Cresco Labs Inc.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 05:52

UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED (Form 6-K)

UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDED
MARCH 31, 2026 AND 2025
(Expressed in United States Dollars)



CRESCO LABS INC.
INDEX TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Condensed Interim Consolidated Financial Statements:
Balance Sheets as of March 31, 2026 and December 31, 2025
2
Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and March 31, 2025
3
Statements of Changes in Shareholders' Equity for the three months ended March 31, 2026 and March 31, 2025
4
Statements of Cash Flows for the three months ended March 31, 2026 and March 31, 2025
5
Notes to the Unaudited Condensed Interim Consolidated Financial Statements:
Note 1. Nature of Operations
6
Note 2. Summary of Significant Accounting Policies
6
Note 3. Inventory
10
Note 4. Property and Equipment
11
Note 5. Intangible Assets and Goodwill
12
Note 6. Share Capital
13
Note 7. Net Loss Per Share
15
Note 8. Business Combinations
16
Note 9. Long-term Notes and Loans Payable, Net
18
Note 10. Disaggregation of Revenue
19
Note 11. Related Party Transactions
19
Note 12. Commitments and Contingencies
20
Note 13. Financial Instruments and Financial Risk Management
21
Note 14. Variable Interest Entities
24
Note 15. Segment Information
25
Note 16. Interest Expense, Net
26
Note 17. Provision for Income Taxes and Deferred Income Taxes
26
Note 18. Subsequent Events
27
1

Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Balance Sheets
As of March 31, 2026 and December 31, 2025
(In thousands of United States Dollars, except share amounts)
March 31, 2026 December 31, 2025
ASSETS (audited)
Current assets:
Cash and cash equivalents1
$ 32,345 $ 57,902
Restricted cash 31,228 33,184
Accounts receivable, net 38,147 37,887
Inventory, net 108,441 98,666
Prepaid expenses 14,786 11,725
Other current assets 21,724 19,909
Total current assets 246,671 259,273
Non-current assets:
Property and equipment, net1
325,589 327,192
Right-of-use assets - operating, net1
89,231 86,773
Right-of-use assets - finance, net 12,354 12,947
Intangible assets, net1
288,449 275,342
Goodwill 209,041 208,173
Deferred tax asset 13,648 13,501
Other non-current assets 13,876 14,099
Total non-current assets 952,188 938,027
TOTAL ASSETS $ 1,198,859 $ 1,197,300
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,173 $ 16,540
Accrued liabilities 55,034 58,017
Short-term borrowings, net
10,858 10,784
Current portion of operating lease liabilities 10,298 9,793
Current portion of finance lease liabilities 2,647 2,480
Deferred and contingent consideration, short-term 5,162 2,566
Total current liabilities 98,172 100,180
Non-current liabilities:
Long-term notes and loans payable, net1
418,229 417,095
Operating lease liabilities1
127,194 125,743
Finance lease liabilities 17,555 18,269
Deferred tax liability 33,800 33,619
Deferred and contingent consideration, long-term 7,674 5,815
Tax receivable agreement liability 66,118 71,603
Uncertain tax position liability 184,906 171,474
Other long-term liabilities 1,000 1,000
Total non-current liabilities 856,476 844,618
TOTAL LIABILITIES $ 954,648 $ 944,798
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS' EQUITY
Super Voting Shares, no par value; Unlimited shares authorized; 500,000 shares issued and outstanding at March 31, 2026 and December 31, 2025
Subordinate Voting Shares, no par value; Unlimited shares authorized; 354,225,583 and 343,232,815 issued and outstanding at March 31, 2026 and December 31, 2025, respectively
Proportionate Voting Shares2, no par value; Unlimited shares authorized; 16,271,816 and 16,298,484 issued and outstanding at March 31, 2026 and December 31, 2025, respectively
Special Subordinate Voting Shares3, no par value; Unlimited shares authorized; 1,589 shares issued and outstanding at March 31, 2026 and December 31, 2025
Share capital 1,736,107 1,722,277
Additional paid-in-capital 117,524 120,047
Accumulated other comprehensive loss (1,831) (1,631)
Accumulated deficit (1,515,773) (1,500,244)
Equity of Cresco Labs Inc. 336,027 340,449
Non-controlling interests (91,816) (87,947)
TOTAL SHAREHOLDERS' EQUITY 244,211 252,502
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,198,859 $ 1,197,300
1See Note 14 "Variable Interest Entities" for amounts related to variable interest entities.
2Proportionate Voting Shares ("PVS") presented on an "as-converted" basis to Subordinate Voting Shares ("SVS") (1-to-200)
3Special Subordinate Voting Shares ("SSVS") presented on an "as-converted" basis to SVS (1-to-0.00001)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
2

Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
For the Three Months Ended March 31, 2026 and 2025
(In thousands of United States Dollars, except share and per share amounts)

