireo Health of Charm City, LLC. ​ On March 25, 2021, the Company entered into a credit agreement for a senior secured delayed draw term loan with an aggregate principal amount of up to $ 46,000,000 (the “ Credit Facility ”), and executed a draw of $ 26,000,000 in principal. The unpaid principal amounts outstanding under the Credit Facility bear interest at a rate of (a) the U.S. prime rate plus 10.375 %, payable monthly in cash, and (b) 2.75 % per annum paid in kind (“ PIK ”) interest payable monthly. In connection with the Credit Facility, the Company also pays a monthly credit monitoring fee in the amount of $ 130,400 which is included in interest expense in the consolidated statements of loss and comprehensive loss for the nine months ended September 30, 2024 and 2023. ​ On November 18, 2021, the Company and lenders amended the Credit Facility to provide for an additional loan of $ 4,200,000 with a cash interest rate of 15 % per annum and PIK interest of 2 % per annum and a maturity date of November 29, 2024. Obligations under the Credit Facility are secured by substantially all the assets of the Company. ​ On January 31, 2022, Vireo Growth and certain of its subsidiaries, as borrowers (collectively, “ Borrowers ”), entered into a Third Amendment to the Credit Facility (the “ Third Amendment ”) providing for additional delayed draw term loans of up to $ 55 million (the “ Delayed Draw Loans ”). The cash interest rate on the Delayed Draw Loans under the Third Amendment is equal to the U.S. prime rate plus 10.375 %, with a minimum required rate of 13.375 % per annum, in addition to PIK interest of 2.75 % per annum. ​ On March 31, 2023, the Company executed a fifth amendment to its Credit Facility with its senior secured lender, Chicago Atlantic Admin, LLC (the " Agent "), an affiliate of Green Ivy Capital, and a group of lenders. The amended credit facility extends the maturity date on its Delayed Draw Loans to April 30, 2024, through the issuance of 15,000,000 Subordinate Voting Shares in lieu of a cash extension fee. These 15,000,000 shares were valued at $ 1,407,903 using a fair value per share of $ 0.094 and considered a deferred financing cost. The fair value per share reflects a 22 % discount to the market price at the time of issuance to account for the four-month trading lock-up imposed on the shares. The amendment also provides the Company with reduced cash outlays by eliminating required amortization of the loan, and requires the Company to divest certain assets to improve its liquidity position and financial performance. The Company has the potential to extend the maturity date on its Delayed Draw Loans up to January 31, 2026 with the satisfaction of certain financial performance-related conditions. ​ On April 30, 2024, the Company executed a short-term extension of the maturity date on the Credit Facility with the Agent. The Credit Facility was extended until June 14, 2024, matching all other terms of the existing agreement. On June 14, 2024, another short-term extension was executed which extended the maturity date on the Credit Facility to July 31, 2024, matching all other terms of the existing agreement. ​ On May 21, 2024 the Company executed a $ 1,200,000 term loan with the Agent to assist with the purchase of a site for a new dispensary location. The loan bears an interest rate of 12.0 % and is due on May 28, 2027. Financing costs of $ 68,600 were incurred in connection with the closing of the loan. ​ On July 31, 2024, the Company executed a ninth amendment to the Company’s Credit Facility. The ninth amendment to the Company’s Credit Facility extends the maturity date on the Credit Facility loans to January 29, 2027, adjusts and 16 Table of Contents extends the deadline with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amends certain financial measure definitions and covenants within the agreement. The Company issued 12,500,000 Subordinate Voting Shares to the lenders in consideration for the credit facility amendment. These 15,000,000 shares were valued at $ 5,387,500 using a fair value per share of $ 0.431 and considered a deferred financing cost. ​ Unless otherwise specified, all deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan. As of September 30, 2024, $ 5,089,311 (December 31, 2023 - $ 1,524,531 ) of deferred financing costs remain unamortized. ​ The following table shows a summary of the Company’s long-term debt: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Beginning of period ​ $ 60,220,535 ​ $ 58,028,604 Proceeds ​ 1,200,000 ​ — Principal repayments ​ ​ ( 1,098,000 ) ​ ​ ( 2,976,362 ) Deferred financing costs ​ ​ ( 5,456,100 ) ​ ​ ( 1,407,903 ) PIK interest ​ ​ 1,219,451 ​ ​ 1,607,032 Amortization of deferred financing costs ​ ​ 1,891,320 ​ ​ 4,969,164 End of period ​ 57,977,206 ​ 60,220,535 Less: current portion ​ 1,144,000 ​ 60,220,535 Total long-term debt ​ $ 56,833,206 ​ $ — ​ ​ ​ ​ ​ ​ As of September 30, 2024, stated maturities of long-term debt were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ $ 1,144,000 2025 ​ ​ — 2026 ​ ​ — 2027 ​ ​ 56,833,206 Total ​ $ 57,977,206 ​ ​ ​ ​ ​ ​ 14. Convertible Notes ​ On April 28, 2023, the Company closed on a new convertible debt facility which enables the Company to access up to $ 10,000,000 in aggregate principal amount of convertible notes (the “ Convertible Notes ”). The convertible facility has a term of three years , with an annual interest rate of 12.0 %, comprised of 6.0 % cash and 6.0 % PIK. The initial tranche's principal amount of Convertible Notes outstanding in the amount of $ 2,000,000 , plus all PIK and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to $ 0.145 . For each future tranche advanced, the principal amount of Convertible Notes outstanding, plus all PIK interest and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to the lesser of $ 0.145 or a 20.0 % premium over the 30-day volume weighted average price of the Company’s Subordinate Voting Shares calculated on the day prior to the date on which each tranche is advanced, if permitted by the Canadian Securities Exchange. The lenders also have the right to advance any remaining undrawn funds on the convertible loan facility to the Company at any time. If the notes are not converted, the outstanding principal amount and unpaid PIK interest is due on April 30, 2026. ​ During the year ended December 31, 2023, the Company closed eight additional tranches of Convertible Notes, which are convertible into Subordinate Voting Shares at a conversion price of $ 0.145 . Total proceeds received from these tranches amounted to $ 8,000,000 . ​ In connection with this financing, the Company issued 6,250,000 warrants to purchase Subordinate Voting Shares of the Company to the lenders. These warrants have a five year term, a strike price of $ 0.145 , and were valued at $ 497,055 . The 17 Table of Contents value of these warrants and other legal and administrative expenses amounting to $ 1,346,793 are treated as deferred financing costs. All deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan. As of September 30, 2024, $ 0 (December 31, 2023 - $ 1,083,697 ) of deferred financing costs remain unamortized. ​ On July 31, 2024, the holders voluntarily converted all outstanding convertible notes into 73,016,061 Subordinate Voting Shares of the Company. ​ The following table shows a summary of the Company’s convertible debt: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Beginning of period ​ $ 9,140,257 ​ $ — Proceeds ​ — ​ 10,000,000 Deferred financing costs ​ ​ — ​ ​ ( 1,346,793 ) PIK interest ​ ​ 363,376 ​ ​ 223,954 Amortization of