Fourth Quarter Results 2021 Reported by Grown Rogue

Positive Net Income of $0.43M, before fair value adjustments

Q4 2021 Revenue of $3.76M versus $3.03M in Q3 2021, an increase of 24%
Q4 2021 aEBITDA1 margin of 30% ($1.14M), versus 25% ($0.77M) in Q3 2021, an increase of 48% ($0.37M)
Michigan operations (through Golden Harvests, LLC) report industry leading gross margin of 72% and aEBITDA1 margin of 52%, before fair value adjustments
Top performing Oregon brand in both August and October, according to LeafLink

MEDFORD, Ore.–(BUSINESS WIRE)–Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a multi-state cannabis company with operations and assets in Oregon and Michigan, reports unaudited fourth quarter results. All financial information is provided in U.S. dollars unless otherwise indicated.

Fourth Quarter 2021 Financial Summary

Grown Rogue Closes Private Placement for Gross Proceeds of USD$1,300,000

Grown Rogue Reports Record Q3 2021 Results

Eighth consecutive quarter, including pro-forma results, of positive aEBITDA1
Revenue of $3.76M compared to $3.03M in the Q3 2021, an increase of 24%
Gross margin, before fair value adjustments, of 62.4% compared to 59.1% in the third quarter, an increase of >300 basis points
aEBITDA margin of 30.4% ($1.14M) compared to 25.5% ($0.77M) in Q3 2021, an increase of 48% ($0.37M)
Operating income, before fair value adjustments, of $0.73M compared to $0.26M in the Q3 2021, an increase of 177%
Operating margin of 19.5% compared to 8.7% in the third quarter, an increase of >1000 basis points compared to Q3 2021
Net income, before fair value adjustments, of $0.43M
Working capital of $2.94M compared to $1.85M in Q3 2021
Net assets (excluding intangibles and goodwill) of $6.82M compared to $5.55M in Q3 2021
Subsequent to quarter-end, Grown Rogue closed a private placement for gross proceeds of $1.3M USD including $0.3M from the Company’s chief executive officer, Obie Strickler

“Grown Rogue continues to execute on our growth plan, increasing revenue by 24% and aEBITDA by 48% sequentially. The company gained market share in both Oregon and Michigan as our customers and retail partners value our quality, consistency, and service. Our 24% revenue growth vs market headwinds on the west coast (Oregon sales down 7%) validates the strength in our products and our team” said Obie Strickler, CEO of Grown Rogue. “Even with the significant pricing pressure being experienced across the sector affecting many of our peers, Grown Rogue’s continued industry leading metrics speak to our efficiency and discipline with managing costs. We are excited to enter 2022 where we expect to continue building our low-cost, high-quality flower business and launch some new products into our markets.”

Highlights by State

Oregon Operations

Revenue of $1.62M compared to $1.28M in the Q3 2021, an increase of 27%
Indoor revenue of $1.57M compared to $1.06M in Q3 2021, an increase of 48%
Gross margin, before fair value adjustments, of 49.4% compared to 40.2% in Q3 2021, an increase of >900 basis points
Segmented aEBITDA1 margin of 44.7% compared to 7.9% in the third quarter
Average selling price of indoor whole flower of $858/pound compared to $1,079/pound in Q3 2021, a decrease of 20%
Indoor production run rate expected to increase from 700 pounds/month in Q4 2021 to 1000 pounds/month in the Q2 2022
Harvested ~3% of Oregon’s total indoor wet weight with only ~0.3% of producer licenses in the state

Michigan Operations

Revenue of $2.14M compared to $1.75M in the Q3 2021, an increase of 22%
Gross margin, before fair value adjustments, of 72.3% compared to 73.0% in Q3 2021
Segmented aEBITDA 1 margin of 52.1% compared to 54.8% in the Q3 2021
Average selling price of indoor whole flower of $1740/pound compared to $2077/pound in Q3 2021, a decrease of 16%
Indoor production run rate expected to increase from 550 pounds/month in Q4 2021 quarter to 750 pounds/month in Q2 2022
Improved wholesale position in bulk flower sales in 2021 from 20th in the Q2 2021 to 16th in the Q3 2021 to 10th in Q4 2021, according to LeafLink’s MarketScape data
Expect state market share to increase in fiscal 2022 as additional cultivation capacity comes online and the Company enters new product categories

The financial information in this release is preliminary and subject to completion of Grown Rogue’s year-end financial reporting processes and audit. Grown Rogue expects to file its fiscal year 2021 in February 2022.

About Grown Rogue

Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning grow team, state of the art indoor and outdoor manufacturing facilities, and consumer insight-based product categorization, to create innovative products thoughtfully curated from “seed to experience.” The Grown Rogue family of products include sungrown and indoor premium flower, along with nitro sealed indoor and sungrown pre-rolls and jars.

NOTES:

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

2. The Company has provided Cash Margin Analysis to demonstrate the methodology for calculating its non-IFRS production cost and margin metrics. Cash production costs of Grown Rogue products is calculated by taking the cost of finished cannabis inventory sold and deducting non-cash production costs, packaging and distribution costs, inventory write-offs and adjustments, and cost of products purchased from other Licensed Producers that were sold. Cash cost of sales per gram of dried cannabis sold is calculated by taking cash production costs of Grown Rogue products by total grams of dried cannabis sold in the period. Management believes these measures provide useful information as they remove noncash amortization and packaging costs and provide a benchmark of the Company against its competitors.

3. The Company has provided unaudited pro-forma revenue information, which assumes that closed and pending mergers and acquisitions in 2020 are included in the Company’s financial results as of the beginning of the quarterly and annual periods in 2020 for the Company and target companies.

NON-IFRS FINANCIAL MEASURES

Cash production costs of Grown Rogue products, EBITDA and aEBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The Company has also provided unaudited pro-forma financial information, which assumes that closed and pending mergers and acquisitions in 2020 are included in the Company’s financial results as of the beginning of the quarterly and annual periods in 2020. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein. Accordingly, the following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS.

About Grown Rogue