Three Months Ended March 31,
2026 2025
Revenues, net $ 151,325 $ 165,757
Cost of goods sold 75,876 87,126
Gross profit 75,449 78,631
Operating expenses:
Selling, general, and administrative 64,276 65,042
Total operating expenses 64,276 65,042
Income from operations 11,173 13,589
Other (expense) income, net:
Interest expense, net (14,927) (14,854)
Other income, net 960 347
Total other expense, net (13,967) (14,507)
Loss before income taxes (2,794) (918)
Income tax expense (14,220) (14,316)
Net loss $ (17,014) $ (15,234)
Net loss attributable to non-controlling interests, net of tax (3,942) (802)
Net loss attributable to Cresco Labs Inc. $ (13,072) $ (14,432)
Net loss per share - attributable to Cresco Labs Inc. shareholders:
Basic and diluted loss per share $ (0.04) $ (0.04)
Basic and diluted weighted-average shares outstanding 364,229,158 350,243,280
Comprehensive loss:
Net loss $ (17,014) $ (15,234)
Foreign currency translation differences, net of tax (200) 12
Total comprehensive loss for the period (17,214) (15,222)
Comprehensive loss attributable to non-controlling interests, net of tax (3,942) (802)
Total comprehensive loss attributable to Cresco Labs Inc. $ (13,272) $ (14,420)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

3

Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
For the Three Months Ended March 31, 2026 and 2025
(In thousands of United States Dollars)

Share capital Additional paid-in capital Accumulated other comprehensive loss, net of tax Accumulated deficit Non-controlling interests Total
Balance as of January 1, 2026 $ 1,722,277 $ 120,047 $ (1,631) $ (1,500,244) $ (87,947) $ 252,502
Exercise of stock options 5 (2) - - - 3
Issuance of vested restricted stock units 6,304 (6,304) - - - -
Share-based compensation - 5,398 - - - 5,398
Employee taxes withheld on certain share-based payment arrangements (1) (1,682) - - - (1,683)
Payable pursuant to tax receivable agreements 4 - - - - 4
Equity Issuances 95 - - - - 95
Equity issuances related to business combinations 5,985 - - - - 5,985
Net change in tax distribution accrual - 67 - - - 67
Tax distributions to non-controlling interest redeemable unit holders and other members - - - - (425) (425)
Excess cash distributions to non-controlling interest redeemable unit holders and other members - - - - (599) (599)
Non-controlling interests, net change in capital 78 - - - - 78
Cresco LLC shares redeemed 1,360 - - (2,457) 1,097 -
Foreign currency translation - - (200) - - (200)
Net loss - - - (13,072) (3,942) (17,014)
Ending balance as of March 31, 2026 $ 1,736,107 $ 117,524 $ (1,831) $ (1,515,773) $ (91,816) $ 244,211
Balance as of January 1, 2025 $ 1,706,822 $ 122,750 $ (2,232) $ (1,352,486) $ (86,678) $ 388,176
Issuance of vested restricted stock units 5,931 (5,931) - - - -
Share-based compensation - 2,535 - - - 2,535
Payable pursuant to tax receivable agreements (27) - - - - (27)
Equity issuances for consulting services 376 - - - - 376
Net change in tax distribution accrual - (228) - - - (228)
Tax distributions to non-controlling interest redeemable unit holders and other members - - - - (41) (41)
Cresco LLC shares redeemed 1,177 - - (2,320) 1,143 -
Foreign currency translation - - 12 - - 12
Net loss - - - (14,432) (802) (15,234)
Ending balance as of March 31, 2025 $ 1,714,279 $ 119,126 $ (2,220) $ (1,369,238) $ (86,378) $ 375,569
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
4

Cresco Labs Inc.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2026 and 2025
(In thousands of United States Dollars)

Three Months Ended March 31,
2026 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (17,014) $ (15,234)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 12,215 12,906
Amortization of operating lease assets 1,889 1,792
Provision for doubtful accounts for expected credit losses
364 81
Provision for expected credit losses 342 39
Share-based compensation expense 5,255 2,723
(Gain) loss on changes in fair value of deferred and contingent consideration (341) -
Loss on inventory write-offs and provision 741 902
Change in deferred taxes (204) (473)
Accretion of discount and deferred financing costs on debt arrangements 635 1,211
Other noncash adjustments
(232) 234
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (406) 6,807
Inventory (7,604) (4,166)
Prepaid expenses and other assets (5,793) (4,112)
Accounts payable and accrued liabilities (7,624) 13,922
Operating lease liabilities (2,290) (2,692)
Income taxes payable 14,436 16,523
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
(5,631) 30,463
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,638) (5,818)
Purchase of intangibles (2,285) (1,217)
Payment of acquisition consideration, net of cash acquired (2,189) -
Merger and acquisition consideration (1,587) -
Proceeds from other investing activities
467 166
NET CASH USED IN INVESTING ACTIVITIES (13,232) (6,869)
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax distribution payments in accordance with the tax receivable agreement (6,237) (4,251)
Tax distributions to non-controlling interest redeemable unit holders and other members (425) (41)
Excess cash distributions to non-controlling interest redeemable unit holders and other members (599) -
Principal payments on finance lease obligations (1,375) (1,119)
Payments for other financing activities
(10) (322)
NET CASH USED IN FINANCING ACTIVITIES (8,646) (5,733)
Effect of exchange rate changes on cash and cash equivalents (2) 2
Net (decrease) increase in cash and cash equivalents (27,511) 17,863
Cash and cash equivalents and restricted cash, beginning of period 94,335 144,255
Cash and cash equivalents, end of period 32,345 155,354
Restricted cash, end of period 31,228 3,513
Restricted cash included in other non-current assets, end of period 3,251 3,251
Cash and cash equivalents and restricted cash, end of period $ 66,824 $ 162,118
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Income tax, net $ - $ (1,734)
Interest 14,882 4,009
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Issuance of shares under business combinations and acquisitions $ 5,985 $ -
Deferred consideration for acquisitions
4,797 -
Non-controlling interests redeemed for equity 1,097 1,143
Liability incurred to purchase property, equipment and intangibles 1,717 1,794
Overpaid declared distributions to non-controlling interest redeemable unit holders (11,440) (17,171)
Receivable related to financing lease transactions - 612
Liability incurred in accordance with tax receivable agreement 71,631 79,064
Other non-cash transactions
290 249
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
5