deferred financing costs ​ ​ 270,924 ​ ​ 263,096 Conversion ​ ​ ( 9,774,557 ) ​ ​ — End of period ​ $ — ​ 9,140,257 Less: current portion ​ — ​ — Total convertible debt ​ $ — ​ $ 9,140,257 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 15. Stockholders’ Equity Shares The Company’s certificate of incorporation authorized the Company to issue the following classes of shares with the following par value and voting rights as of September 30, 2024. The liquidation and dividend rights are identical among shares equally in the Company’s earnings and losses on an as converted basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ Par Value Authorized Voting Rights Subordinate Voting Share (“SVS”) — Unlimited 1 vote for each share Multiple Voting Share (“MVS”) — Unlimited 100 votes for each share Super Voting Share — Unlimited 1,000 votes for each share ​ ​ Subordinate Voting Shares Holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held. Multiple Voting Shares Holders of Multiple Voting Shares are entitled to one hundred votes for each Multiple Voting Share held. Multiple Voting Shares each have the restricted right to convert to one hundred Subordinate Voting Shares subject to adjustments for certain customary corporate changes. Super Voting Shares Holders of Super Voting Shares are entitled to one thousand votes per Super Voting Share. Each Super Voting share is convertible into one Multiple Voting Share. 18 Table of Contents Shares Issued During the nine months ended September 30, 2024, 32,879 Multiple Voting Shares were converted into 3,287,900 Subordinate Voting Shares for no additional consideration. During the nine months ended September 30, 2024, 12,500,000 Subordinate Voting Shares were issued to the Company’s senior secured lender in connection with the ninth amendment to the Company’s credit agreement (Note 13). During the nine months ended September 30, 2024, 1,300,078 Subordinate Voting Shares were issued to the Company’s senior secured lender, Chicago Atlantic Opportunity Portfolio, LP, for $ 700,000 of proceeds. During the nine months ended September 30, 2024, the holders of the Company’s Convertible Notes voluntarily converted all outstanding convertible notes into 73,016,061 Subordinate Voting Shares of the Company During the nine months ended September 30, 2024, employee stock options were exercised for 50,000 Subordinate Voting Shares. Proceeds from this transaction were $ 16,500 . During the nine months ended September 30, 2024, stock warrants were exercised for 303,127 Subordinate Voting Shares. Proceeds from these transactions were $ 43,953 . During the nine months ended September 30, 2023, the Company issued the 15,000,000 Subordinate Voting Shares to its senior secured lender, Chicago Atlantic Admin, LLC, an affiliate of Green Ivy Capital, and a group of lenders in connection with the fifth amendment to its Credit Facility signed on March 31, 2023 (Note 13). ​ During the nine months ended September 30, 2023, 65,411 Super Voting Shares were redeemed for 6,541,100 Subordinate Voting Shares ​ During the nine months ended September 30, 2023, 702 Multiple Voting Shares were redeemed for 70,200 Subordinate Voting Shares ​ ​ 16. Stock-Based Compensation Stock Options In January 2019, the Company adopted the 2019 Equity Incentive Plan under which the Company may grant incentive stock options, restricted shares, restricted share units, or other awards. Under the terms of the plan, a total of ten percent of the number of shares outstanding assuming conversion of all super voting shares and Multiple Voting Shares to Subordinate Voting Shares are permitted to be issued. The exercise price for incentive stock options issued under the plan will be set by the Compensation Committee but will not be less 100 % of the fair market value of the Company’s shares on the date of grant. Incentive stock options have a maximum term of 10 years from the date of grant. The incentive stock options vest at the discretion of the Board of Directors. 19 Table of Contents Options granted under the equity incentive plan were valued using the Black-Scholes option pricing model with the following weighted average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2024 2023 Risk-Free Interest Rate ​ 3.88 % 3.81 % Weighted Average Exercise Price $ 0.49 $ 0.25 ​ Weighted Average Stock Price $ 0.49 $ 0.25 ​ Expected Life of Options (years) ​ 7.00 ​ 6.12 ​ Expected Annualized Volatility ​ 100.00 % 100.00 % Grant Fair Value $ 0.41 $ 0.13 ​ Expected Forfeiture Rate ​ N/A N/A ​ Expected Dividend Yield ​ N/A N/A ​ ​ ​ Stock option activity for the nine months ended September 30, 2024, and for the year ended December 31, 2023, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Weighted Avg. ​ ​ Number of Options ​ Exercise Price ​ Remaining Life Balance, December 31, 2022 23,547,558 ​ $ 0.66 7.30 Forfeitures ( 4,137,079 ) ​ 0.82 — Granted 10,558,845 ​ 0.25 6.42 Balance, December 31, 2023 29,969,324 ​ $ 0.50 6.18 Forfeitures ( 952,835 ) ​ 0.77 — Exercised ( 50,000 ) ​ 0.33 — Granted 2,473,839 ​ 0.49 — Options Outstanding at September 30, 2024 31,440,328 ​ $ 0.49 5.72 ​ ​ ​ ​ ​ ​ ​ ​ Options Exercisable at September 30, 2024 26,718,615 ​ $ 0.42 5.29 ​ ​ During the three and nine month periods ended September 30, 2024, the Company recognized $ 615,215 and $ 641,196 in stock-based compensation relating to stock options, respectively. During the three and nine month periods ended September 30, 2023, the Company recognized $ 248,000 and $ 2,247,635 in stock-based compensation relating to stock options, respectively. As of September 30, 2024, the total unrecognized compensation costs related to unvested stock options awards granted was $ 549,340 . In addition, the weighted average period over which the unrecognized compensation expense is expected to be recognized is approximately 1.4 years. The total intrinsic value of stock options outstanding and exercisable as of September 30, 2024, was $ 4,884,187 and $ 4,432,386 , respectively. The Company does not estimate forfeiture rates when calculating compensation expense. The Company records forfeitures as they occur. Warrants Subordinate Voting Share (SVS) warrants entitle the holder to purchase one Subordinate Voting Share of the Company. 20 Table of Contents A summary of the warrants outstanding is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Weighted Average Weighted Average SVS Warrants ​ Warrants ​ Exercise Price ​ Remaining Life Warrants outstanding at December 31, 2022 150,000 ​ $ 1.49 ​ 2.00 Granted 16,250,000 ​ ​ 0.20 ​ 5.00 Warrants outstanding at December 31, 2023 ​ 16,400,000 ​ $ 0.21 4.57 Granted ​ — ​ ​ — ​ — Exercised ​ ( 303,127 ) ​ ​ 0.145 ​ — Warrants outstanding at September 30, 2024 16,096,873 ​ $ 0.21 3.82 ​ ​ ​ ​ ​ ​ ​ ​ Warrants exercisable at September 30, 2024 16,096,873 ​ $ 0.21 3.82 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Weighted Average Weighted Average SVS Warrants Denominated in C$ ​ Warrants ​ Exercise Price ​ Remaining Life Warrants outstanding at December 31, 2022 3,037,649 ​ $ 3.50 3.23 Granted — ​ — — Warrants outstanding at December 31, 2023 3,037,649 ​ $ 3.50 2.23 Granted ​ — ​ ​ — ​ — Warrants outstanding at September 30, 2024 ​ 3,037,649 ​ $ 3.50 ​ 1.48 ​ ​ ​ ​ ​ ​ ​ ​ Warrants exercisable at September 30, 2024 3,037,649 ​ $ 3.50 1.48 ​ During both the three and nine month periods ended September 30, 2024, $ 0 in stock-based compensation expense was recorded in connection with outstanding warrants. During the three and nine month periods ended September 30, 2023, ($ 3,820 ) and $ 1,244,404 was recorded in connection