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


NOTE 1. NATURE OF OPERATIONS
Cresco Labs Inc. ("Cresco Labs" or the "Company"), formerly known as Randsburg International Gold Corp. was incorporated in the Province of British Columbia under the Company Act on July 6, 1990. The Company is one of the largest vertically-integrated multi-state cannabis operators in the United States licensed to cultivate, manufacture, and sell retail and medical cannabis products primarily through Sunnyside*®, Cresco Labs' national dispensary brand and third-party retail stores. Employing a consumer-packaged goods approach to cannabis, Cresco Labs' house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco®, High Supply®, Mindy'sTM, Good News®, RemediTM, Wonder Wellness Co.®, and FloraCal® Farms. As of March 31, 2026, the Company operates in Illinois, Pennsylvania, Ohio, New York, Massachusetts, Michigan, Florida, and Kentucky pursuant to applicable state and local laws and regulations.
The Company's SVS are listed on the Canadian Securities Exchange under the ticker symbol "CL" and are quoted on the Over-the-Counter Market under the ticker symbol "CRLBF" and on the Frankfurt Stock Exchange under the symbol "6CQ."
The Company's corporate office is located at 600 W. Fulton Street, Suite 800, Chicago, IL 60661. The registered office is located at 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)Basis of Preparation
The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to Accounting Standards Codification ("ASC") 270 Interim Reporting. The financial data presented herein should be read in conjunction with the Company's audited annual consolidated financial statements and accompanying notes as of and for the years ended December 31, 2025 and 2024 as filed on SEDAR+ and EDGAR. The Consolidated Balance Sheet for the year ended December 31, 2025 was derived from audited financial statements filed on SEDAR+ on March 5, 2026 and EDGAR on March 6, 2026. In the opinion of management, the unaudited financial data presented includes all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2026 are not necessarily indicative of results that may be expected for any other reporting period. These unaudited condensed interim consolidated financial statements include estimates and assumptions of management that affect the amounts reported. Actual results could differ from these estimates.
(b)Basis of Measurement
The accompanying unaudited condensed interim consolidated financial statements have been prepared on a going concern basis, under the historical cost convention, except for certain loans receivable, investments, and contingent considerations, which are recorded at fair value. Historical cost is generally based upon the fair value of the consideration given in exchange for assets acquired and the contractual obligation for liabilities incurred.
(c)Functional and Presentation Currency
The Company's functional currency and that of the majority of its subsidiaries is the United States ("U.S.") dollar. The Company's reporting currency is the U.S. dollar ("USD"). Foreign currency denominated assets and liabilities are remeasured into the functional currency using period-end exchange rates. Gains and losses from foreign currency transactions are included in Other income, net in the Unaudited Condensed Interim Consolidated Statements of Operations.
6


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

Assets and liabilities of foreign operations having a functional currency other than USD (e.g., Canadian dollars) are translated at the rate of exchange prevailing at the reporting date; revenues and expenses are translated at the monthly average rate of exchange during the period. Gains or losses on translation of foreign subsidiaries and net investments in foreign operations are included in Foreign currency translation differences, net of tax in the Unaudited Condensed Interim Consolidated Statements of Comprehensive Loss and Accumulated other comprehensive loss on the Unaudited Condensed Interim Consolidated Balance Sheets.
(d)Basis of Consolidation
The unaudited condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries with intercompany balances and transactions eliminated upon consolidation. Subsidiaries are those entities over which the Company has the power over the investee, is exposed, or has rights, to variable involvement with the investee; and has the ability to use its power to affect its returns. The following are Cresco Labs' wholly-owned or controlled entities as of March 31, 2026:
Entity Location Purpose Percentage
Held
Cresco Labs Inc. British Columbia, Canada Parent Company
Cali-Antifragile Corp. California Holding Company 100%
River Distributing Co., LLC California Holding Company 100%
Cub City, LLC California Cultivation 100%
CRHC Holdings Corp. Ontario, Canada Holding Company 100%
Cannroy Delaware Inc. Delaware Holding Company 100%
Laurel Harvest Labs, LLC Pennsylvania Cultivation and Dispensary Facility 100%
JDRC Mount Joy, LLC Illinois Holding Company 100%
JDRC Scranton, LLC Illinois Holding Company 100%
Bluma Wellness Inc. British Columbia, Canada Holding Company 100%
Cannabis Cures Investments, LLC Florida Holding Company 100%
3 Boys Farm, LLC Florida Cultivation, Production and Dispensary Facility 100%
Farm to Fresh Holdings, LLC Florida Holding Company 100%
Cresco U.S. Corp. Illinois Holding Company 100%
Keystone Integrated Care, LLC Pennsylvania Dispensary 100%
Arizona Facilities Supply, LLC Arizona Holding Company 100%
Cresco Labs Michigan Management, LLC Michigan Holding Company 100%
MedMar Inc. Illinois Holding Company 100%
MedMar Lakeview, LLC Illinois Dispensary 88%
MedMar Rockford, LLC Illinois Dispensary 75%
Gloucester Street Capital, LLC New York Holding Company 100%
Valley Agriceuticals, LLC New York Cultivation, Production and Dispensary Facility 100%
Valley Agriceuticals Real Estate New York Holding Company 100%
JDRC Ellenville, LLC Illinois Holding Company 100%
CMA Holdings, LLC Illinois Holding Company 100%
BL Real Estate, LLC Massachusetts Holding Company 100%
BL Pierce, LLC Massachusetts Holding Company 100%
BL Uxbridge, LLC Massachusetts Holding Company 100%
BL Main, LLC Massachusetts Holding Company 100%
BL Burncoat, LLC Massachusetts Holding Company 100%
BL Framingham, LLC Massachusetts Holding Company 100%
BL Worcester, LLC Massachusetts Holding Company 100%
Cultivate Licensing LLC Massachusetts Holding Company 100%
Cultivate Worcester, Inc. Massachusetts Dispensary 100%
Cultivate Leicester, Inc. Massachusetts Cultivation, Production and Dispensary Facility 100%
Cultivate Framingham, Inc. Massachusetts Dispensary 100%
Cultivate Cultivation, LLC Massachusetts Cultivation and Production Entity 100%
High Road Holdings LLC Delaware Holding Company 100%
SPS Management, LLC Delaware Holding Company 100%
7