with outstanding warrants. ​ Restricted Stock Units (“RSUs”) ​ The expense associated with RSUs is based on the closing share price of the Company’s subordinate voting shares on the business day immediately preceding the grant date, adjusted for the absence of future dividends and is amortized on a straight-line basis over the periods during which the restrictions lapse. The Company currently has RSUs that vest over a three year period. The awards are generally subject to forfeiture in the event of termination of employment. During the three and nine months ended September 30, 2024, the Company recognized $ 689,704 and $ 782,944 , respectively, in stock-based compensation expense related to RSUs. During the three and nine month periods ended September 30, 2023, the Company recognized $ 52,437 and $ 517,376 , respectively, in stock-based compensation expense related to RSUs. ​ ​ A summary of RSUs is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Avg. ​ ​ Number of Shares ​ Fair Value Balance, December 31, 2022 3,221,677 ​ $ 0.81 Forfeitures ​ ( 678,666 ) ​ ​ 0.54 Balance, December 31, 2023 ​ 2,543,011 ​ ​ 0.88 Granted ​ 1,728,458 ​ ​ 0.50 Forfeitures ​ ( 163,720 ) ​ ​ 0.54 Balance, September 30, 2024 ​ 4,107,749 ​ ​ 0.73 ​ ​ ​ ​ ​ ​ Vested at September 30, 2024 ​ 2,253,298 ​ $ 0.71 ​ ​ ​ 21 Table of Contents 17. Commitments and Contingencies Legal proceedings Schneyer ​ On February 25, 2019, Dr. Mark Schneyer (“ Schneyer ”) filed a lawsuit in Minnesota District Court, Fourth District (the “ Court ”), on his own behalf and, derivatively, on behalf of Dorchester Capital, LLC, naming Vireo Health, Inc. (“ Vireo U.S. ”), Dorchester Management, LLC (“ Dorchester Management ”), and Dorchester Capital, LLC (“ Capital ”), as defendants. The essence of the claims made by Schneyer is Vireo U.S. paid an inadequate price for MaryMed, LLC (“ MaryMed ”), which it purchased from Capital in 2018, and that the consideration given – shares of preferred stock in Vireo U.S. – was distributed inappropriately by Capital at the direction of Dorchester Management (the managing member of Capital). Schneyer, who is a Class B member of Capital, sought unspecified damages in excess of $ 50,000 and other relief. Dorchester Management, LLC is an affiliated entity to Vireo U.S. and was previously used as a management company over Dorchester Capital, LLC. It no longer has active operations following Vireo Health, Inc.’s acquisition of MaryMed, LLC in 2018. It was owned and controlled by Kyle E. Kingsley and Amber H. Shimpa, executive officers and directors of Vireo U.S. and the Company. ​ While Vireo U.S. continues to believe that Schneyer’s claims lack merit, it agreed to settle the litigation in April 2023 to avoid the expense, distraction and risk of the pre-trial and trial processes. Entering into this settlement in no way changed the defendants’ position that they did nothing wrong and that the claims were baseless. ​ Verano On January 31, 2022, the Company entered into the Arrangement Agreement with Verano, pursuant to which Verano was to acquire all of the issued and outstanding shares of Vireo Growth pursuant to a Plan of Arrangement. Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, holders of Vireo Growth Shares would receive 0.22652 of a Verano Subordinate Voting Share, subject to adjustment as described below, for each Subordinate Voting Share held, and 22.652 Verano Subordinate Voting Shares for each Multiple Voting Share and Super Voting Share held, immediately prior to the effective time of the Arrangement. On October 13, 2022, Vireo Growth received a notice of purported termination of the Arrangement Agreement (the “ Notice ”) from Verano. The Notice 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 a $ 14,875,000 termination fee and its transaction expenses. Vireo Growth 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 has no factual or legal basis to justify or support its purported termination of the Arrangement Agreement, which the Company determined to treat as a repudiation of the Arrangement Agreement. On October 21, 2022, Vireo Growth commenced an action in the Supreme Court of British Columbia against Verano after Verano wrongfully repudiated the Arrangement Agreement. 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 July 31, 2023, the Company filed a requisition for adjournment of its application filed July 14, 2023, and set for hearing on July 31, 2023 to compel Verano’s compliance with document production based upon the Company’s belief that Verano was engaging in tactics to delay the litigation. Throughout 2023, the Company served 4 lists of documents, reviewed document production from Verano, and prepared for examinations for discovery. 22 Table of Contents ​ On May 2, 2024, the Company filed an application with the Supreme Court of British Columbia for summary determination. The Company is seeking substantial damages, specifically US $ 860.9 million, as well as other costs and legal fees, based on Verano’s breach of contract and of its duty of good faith and honest performance. Due to uncertainties inherent in litigation, it is not possible for Vireo Growth 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. The damages sought will be significant and material given that Verano’s breach left the Company in a vulnerable position resulting in the Company being constrained in its ability to fund growth initiatives that were desirable and that its competitors were able to undertake, most notably in Minnesota and New York markets. ​ Lease commitments The Company leases various facilities, under non-cancelable finance and operating leases, which expire at various dates through September 2041. ​ ​ 18. Selling, General and Administrative Expenses Selling, general and administrative expenses are comprised of the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2024 2023 ​ 2024 2023 Salaries and benefits ​ $ 3,635,658 ​ $ 3,844,445 ​ $ 10,814,786 ​ $ 11,507,372 Professional fees ​ 1,026,305 ​ 687,007 ​ 4,324,986 ​ 3,273,733 Insurance expenses ​ 435,789 ​ 656,100 ​ 1,414,059 ​ 1,967,588 Marketing ​ ​ 239,932 ​ ​ 161,782 ​ ​ 651,892 ​ ​ 613,963 Other expenses ​ 1,573,594 ​ 1,399,980 ​ 4,321,399 ​ 4,602,920 Total ​ $ 6,911,278 ​ $ 6,749,314 ​ $ 21,527,122 ​ $ 21,965,576 ​ ​ 19. Other Income (Expense) The CARES Act provides an employee retention credit (“CARES Employee Retention credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020. Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021. Based on these additional provisions, the tax credit is now equal to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter. The Company applied for and received the tax credit under the CARES Act. During the three and nine months ended September 30, 2024, the Company recorded and received $ 815,422 (2023 - $ 4,650,264 ) related to the CARES Employee Retention credit in other income on the unaudited condensed consolidated statement of loss and comprehensive loss for the three and nine months ended September 30, 2024 and 2023. ​ On May 25, 2023, the Company and Grown Rogue International, Inc. (“ Grown Rogue ”) entered into a strategic agreement whereby Grown Rogue will support Vireo Growth in the optimization of its cannabis flower products. As part of this strategic agreement (the “ Consulting Agreement ”) Grown Rogue granted the Company 8,500,000 warrants to purchase subordinate voting shares of Grown Rogue on October 5, 2023. These warrants were valued at $ 5,221,971 on September 30, 2024 using a stock price of $ 0.70 , an exercise price of $ 0.167 , an expected life of 4.02 years, an