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

Entity Location Purpose Percentage
Held
Strategic Capital and Management Services, LLC1
Illinois Dispensary 0%
Altus Global, LLC Delaware Holding Company 100%
Altus, LLC Delaware Holding Company 100%
GoodNews Holdings, LLC Illinois Licensing Company 100%
Wonder Holdings, LLC Illinois Licensing Company 100%
JDRC Seed, LLC Illinois Educational Company 100%
CP Pennsylvania Holdings, LLC Illinois Holding Company 100%
Bay, LLC Pennsylvania Dispensary 100%
Bay Asset Management, LLC Pennsylvania Holding Company 100%
Ridgeback, LLC Colorado Holding Company 100%
Cresco Labs Texas, LLC Texas Holding Company 100%
CL Kentucky HoldCo, LLC Delaware Holding Company 100%
CL Kentucky Cultivation, LLC Delaware Cultivation Entity 100%
CL Kentucky Processing, LLC Delaware Production Entity 100%
CL Kentucky Dispensing, LLC Delaware Dispensary 100%
Cresco Labs, LLC Illinois Operating Entity 67%
IP CL, LLC Delaware Holding Company 100%
Cresco Labs Ohio, LLC Ohio Cultivation, Production and Dispensary Facility 99%
Cresco Labs Notes Issuer, LLC Illinois Holding Company
Wellbeings, LLC Delaware CBD Wellness Product Development 100%
Cresco Labs SLO, LLC California Holding Company 100%
SLO Cultivation Inc. California Holding Company 80%
Cresco Labs Joliet, LLC Illinois Cultivation and Production Facility 100%
Cresco Labs Kankakee, LLC Illinois Cultivation and Production Facility 100%
Cresco Labs Logan, LLC Illinois Cultivation and Production Facility 100%
Cresco Labs PA, LLC Illinois Holding Company 100%
Cresco Yeltrah, LLC Pennsylvania Cultivation, Production and Dispensary Facility 100%
Strip District Education Center Pennsylvania Holding Company 100%
JDC Newark, LLC Ohio Holding Company 100%
Verdant Creations Newark, LLC Ohio Dispensary 100%
Strategic Property Concepts, LLC Ohio Holding Company 100%
JDC Marion, LLC Ohio Holding Company 100%
Verdant Creations Marion, LLC Ohio Dispensary 100%
Strategic Property Concepts 4, LLC Ohio Holding Company 100%
JDC Chillicothe, LLC Ohio Holding Company 100%
Verdant Creations Chillicothe, LLC Ohio Dispensary 100%
Strategic Property Concepts 5, LLC Ohio Holding Company 100%
JDC Columbus, LLC Ohio Holding Company 100%
Care Med Associates, LLC Ohio Dispensary 100%
PDI Medical III, LLC Illinois Dispensary 100%
Phoenix Farms of Illinois, LLC Illinois Dispensary 100%
FloraMedex, LLC Illinois Dispensary 100%
Cresco Edibles, LLC Illinois Holding Company 100%
TSC Cresco, LLC Illinois Licensing 75%
Cresco HHH, LLC Massachusetts Cultivation, Production and Dispensary Facility 100%
Cresco Labs Missouri Management, LLC Missouri Holding Company 100%
JDRC Acquisitions, LLC Illinois Holding Company 100%
JDRC 7841 Grand LLC Illinois Holding Company 100%
JDRC Lincoln, LLC Illinois Holding Company 100%
JDRC Danville, LLC Illinois Holding Company 100%
JDRC Kankakee, LLC Illinois Holding Company 100%
JDRC Brookville, LLC Illinois Holding Company 100%
Cresco Labs Michigan, LLC2
Michigan Cultivation and Production Facility 85%
1See Note 14 "Variable Interest Entities" for additional information.
2Legally, Cresco Labs Michigan, LLC is 42.5% owned by a related party within management of the Company.
8


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


Cresco U.S. Corp., which is wholly owned by the Company, is the sole manager of Cresco Labs, LLC; Cresco Labs, LLC is the sole owner and manager of Cresco Labs Notes Issuer, LLC. Therefore, the Company controls Cresco Labs Notes Issuer, LLC and has consolidated its results into the unaudited condensed interim consolidated financial statements.
Non-controlling interests ("NCI") represent ownership interests in consolidated subsidiaries by parties that are not shareholders of the Company. They are shown as a component of total equity in the Unaudited Condensed Interim Consolidated Balance Sheets, and the share of income attributable to NCI is shown as Net income attributable to non-controlling interests, net of tax in the Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss. Changes in the parent company's ownership that do not result in a loss of control are accounted for as equity transactions. See Note 6 "Share Capital" for additional information.

(e)Newly Adopted Accounting Pronouncements

In November 2025, the FASB issues ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans, which expands the population of acquired financial assets subject to the gross-up approach in Topic 326. This guidance in effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company adopted this ASU for the fiscal year ended December 31, 2026 and already applies the gross-up approach, as such, this ASU will not impact the Company's consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. This guidance is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company adopted this ASU for the fiscal year ended December 31, 2026 and does not expect a material impact to the consolidated financial statements. The Company has elected the practical expedient described in paragraphs 326-20-30-10C through 30-10D.
(f)Recently Issued Accounting Standards

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which addresses thirty-three issues that represent changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. This guidance is effective for interim periods within annual reporting periods beginning after December 15, 2026. Early adoption is permitted. Upon adoption, the guidance can applied either prospectively or retrospectively. The Company is currently assessing the impact of this ASU on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which amends the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. This guidance is effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Upon adoption, the guidance can applied either prospectively or retrospectively. The Company is currently assessing the impact of the disclosure requirements on our consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, Business Combination (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity ("VIE"), which provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs. The update aims to improve consistency and comparability in financial reporting. This guidance is effective for annual periods beginning after December 15, 2026, including interim periods within those annual
9


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

periods. Early adoption is permitted. Upon adoption, the guidance will be applied prospectively. The Company is currently assessing the impact of the disclosure requirements on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses. In January 2025, the FASB issued ASU No. 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date for non-calendar year-end entities. ASU 2024-03 is intended to enhance transparency into the nature and function of expenses. ASU 2024-03 requires that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization, and depletion. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Upon adoption, ASU 2024-03 should be applied on a prospective basis, while retrospective application is permitted. The Company is currently assessing the impact of the disclosure requirements on our consolidated financial statements.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission's ("SEC") Disclosure Update and Simplification Initiative. The amendments in this update represent changes to clarify or improve disclosure and presentation requirements of a variety of topics in the ASC. The amendments should be applied on a prospective basis and allow users to more easily compare entities subject to SEC's existing disclosure with those entities that were not previously subject to the SEC's requirements. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently assessing the impact of this ASU on our consolidated financial statements.
(g)Reclassifications

Certain immaterial prior period amounts were reclassified to conform to the current presentation. These reclassifications did not have a material impact on the Company's unaudited condensed interim consolidated financial statements, except for the following:

(i)The Company reclassified changes in fair value related to our deferred and contingent considerations to other expense, net previously included in interest expense, net on the Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss. The reclassification had no effect on Total other expense, net or net cash provided by operations.

NOTE 3. INVENTORY
Inventory as of March 31, 2026 and December 31, 2025, consisted of the following:
($ in thousands) March 31, 2026 December 31, 2025
Raw materials $ 14,081 $ 12,875
Raw materials - non-cannabis 12,174 12,210
Work-in-process 45,528 42,551
Finished goods 35,132 29,574
Finished goods - non-cannabis 1,526 1,456
Inventory, net $ 108,441 $ 98,666
During the three months ended March 31, 2026 and 2025, the net impact to inventory reserve was an increase of $0.7 million and $0.9 million, respectively. The expense related to the change in inventory reserve is included in Cost of goods sold presented in the Unaudited Condensed Interim Consolidated Statements of Operations.
10


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2026 and December 31, 2025 consisted of the following:
($ in thousands) March 31, 2026 December 31, 2025
Land and Buildings $ 223,629 $ 213,171
Machinery and Equipment 44,127 42,905
Furniture and Fixtures 49,961 47,745
Leasehold Improvements 171,363 170,849
Website, Computer Equipment and Software 12,044 11,975
Vehicles 2,678 2,678
Construction In Progress 16,522 22,988
Total property and equipment, gross 520,324 512,311
Less: Accumulated depreciation (194,735) (185,119)
Property and equipment, net $ 325,589 $ 327,192
As of March 31, 2026 and December 31, 2025, costs related to unfinished construction at the Company's facilities and dispensaries were capitalized in construction in progress and not depreciated. Depreciation will commence when construction is completed and the facilities and dispensaries are available for their intended use.
The following table reflects depreciation expense related to property and equipment for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Depreciation expense included in cost of goods sold and ending inventory $ 6,490 $ 7,246
Depreciation expense included in selling, general, and administrative expense 3,271 3,521
Total depreciation expense $ 9,761 $ 10,767
As of both March 31, 2026 and December 31, 2025, ending inventory includes $8.8 million of capitalized depreciation, respectively.
The following table reflects depreciation expense capitalized to cost of goods sold and depreciation expense capitalized to ending inventory for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Capitalized expense included in cost of goods sold $ 6,475 $ 7,013
Capitalized expense to inventory for prior periods 5,179 5,691
During the three months ended March 31, 2026, the Company disposed of $0.3 million of property and equipment no longer in use in various states resulting in immaterial net losses on the disposal of those assets which is recorded in Other income, net in the Unaudited Condensed Interim Consolidated Statements of Operations.