annual risk free rate of 3.58 % , and volatility of 100 % . The change in fair value for the three and nine months ended September 30, 2024, of $ 354,328 and $ 3,284,619 , respectively, was recorded as other income in the unaudited condensed consolidated statement of loss and comprehensive loss for the three and nine months ended September 30, 2024. ​ ​ ​ ​ 23 Table of Contents 20. Supplemental Cash Flow Information (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2024 2023 Cash paid for interest ​ $ 20,355,166 ​ $ 18,214,889 Cash paid for income taxes ​ — ​ 1,055,235 Change in construction accrued expenses ​ ( 280,999 ) ​ 10,475,367 Stock issued in connection with financing activities ​ 5,387,500 ​ — (1) For supplemental cash flow information related to leases, refer to Note 10. ​ ​ ​ ​ 21. Financial Instruments Credit risk Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash, and accounts receivable. A small portion of cash is held on hand, from which management believes the risk of loss is remote. Receivables relate primarily to wholesale sales. The Company does not have significant credit risk with respect to customers. The Company’s maximum credit risk exposure is equivalent to the carrying value of these instruments. The Company has been granted licenses pursuant to the laws of the states of Maryland, Minnesota, and New York with respect to cultivating, processing, and/or distributing marijuana. Presently, this industry is illegal under United States federal law. The Company has adhered, and intends to continue to adhere, strictly to the applicable state statutes in its operations. Liquidity risk The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As of September 30, 2024, the Company’s financial liabilities consist of accounts payable, accrued liabilities, debt, convertible debt, liabilities held for sale, and uncertain tax liabilities. The Company manages liquidity risk by reviewing its capital requirements on an ongoing basis. Historically, the Company’s main source of funding has been additional funding from investors and debt issuances. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity or debt financing. Legal Risk Vireo Growth operates in the United States. The U.S. federal government regulates drugs through the Controlled Substances Act (21 U.S.C. § 811), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the U.S., and a lack of accepted safety for the use of the drug under medical supervision. The U.S. Food and Drug Administration has not approved marijuana as a safe and effective drug for any indication. In the U.S. marijuana is largely regulated at the state level. State laws regulating cannabis are in direct conflict with the federal Controlled Substances Act, which makes cannabis use and possession federally illegal. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency rates. Given the Company’s financial transactions are rarely denominated in a foreign currency, there is minimal foreign currency risk exposure. 24 Table of Contents Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company currently carries variable interest-bearing debt subject to fluctuations in the United States Prime rate. A change of 100 basis points in interest rates during the nine months ended September 30, 2024, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 420,133 . ​ ​ 22. Related Party Transactions As of September 30, 2024, and December 31, 2023, there were $ 0 and $ 121,846 due to related parties, respectively. ​ 23. Subsequent Events On October 9, 2024, the Company and Grown Rogue, mutually agreed to terminate the Consulting Agreement between the parties dated May 24, 2023, as amended September 20, 2023, effective September 30, 2024. As part of the termination agreement, Vireo Growth forfeited 4.5 million of the 8.5 million Grown Rogue warrants the Company received under the Consulting Agreement and paid Grown Rogue a lump sum termination fee of $ 800,000 . ​ On October 10, 2024, Joshua Rosen, Chief Executive Officer, Interim Chief Financial Officer and Director of the Company resigned from all of his positions with the Company. In conjunction with this event, the parties entered into a separation agreement (“ Separation Agreement ”) dated October 9, 2024 that provides, among other things, for the grant of 500,000 restricted stock units, which vest in 12 equal installments commencing January 1, 2025 and ending on December 1, 2025 and 500,000 immediately exercisable stock options with an exercise price per share of $ 0.50 . Such options expire October 9, 2027. Further, Mr. Rosen will receive salary continuation for two years at a rate of $ 300,000 per year. Pursuant to the Separation Agreement, the vesting of 250,000 options granted to Mr. Rosen in August 2024 were accelerated and are exercisable until October 9, 2027. ​ On November 1, 2024, the Company entered into a Joinder and Tenth Amendment to the Credit Facility, which provides a financing commitment of up to $ 10.0 million in aggregate principal amount of convertible notes (the “ Convertible Notes ”). These Convertible Notes are being funded by the Company’s senior secured lender and its affiliates. The Convertible Notes have a term of three years , with a cash interest rate of 12.0 percent, and such interest shall be paid in cash on the last business day of each calendar month. All accrued and unpaid interest shall be payable in full on the maturity date or earlier date of prepayment, in each case adjusted for any period of less than one calendar month, if applicable. The Convertible Notes are convertible at the option of lender, in whole but not in part in a single transaction, at any time into that number of Subordinate Voting Shares of the Company determined by dividing the outstanding principal amount plus all accrued but unpaid interest on the Convertible Notes on the date of such conversion by a conversion price equal to $ 0.625 . ​ ​ 25 Table of Contents , Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with the financial information and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our outlook, plans and strategy for our business and potential financing, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or “forward-looking information” within the meaning of Canadian securities laws. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “remain,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” “should,” “potential,” “intention,” “strategy,” “strategic,” “approach,” “subject to,” “possible,” “pending,” “if,” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements and forward-looking information are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements or forward-looking information. Factors that could cause or contribute to such differences include, but are not limited to, those identified in this Quarterly Report on Form 10-Q and those discussed in the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as amended, and in our other SEC and Canadian public filings. Such forward-looking statements reflect our beliefs and opinions on the relevant subject based on information available to us as of the date of this report, and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. You should not rely upon forward-looking statements or forward-looking information as predictions of future events. Furthermore, such forward-looking statements or forward-looking information speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements or forward-looking information to reflect events or circumstances after the date of such statements. Amounts are presented in United States dollars, except as otherwise indicated. Overview of the Company 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 three limited-license markets through our state-licensed subsidiaries, we cultivate and manufacture cannabis products and distribute these products through our growing network of Green Goods ® and other retail dispensaries we own or operate as well as to third-party dispensaries in the markets in which our subsidiaries hold operating licenses. ​ The termination of the Arrangement Agreement with Verano (as more fully described in Note 17 – Commitments and Contingencies – of our notes to our consolidated financial statement contained herein) gives rise to substantial doubt about the Company’s ability to continue as a going concern. Company management is working with the Company’s lenders, counsel, and other applicable parties to implement a plan to effectively mitigate the conditions giving rise to substantial doubt. Elements of this plan may include, but are not limited to, asset sales, debt restructuring, and capital raises. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the Company’s continuance as going concern is dependent on its future profitability and implementation of the aforementioned plan. The Company may not be successful in these efforts. ​ 26 Table of Contents Three months ended September 30, 2024, Compared to Three months ended September 30, 2023 Revenue We derived our revenue from cultivating, processing, and distributing cannabis products through our fourteen dispensaries in three states and our wholesale sales to third parties in three states. For the three months ended September 30, 2024, 78% of our revenue was generated from retail dispensaries and 22% from the wholesale business. For the three months ended September 30, 2023, 82% of our revenue was generated from retail business and 18% from wholesale business. For the three months ended September 30, 2024, Minnesota operations contributed approximately 46% of revenues, New York contributed 11%, and Maryland contributed 43%. For the three months ended September 30, 2023, Minnesota operations contributed approximately 48% of revenues, New York contributed 14%, and Maryland contributed 38%. Revenue for the three months ended September 30, 2024, was $25,165,343, an increase of $490,198 or 2% compared to revenue of $24,675,145 for the three-months ended September 30, 2023. The increase is primarily attributable to increased revenue contributions from the Maryland business driven by the ramp up in adult-use sales, which commenced on July 1, 2023, partially offset by the decrease in New York revenues. Retail revenue for the three months ended September 30, 2024, was $19,740,787 a decrease of $406,287 or 2% compared to retail revenue of $20,147,074 for the three months ended September 30, 2023, primarily due to decreased revenue contributions from the New York business. Wholesale revenue for the three months ended September 30, 2024, was $5,424,556, an increase of $896,485 compared to wholesale revenue of $4,528,071 for the three months ended September 30, 2023. The increase was primarily due to increased revenue contributions from the Maryland business driven by the ramp up in adult-use sales, which commenced on July 1, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ 2024 2023 $Change % Change Retail: ​ ​ ​ ​ ​ MN ​ $ 11,391,969 ​ $ 11,791,001 ​ $ (399,032) (3) % NY ​ 1,428,827 ​ 2,185,701 ​ (756,874) (35) % MD ​ ​ 6,919,991 ​ ​ 6,170,372 ​ ​ 749,619 12 % Total Retail ​ $ 19,740,787 ​ $ 20,147,074 ​ $ (406,287) (2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale: ​ ​ ​ ​ MD ​ 3,956,871 ​ 3,152,341 ​ 804,530 26 % NY ​ 1,321,224 ​ 1,375,730 ​ (54,506) (4) % MN ​ 146,461 ​ — ​ 146,461 100 % Total Wholesale ​ $ 5,424,556 ​ $ 4,528,071 ​ $ 896,485 20 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Revenue ​ $ 25,165,343 ​ $ 24,675,145 ​ $ 490,198 2 % NY ​ $ (2,750,051) ​ $ (3,561,431) ​ $ 811,380 (23) % Total Revenue excluding NY ​ $ 22,415,292 ​ $ 21,113,714 ​ $ 1,301,578 6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Sales and Gross Profit Gross profit reflects total net revenue less cost of sales. Cost of sales represents the costs attributable to producing bulk materials and finished goods, which includes direct materials, labor, and certain indirect costs such as depreciation, insurance, utilities and valuation adjustments. Cannabis costs are affected by various state regulations that limit the 27 Table of Contents sourcing and procurement of cannabis product, which may create fluctuations in gross profit over comparative periods as the regulatory environment changes. Cost of sales are determined from costs related to the cultivation and processing of cannabis and cannabis-derived products as well as the cost of finished goods inventory purchased from third parties and valuation adjustments. Cost of sales for the three months ended September 30, 2024, was $12,841,373, an increase of $1,363,616 compared to the three months ended September 30, 2023, of $11,477,757. Gross profit for the three months ended September 30, 2024, was $12,323,970, representing a gross margin of 49%. This is compared to gross profit for the three months ended September 30, 2023, of $13,197,388 or a 53% gross margin. The decrease was primarily attributable to sales pricing compression in Minnesota and Maryland, and a greater mix of wholesale sales during the three months ended September 30, 2024, relative to the three months ended September 30, 2023. We believe our current production capacity has not been fully realized and we expect future operations to benefit from increased revenue growth reflective of higher demand, increased product output and new product development. However, we expect gradual price compression as markets mature, which could place downward pressure on our retail and wholesale gross margins. Total Expenses Total expenses other than the cost of sales consist of selling costs to support customer relationships, marketing, and branding activities. It also includes a significant investment in the corporate infrastructure required to support ongoing business. Selling costs generally correlate to revenue. In the short-term as a percentage of sales, we expect selling costs to remain relatively flat. However, as anticipated positive regulatory developments in our core markets occur, we expect selling costs as a percentage of sales to decrease via growth in our retail and wholesale channels. General and administrative expenses also include costs incurred at the corporate offices, primarily related to personnel costs, including salaries, benefits, and other professional service costs, as well as corporate insurance, legal and professional fees associated with being a publicly traded company. We expect general and administrative expenses as a percentage of sales to decrease as we realize revenue growth organically and through anticipated positive regulatory developments in our core markets. Total expenses for the three months ended September 30, 2024, were $8,472,523 an increase of $1,146,629 compared to total expenses of $7,325,894 for the three months ended September 30, 2024. The increase in total expenses is primarily attributable to a increase in stock-based compensation expense driven by the issuance restricted stock unit and option grants during the three months ended September 30, 2024. Operating Income before Other Income (Expense) and Income Taxes Operating income before other income (expense) and provision for income taxes for the three months ended September 30, 2024, was $3,851,447 a decrease of $2,020,047 compared to $5,871,494 for the three months ended September 30, 2023. Total Other Expense Total other expense for the three months ended September 30, 2024, was $6,392,805, a decrease of $1,227,715 compared to other expense of $7,620,520 for the three months ended September 30, 2023. This change is primarily attributable to increased other income driven by the increasing value of the warrants we hold in Grown Rogue. 28 Table of Contents Provision for Income Taxes Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. For the three months ended September 30, 2024, tax expense totaled $2,385,000 compared to tax expense of $3,480,000 for the three months ended September 30, 2023. ​ Nine months ended September 30, 2024, Compared to nine months ended September 30, 2023 Revenue We derived our revenue from cultivating, processing, and distributing cannabis products through our fourteen dispensaries in three states and our wholesale sales to third parties in three states. For the nine months ended September 30, 2024, 81% of our revenue was generated from retail dispensaries and 19% from the wholesale business. For the nine months ended September 30, 2023, 84% of our revenue was generated from retail business and 16% from wholesale business. For the nine months ended September 30, 2024, Minnesota operations contributed approximately 48% of revenues, New York contributed 11%, and Maryland contributed 41%. For the nine months ended September 30, 2023, Minnesota operations contributed approximately 54% of revenues, New York contributed 16%, New Mexico contributed 3%, and Maryland contributed 27%. Revenue for the nine months ended September 30, 2024, was $74,360,905, an increase of $10,400,780 or 16% compared to revenue of $63,960,125 for the nine months ended September 30, 2023. The increase is primarily attributable to increased revenue contributions from the Maryland business driven by the commencement of adult-use sales on July 1, 2023, partially offset by the decrease in New Mexico revenues, which was divested in June of 2023. Retail revenue for the nine months ended September 30, 2024, was $60,159,246 an increase of $6,397,273 or 12% compared to retail revenue of $53,761,973 for the nine months ended September 30, 2023, primarily due to increased revenue contributions from the Maryland business driven by the commencement of adult-use sales on July 1, 2023, partially offset by the decrease in New Mexico revenues, which was divested in June of 2023. Wholesale revenue for the nine months ended September 30, 2024, was $14,201,659 an increase of $4,003,507 compared to wholesale revenue of $10,198,152 for the nine months ended September 30, 2023. The increase was primarily due to 29 Table of Contents increased revenue contributions from the Maryland business driven by the commencement of adult-use sales on July 1, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ 2024 2023 $ Change % Change Retail: ​ ​ ​ ​ ​ MN ​ $ 34,608,015 ​ $ 33,989,289 ​ $ 618,726 2 % NY ​ 4,854,423 ​ 6,827,278 ​ (1,972,855) (29) % NM ​ — ​ 1,964,285 ​ (1,964,285) (100) % MD ​ ​ 20,696,808 ​ ​ 10,981,121 ​ ​ 9,715,687 ​ 88 % Total Retail ​ $ 60,159,246 ​ $ 53,761,973 ​ $ 6,397,273 12 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale: ​ ​ ​ ​ MD ​ $ 10,594,167 ​ $ 6,553,361 ​ $ 4,040,806 62 % NY ​ 3,454,162 ​ 3,605,064 ​ (150,902) (4) % NM ​ ​ — ​ ​ 39,727 ​ ​ (39,727) ​ (100) % MN ​ ​ 153,330 ​ ​ — ​ ​ 153,330 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Wholesale ​ $ 14,201,659 ​ $ 10,198,152 ​ $ 4,003,507 39 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Revenue ​ $ 74,360,905 ​ $ 63,960,125 ​ $ 10,400,780 16 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NY and NM ​ $ (8,308,585) ​ $ (12,396,627) ​ $ 4,088,042 ​ (33) % Total Revenue excluding NY and NM ​ $ 66,052,320 ​ $ 51,563,498 ​ $ 14,488,822 ​ 28 % ​ ​ Cost of Sales and Gross Profit Cost of sales for the nine months ended September 30, 2024, was $36,241,865, an increase of $4,330,636 compared to the nine months ended September 30, 2023, of $31,911,229. Gross profit for the nine months ended September 30, 2024, was $38,119,040, representing a gross margin of 51%. This is compared to gross profit for the nine months ended September 30, 2023, of $32,048,896 or a 50% gross margin. The lack of New Mexico operations, which carried a lower margin, in 2024 is the primary driver of the small increase in margin. Total Expenses Total expenses for the nine months ended September 30, 2024, were $23,714,126 a decrease of $3,136,814 compared to total expenses of $26,850,940 for the nine months ended September 30, 2023. The decrease in total expenses is primarily attributable to a decrease in salaries and wages and stock-based compensation expense. Operating Income before Other Income (Expense) and Income Taxes Operating income before other income (expense) and provision for income taxes for the nine months ended September 30, 2024, was $14,404,914 an increase of $9,206,958 compared to $5,197,956 for the nine months ended September 30, 2023. Total Other Expense Total other expense for the nine months ended September 30, 2024, was $19,941,142, an increase of $513,805 compared to other expense of $19,427,337 for the nine months ended September 30, 2023. This change is primarily attributable to increased interest expenses. 30 Table of Contents Provision for Income Taxes Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. For the nine months ended September 30, 2024, tax expense totaled $6,770,000 compared to tax expense of $6,734,871 for the nine months ended September 30, 2023. ​ ​ NON-GAAP MEASURES EBITDA is a non-GAAP measure that does not have a standardized definition under the generally accepted accounting principles in the United States of America (“ GAAP”). Total Revenues excluding revenues from states where we have divested operations is also a non-GAAP measure that does not have a standardized definition under GAAP. The following information provides reconciliations of the supplemental non-GAAP financial measure EBITDA presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP. Reconciliations of the supplemental non-GAAP financial measure Total Revenues that excludes revenues from states where we have divested operations presented herein to the most directly comparable financial measures calculated in accordance with GAAP can be found in the tables above where the measure appears. We have provided these non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. This supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 ​ 2024 2023 Net income (loss) ​ $ (4,926,358) ​ $ (5,229,026) ​ $ (12,306,228) ​ $ (20,964,252) Interest expense, net ​ 7,363,655 ​ 7,915,658 ​ 23,604,746 ​ 22,795,242 Income taxes ​ 2,385,000 ​ 3,480,000 ​ 6,770,000 ​ 6,734,871 Depreciation & Amortization ​ 256,326 ​ 279,963 ​ 762,864 ​ 875,949 Depreciation and amortization included in cost of sales ​ 582,072 ​ 577,132 ​ 1,752,770 ​ 1,871,197 EBITDA (non-GAAP) ​ $ 5,660,695 ​ $ 7,023,727 ​ $ 20,584,152 ​ $ 11,313,007 ​ Liquidity, Financing Activities During the Period, and Capital Resources We are an early-stage growth company. We are generating cash from sales and deploying our capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are for capital expenditures and improvements in existing facilities, product development and marketing, customer, supplier, investor, industry relations, and working capital. Current management forecasts and related assumptions support the view that we can adequately manage the operational needs of the business. Credit Facility During 2017, the Company signed a promissory