During the three months ended March 31, 2025, the Company disposed of $0.2 million of property and equipment no longer in use in various states. The Company recorded a total $0.2 million net loss on the disposal of those assets which is recorded in Other income, net in the Unaudited Condensed Interim Consolidated Statements of Operations.

11


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

NOTE 5. INTANGIBLE ASSETS AND GOODWILL
(a)Intangible Assets

Intangible assets consisted of the following as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025
($ in thousands) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net
Definite-Lived Intangible Assets:
Customer Relationships $ 32,000 $ (20,216) $ 11,784 $ 30,600 $ (19,150) $ 11,450
Trade Names 1,400 (1,400) - 1,400 (1,400) -
Permit Application Costs 7,013 (3,875) 3,138 4,488 (3,123) 1,365
Other Intangibles
4,917 (4,917) - 4,917 (4,917) -
Indefinite-Lived Intangible Assets:
Licenses 273,527 - 273,527 262,527 - 262,527
Total Intangible Assets $ 318,857 $ (30,408) $ 288,449 $ 303,932 $ (28,590) $ 275,342

During the three months ended March 31, 2026, the gross carrying amount of intangible assets increased by $14.9 million, primarily related to the Company's dispensaries transaction completed in the first quarter of 2026, see Note 8 "Business Combinations" for additional details.

The following table reflects the amortization expense related to definite-lived intangible assets for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Amortization expense included in cost of goods sold and ending inventory $ 761 $ 849
Amortization expense included in selling, general, and administrative expense 1,057 1,044
Total amortization expense $ 1,818 $ 1,893

As of March 31, 2026 and December 31, 2025, ending inventory included $0.3 million and $0.3 million of capitalized amortization, respectively.

The following table reflects amortization expense capitalized to cost of goods sold, that was previously capitalized to inventory, and amortization expense capitalized to ending inventory, related to prior periods, for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Capitalized expense included in cost of goods sold $ 822 $ 737
Capitalized expense to inventory for prior periods 314 194

12


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

The following table outlines the estimated amortization expense related to intangible assets for each of the next five years:
($ in thousands) Estimated Amortization Expense
Remaining in 2026 $ 5,860
2027 4,389
2028 3,035
2029 1,638
Thereafter -
Total estimated amortization expense $ 14,922

(b)Goodwill

The changes in carrying amount of goodwill by segment are as follows for the year ended December 31, 2025 and the three months ended March 31, 2026:

($ in thousands) Wholesale Retail Total
Balance at December 31, 2025
$ 57,555 $ 150,618 $ 208,173
Additions
- 868 868
Balance at March 31, 2026
$ 57,555 $ 151,486 $ 209,041
NOTE 6. SHARE CAPITAL
(a) Authorized
The authorized share capital of the Company is outlined in the Company's audited annual consolidated financial statements and accompanying notes as of and for the years ended December 31, 2025 and 2024, which were previously filed on SEDAR+ and EDGAR. There have been no changes in authorized share capital as of March 31, 2026.
13


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

(b) Issued and Outstanding Shares
As of March 31, 2026 and 2025, issued and outstanding capital consisted of the following:

(shares in thousands)
Redeemable
Units1
SVS2
PVS3
MVS4
SSVS5
Beginning balance, January 1, 2026
85,299 343,233 16,298 500 2
Stock options exercised - 3 - - -
RSUs6 issued
- 2,723 - - -
Equity issuances related to business combinations7
- 5,904 - - -
Cresco LLC redemptions (1,000) 1,000 - - -
PVS converted to SVS - 26 (26) - -
Issuances related to employee taxes on certain share-based payment arrangements - 1,337 - - -
Ending Balance, March 31, 2026 84,299 354,226 16,272 500 2
Beginning balance, January 1, 2025
92,057 331,490 17,107 500 2
RSUs issued - 2,235 - - -
Cresco LLC redemptions (1,153) 1,153 - - -
PVS converted to SVS - 167 (167) - -
Issuance of shares for consulting services - 522 - - -
Ending Balance, March 31, 2025 90,904 335,567 16,940 500 2
1 Redeemable units of Cresco Labs, LLC ("Redeemable Units")
2 SVS includes shares pending issuance or cancellation
3 PVS presented on an "as-converted" basis to SVS (1-to-200)
4 Super Voting Shares ("MVS")
5 SSVS presented on an "as-converted" basis to SVS (1-to-0.00001)
6 Restricted stock units ("RSUs")
7 See Note 8 "Business Combinations" for additional information
(c) Distribution to Non-controlling Interest Holders
Tax distributions are based off the tax rate determined by Cresco Labs Inc. (which is currently the highest U.S. individual income tax rate) applied to taxable income generated from Cresco Labs, LLC (i.e., not the whole Cresco group), which is the Company's most significant distribution, and attributable to the NCI members. The Company has other tax and non-tax distributions that are calculated in accordance with each relevant operating agreement.
As of March 31, 2026, the Company had an asset of $11.4 million for tax-related distributions to 2026 and 2025 unit holders of Cresco Labs, LLC and other minority interest holders. As of December 31, 2025, the Company had an asset of $11.3 million for tax-related distributions to the 2025 and 2024 unit holders of Cresco Labs, LLC and other minority interest holders.
During the second quarter of 2024, the Company recorded significant tax and tax-related items due to uncertain tax positions that its operations are not subject to IRC Section 280E. Due to this updated position, the Company determined it had overpaid tax distributions to 2025 and 2024 unit holders, and thus is currently in a net asset position.
In accordance with the underlying operating agreements, the Company declared and paid required distribution amounts to 2026 and 2025 unit holders of Cresco Labs, LLC and other minority holders during the three months ended March 31, 2026. Similarly, the Company declared and paid required tax distribution amounts to 2025 and 2024 unit holders of Cresco Labs, LLC and other minority interest holders during the three months ended March 31, 2025.
14


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

(d) Changes in Ownership and Non-controlling Interests
During the three months ended March 31, 2026, redemptions of 1.0 million Redeemable Units occurred during the period, which were converted into an equivalent number of SVS. These redemptions resulted in a decrease of 0.4% in non-controlling interest in Cresco Labs, LLC for the period.
During the three months ended March 31, 2025, redemptions of 1.2 million Redeemable Units occurred during the period, which were converted into an equivalent number of SVS. These redemptions resulted in a decrease of 0.5% in non-controlling interest in Cresco Labs, LLC for the period.
The effects of changes in the Company's ownership interests in less than 100% owned subsidiaries during the three months ended March 31, 2026 and 2025 were as follows:
Three Months Ended March 31,
($ in thousands) 2026 2025
Net loss attributable to Cresco Labs Inc. $ (13,072) $ (14,432)
Changes in Cresco Labs Inc. equity due to redemptions of Cresco Labs, LLC units:
Share capital 1,360 1,177
Accumulated deficit (2,457) (2,320)
Total change from net loss attributable to Cresco Labs Inc. and change in ownership interest in Cresco Labs, LLC.
$
(14,169)
$
(15,575)
NOTE 7. NET LOSS PER SHARE
The following is a reconciliation for the calculation of basic and diluted loss per share for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,
($ in thousands, except per share amounts) 2026 2025
Numerator:
Net loss
$ (17,014) $ (15,234)
Less: Net loss attributable to non-controlling interests, net of tax (3,942) (802)
Net loss attributable to Cresco Labs Inc.
$ (13,072) $ (14,432)
Denominator:
Weighted-average basic and diluted shares outstanding 364,229,158 350,243,280
Loss per Share:
Basic and diluted loss per share $ (0.04) $ (0.04)
For the three months ended March 31, 2026 and 2025, weighted-average potentially dilutive shares were not included in the computation of diluted loss per common share due to the net loss during the periods presented
15


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

because the shares would have had an anti-dilutive effect. Weighted-average potentially dilutive shares for the three months ended March 31, 2026 and 2025, consisted of the following:
Three Months Ended March 31,
(shares in thousands) 2026 2025
Redeemable Units
84,455
90,984
Stock options
21,541
26,966
RSUs
28,729
12,864
Total potentially dilutive shares
134,725
130,814

NOTE 8. BUSINESS COMBINATIONS

(a)Business Combinations
On March 9, 2026, a VIE of the Company entered into multiple agreements to acquire four (4) dispensaries. The costs associated with this transaction were immaterial. The expenses are recorded as selling, general and administrative expense in the Unaudited Condensed Interim Consolidated Statements of Operations for the three months ended March 31, 2026. See Note 14 "Variable Interest Entities" for additional information.

As of March 31, 2026, the Company recorded preliminary estimates of the fair value of assets and liabilities assumed. Balances are subject to change during the measurement period, which will conclude at the earlier of the date the Company receives the information it is seeking about the facts and circumstances that existed as of the date of business combination, learns that more information is not obtainable, or one year following the date of business combination. Any changes to the preliminary estimates of the fair value of the assets and liabilities assumed will be recorded as adjustments to those assets and liabilities, and residual amounts will be allocated to goodwill. As of March 31, 2026, the Company has no goodwill recorded in connection with the dispensary business combination that is expected to be tax deductible.

The table below summarizes the total consideration and net identifiable assets and liabilities assumed in connection with the dispensary business combination during the three months ended March 31, 2026:
16


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


($ in thousands) Amount
Total consideration:
Shares issued $ 5,985
Cash 2,026
Deferred consideration, short-term 4,797
Unsecured promissory note 1,552
Pre-existing relationship - Accounts receivable 327
Total consideration $ 14,687
Net identifiable assets (liabilities)
Cash $ 164
Inventory 2,938
Other current assets 242
Property and equipment, net 2
Right-of-use assets - operating, net 4,031
Licenses 11,000
Customer relationships 1,400
Total identifiable assets
$ 19,777
Accounts payable $ (1,429)
Accrued liabilities (498)
Operating lease liabilities (4,031)
Total identifiable liabilities assumed $ (5,958)
Purchase price allocation
Net identifiable assets
$ 13,819
Goodwill 868
Total consideration $ 14,687

(b)Deferred and Contingent Considerations
As of March 31, 2026, the Company has $4.8 million in total short-term deferred consideration, in connection with the dispensary business combination. The deferred consideration consists of monthly payments with a final cash payment and issuance of 1.5 million shares expected to be paid within twelve months. The face value of this deferred consideration approximates fair value.