note payable in the amount of $1,010,000. The note bears interest at a rate of 15% per annum with interest payments required on a monthly basis. In 2019, the Company’s promissory note payable in the amount of $1,010,000 was modified to increase the amount payable to $1,110,000. The Company repaid the note in full during the nine months ended September 30, 2024. ​ 31 Table of Contents On November 19, 2021, the Company signed a promissory note payable in the amount of $2,000,000 in connection with the acquisition of Charm City Medicus, LLC. The note bears an interest rate of 8% per annum with interest payments due on the last day of each calendar quarter. On November 19, 2023, the Company and lender amended the note. Per the terms of the amendment, the interest rate was modified to 15%, and the Company paid off $1,000,000 of principal. The remaining principal balance of $1,000,000 is due on November 19, 2024, and the note is secured by 25% of the membership interests in Vireo Health of Charm City, LLC. ​ On March 25, 2021, the Company entered into a credit agreement for a senior secured delayed draw term loan with an aggregate principal amount of up to $46,000,000 (the “ Credit Facility ”), and executed a draw of $26,000,000 in principal. The unpaid principal amounts outstanding under the Credit Facility bear interest at a rate of (a) the U.S. prime rate plus 10.375%, payable monthly in cash, and (b) 2.75% per annum paid in kind (“PIK”) interest payable monthly. In connection with the Credit Facility, the Company also pays a monthly credit monitoring fee in the amount of $130,400 which is included in interest expense in the consolidated statements of loss and comprehensive loss for the nine months ended September 30, 2024 and 2023. ​ On November 18, 2021, the Company and lenders amended the Credit Facility to provide for an additional loan of $4,200,000 with a cash interest rate of 15% per annum and PIK interest of 2% per annum and a maturity date of November 29, 2024. Obligations under the Credit Facility are secured by substantially all the assets of the Company. ​ On January 31, 2022, Vireo Growth and certain of its subsidiaries, as borrowers (collectively, “ Borrowers ”), entered into a Third Amendment to the Credit Facility (the “ Third Amendment ”) providing for additional delayed draw term loans of up to $55 million (the “ Delayed Draw Loans ”). The cash interest rate on the Delayed Draw Loans under the Third Amendment is equal to the U.S. prime rate plus 10.375%, with a minimum required rate of 13.375% per annum, in addition to PIK interest of 2.75% per annum. ​ On March 31, 2023, the Company executed a fifth amendment to its Credit Facility with its senior secured lender, Chicago Atlantic Admin, LLC (the " Agent "), an affiliate of Green Ivy Capital, and a group of lenders. The amended credit facility extends the maturity date on its Delayed Draw Loans to April 30, 2024, through the issuance of 15,000,000 Subordinate Voting Shares in lieu of a cash extension fee. These 15,000,000 shares were valued at $1,407,903 using a fair value per share of $0.094 and considered a deferred financing cost. The fair value per share reflects a 22% discount to the market price at the time of issuance to account for the four-month trading lock-up imposed on the shares. The amendment also provides the Company with reduced cash outlays by eliminating required amortization of the loan, and requires the Company to divest certain assets to improve its liquidity position and financial performance. The Company has the potential to extend the maturity date on its Delayed Draw Loans up to January 31, 2026 with the satisfaction of certain financial performance-related conditions. ​ On April 30, 2024, the Company executed a short-term extension of the maturity date on the Credit Facility with the Agent. The Credit Facility was extended until June 14, 2024, matching all other terms of the existing agreement. On June 14, 2024, another short-term extension was executed which extended the maturity date on the Credit Facility to July 31, 2024, matching all other terms of the existing agreement. ​ On July 31, 2024, the Company executed a ninth amendment to the Company’s Credit Facility. The ninth amendment to the Credit Facility extends the maturity date on the credit facility loans to January 29, 2027, adjusts and extends the deadline with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amends certain financial measure definitions and covenants within the agreement. The Company issued 12,500,000 Subordinate Voting Shares to the lenders in consideration for the credit facility amendment. These 15,000,000 shares were valued at $5,387,500 using a fair value per share of $0.431 and considered a deferred financing cost. ​ Unless otherwise specified, all deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan. As of September 30, 2024, $5,089,311 (December 31, 2023 - $1,524,531) of deferred financing costs remain unamortized. ​ 32 Table of Contents Convertible Notes ​ On April 28, 2023, the Company closed on a new convertible debt facility which enables the Company to access up to $10,000,000 in aggregate principal amount of convertible notes (the “ Convertible Notes ”). The convertible facility has a term of three years, with an annual interest rate of 12.0%, comprised of 6.0% cash and 6.0% PIK. The initial tranche's principal amount of Convertible Notes outstanding in the amount of $2,000,000, plus all PIK and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to $0.145. For each future tranche advanced, the principal amount of Convertible Notes outstanding, plus all PIK interest and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to the lesser of $0.145 or a 20.0% premium over the 30-day volume weighted average price of the Company’s Subordinate Voting Shares calculated on the day prior to the date on which each tranche is advanced, if permitted by the Canadian Securities Exchange. The lenders also have the right to advance any remaining undrawn funds on the convertible loan facility to the Company at any time. If the notes are not converted, the outstanding principal amount and unpaid PIK interest is due on April 30, 2026. ​ During the year ended December 31, 2023, the Company closed eight additional tranches of Convertible Notes, which are convertible into Subordinate Voting Shares at a conversion price of $0.145. Total proceeds received from these tranches amounted to $8,000,000. ​ In connection with this financing, the Company issued 6,250,000 warrants to purchase Subordinate Voting Shares of the Company to the lenders. These warrants have a five year term, a strike price of $0.145, and were valued at $497,055. The value of these warrants and other legal and administrative expenses amounting to $1,346,793 are treated as deferred financing costs. All deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan. As of September 30, 2024, $0 (December 31, 2023 - $1,083,697) of deferred financing costs remain unamortized. ​ On July 31, 2024, the holders voluntarily converted all outstanding convertible notes into 73,016,061 Subordinate Voting Shares of the Company. ​ Cash Used in Operating Activities Net cash used in operating activities was $0.2 million for the nine months ended September 30, 2024, a decrease of $3.8 million as compared to $0.5 million for the nine months ended September 30, 2023. The increase is primarily attributed to less favorable changes in working capital, and reduced proceeds received from the Cares Employee Retention Credit in 2024 relative to 2023. Cash Used in Investing Activities Net cash used in investing activities was $5.5 million for the nine months ended September 30, 2024, an increase of $2.2 million compared to net cash used in investing activities of $3.3 million for the nine months ended September 30, 2023. The increase is primarily attributable to increased property, plant, and equipment additions relative to the prior year. Cash Used in Financing Activities Net cash provided by financing activities was $0.6 million for the nine months ended September 30, 2024, a change of $1.4 million as compared to $2.0 million provided by financing activities in the nine months ended September 30, 2023. The change was principally due to the issuance of convertible during the nine months ended September 30, 2024. Lease Transactions As of September 30, 2024, we have entered into lease agreements for the use of buildings used in cultivation, production and/or sales of cannabis products in Maryland, Minnesota, and New York. ​ 33 Table of Contents The lease agreements for all of the retail space used for our dispensary operations are with third-party landlords and remaining duration ranges from 1 to 6 years. These agreements are short-term facility leases that require us to make monthly rent payments as well as funding common area costs, utilities and maintenance. In some cases, we have received tenant improvement funds to assist in the buildout of the space to meet our operating needs. As of September 30, 2024, we operated 14 retail locations secured under these agreements. We have also entered into sale and leaseback arrangements for our cultivation and processing facilities in Minnesota and New York with a special-purpose real estate investment trust. These leases are long-term agreements that provide, among other things, funds to make certain improvements to the property that will significantly enhance production capacity and operational efficiency of the facility. Excluding any contracts under one year in duration, the future minimum lease payments (principal and interest) on all our leases are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Leases ​ Finance Leases ​ ​ ​ ​ September 30, 2024 September 30, 2024 Total 2024 ​ $ 560,981 ​ $ 3,416,902 ​ $ 3,977,883 2025 ​ 3,047,603 ​ 13,773,155 ​ 16,820,758 2026 ​ 2,727,346 ​ 14,183,661 ​ 16,911,007 2027 ​ 2,474,144 ​ 14,606,527 ​ 17,080,671 2028 ​ 2,254,049 ​ 15,042,128 ​ 17,296,177 Thereafter ​ 7,824,515 ​ 218,572,918 ​ 226,397,433 Total minimum lease payments ​ $ 18,888,638 ​ $ 279,595,291 ​ $ 298,483,929 Less discount to net present value ​ ​ (4,111,939) ​ (185,628,604) ​ (189,740,543) Less liabilities held for sale ​ ​ (2,837,202) ​ ​ (85,599,819) ​ ​ (88,437,021) Present value of lease liability ​ $ 11,939,497 ​ $ 8,366,868 ​ $ 20,306,365 ​ ADDITIONAL INFORMATION Outstanding Share Data As of November 11, 2024, we had 200,762,510 shares issued and outstanding, consisting of the following: (a) Subordinate Voting Shares 200,464,196 shares issued and outstanding. The holders of Subordinate Voting Shares are entitled to receive dividends which may be declared from time to time and are entitled to one vote per share at all shareholder meetings. All Subordinate Voting Shares are ranked equally with regards to the Company’s residual assets. The Company is authorized to issue an unlimited number of no-par value Subordinate Voting Shares. (b) Multiple Voting Shares 298,314 shares issued and outstanding. The holders of Multiple Voting Shares are entitled to one hundred votes per share at all shareholder meetings. Each Multiple Voting Share is exchangeable for one hundred subordinate voting shares. The Company is authorized to issue an unlimited number of Multiple Voting Shares. 34 Table of Contents Options, Warrants, and Convertible Promissory Notes As of September 30, 2024, we had 31,440,328 employee stock options outstanding, 4,107,749 RSUs outstanding, 3,037,649 Subordinate Voting Share compensation warrants denominated in C$ related to financing activities, and 16,096,873 Subordinate Voting Share compensation warrants outstanding. Off-Balance Sheet Arrangements As of the date of this filing, we do not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources. Critical Accounting Policies and Estimates There have been no material changes to our critical accounting policies and estimates from the information provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2023, as amended. ​ Item 3. Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies. ​ Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to the Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We, under the supervision of and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024, and, based on that evaluation, have concluded that the design and operation of our disclosure controls and procedures were effective as of such date. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ​ PART II — OTHER INFORMATION Item 1. Legal Proceedings We are involved in various regulatory issues, claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material, adverse effect on our results of operations or financial condition. The information contained in Part I, Item 1. Financial Statement and Supplementary Date - Note 17, "Commitments and Contingencies," under the heading "Legal Proceedings," is incorporated by reference into this Item 1. ​ 35 Table of Contents Item 1A. Risk Factors Not applicable. ​ Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Except as previously reported, there were no unregistered sales of equity securities or repurchase of equity securities occurred during the three months ended September 30, 2024. ​ ​ Item 5. Other Information ​ Insider Trading Arrangements ​ During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted , modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933). ​ Item 6. Exhibits ​ ​ Exhibit No. Description of Exhibit ​ 3.1 ​ ​ Notice of Alteration, Notice of Articles and Certificate of Name Change dated June 25, 2024 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed July 1, 2024) ​ ​ ​ 3.2 ​ Articles of Vireo Growth Inc. dated June 25, 2024 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed July 1, 2024) ​ ​ ​ 10.78 ​ Waiver and Ninth Amendment to Credit Agreement, dated as of July 31, 2024, by and among Vireo Growth Inc. and certain of its subsidiaries, the persons from time-to-time party thereto as guarnators, the lenders party thereto, and Chicago Atlantic Admin, LLC, as administrative agend and as collateral agent. ​ ​ ​ 31.1 ​ Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer ​ 31.2 ​ Rule 13a-14(a)/15d-14(a) certification of Interim Chief Financial Officer ​ ​ ​ 32.1 ​ Section 1350 certification, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ​ 101 ​ Includes the following financial and related information from Vireo Growth’s Quarterly Report on Form 10-Q as of and for the quarter ended September 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Comprehensive Income, (4) the Consolidated Statements of Changes in Stockholders’ Equity, (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements. ​ ​ ​ 104 ​ The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL. ​ ​ ​ 36 Table of Contents ​ SIGNATURES Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ​ ​ VIREO GROWTH INC. (Registrant) ​ ​ ​ Date: November 13, 2024 By: /s/ Amber Shimpa ​ ​ Name: Amber Shimpa ​ ​ Title: Chief Executive Officer (principal executive officer) ​ ​ ​ ​ Date: November 13, 2024 By: /s/ Joseph Duxbury ​ ​ Name: Joseph Duxbury ​ ​ Title: Interim Chief Financial Officer (principal accounting and financial officer) ​ ​ ​ ​ ​ ​ 37