As of March 31, 2026 and December 31, 2025, the Company had $0.4 million and $0.9 million, respectively, of short-term contingent consideration related to the Keystone acquisition. Additionally, as of March 31, 2026, the Company had $7.7 million long-term deferred consideration related to Valley Agriceuticals, LLC ("Valley Ag"), compared to $1.7 million and $5.8 million of short-term and long-term deferred consideration, respectively, related to Valley Ag as of December 31, 2025. The total estimated liability for Keystone and Valley Ag is based on the present value of expected payments associated with future cash flows.

During the three months ended March 31, 2026, the Company reclassified $1.7 million from short-term deferred consideration to long-term deferred consideration due to the expected timing of payment related to the Valley Ag acquisition.

17


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

During the three months ended March 31, 2026, the Company recorded other expense of $0.2 million and other income of $0.5 million, due to the change in fair value of Valley Ag deferred consideration and Keystone contingent consideration, respectively. For the three months ended March 31, 2025, the Company recorded immaterial other income due to the change in fair value of Valley Ag deferred consideration and immaterial other expense due to the change in fair value of Keystone contingent consideration. The expense is recorded in Other expense, net in the Unaudited Condensed Interim Consolidated Statements of Operations.

Please see Note 13 "Financial Instruments and Financial Risk Management" for additional details related to deferred and contingent considerations.

NOTE 9. LONG-TERM NOTES AND LOANS PAYABLE, NET
The following table represents the Company's Long-term notes and loans payable, net balances as of March 31, 2026 and December 31, 2025:

($ in thousands) March 31, 2026 December 31, 2025
Senior Secured Term Loan $ 325,000 $ 325,000
Mortgage Loans 20,066 20,161
Short-term borrowings and interest payable, net
7,370 7,484
Financing liability 90,219 91,009
Unsecured Promissory Notes 3,095 1,250
Total borrowings and interest payable $ 445,750 $ 444,904
Less: Unamortized discount and debt issuance costs (16,663) (17,025)
Less: Short-term borrowings and interest payable, net
(7,370) (7,484)
Less: Current portion of financing liability (3,488) (3,300)
Total Long-term notes and loans payable, net $ 418,229 $ 417,095

(a)Senior Secured Term Loan
On August 13, 2025, the Company closed on an agreement for a Senior Secured Term Loan with an undiscounted principal balance of $325.0 million and an original issue discount of $13.0 million. Proceeds from the Senior Secured Term Loan, along with cash on hand, was used to retire the then existing Senior Loan, reducing total debt.
The Senior Secured Term Loan accrues interest as a rate of 12.5% per annum, payable in cash quarterly and has a stated maturity date of August 13, 2030. The Company's effective interest rate for the Senior Secured Term Loan is 13.8%. Upon inception of the Senior Secured Term Loan, the Company capitalized $15.8 million of deferred financing fees.
The Senior Secured Term Loan is secured by a guarantee from substantially all material subsidiaries of the Company, as well as by a security interest in certain assets of the Company and such material subsidiaries. The Senior Secured Term Loan contains negative covenants which restrict the actions of the Company and its subsidiaries during the term of the loan, including restrictions on paying dividends, making investments and incurring additional indebtedness. The Company is also subject to compliance with affirmative covenants, some of which may require management to exercise judgment. In addition, the Company is required to maintain a minimum cash balance of $30.0 million. As of March 31, 2026, the Company was in compliance with all covenants.
The Company may prepay in whole, or in part, the Senior Secured Term Loan at any time prior to the stated maturity date, subject to certain conditions. Any prepayment of the outstanding principal amount must also include all accrued and unpaid interest and fees. Interest expense is discussed in Note 16 "Interest Expense, Net".
18


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

(b)Mortgage Loans
On September 26, 2023, JDRC Ellenville, LLC ("Ellenville"), an indirect subsidiary of the Company, entered into loan agreements to borrow an undiscounted principal amount of $25.3 million (the "Mortgage Loans"). Borrowings under the terms of the Mortgage Loans bear an initial interest rate of 8.4% per annum, which is equal to the Federal Home Loan Bank Five Year Classic Regular Advance Rate, plus a 375-basis point spread. The Mortgage Loans have an effective interest rate of 10.2%. The Mortgage Loans are secured by real estate in Ellenville, New York and improvements thereto, and converts to a permanent term loan on the conversion date of November 1, 2028. The Mortgage Loans contains certain affirmative and negative covenants which restrict the actions of Ellenville during the term of the loan.
On October 3, 2025, the Company amended the Mortgage Loans, extending the interest-only payment period through October 1, 2026. All other terms of the Mortgage Loans remain the same.
As of March 31, 2026 and December 31, 2025, the full commitment amount was not fully drawn, as $5.1 million of the principal balance will be advanced to Ellenville as it completes the buildout of the Ellenville cultivation center. Upon inception of the Mortgage Loans, the Company incurred $2.0 million, in deferred financing fees reflected within Long-term notes and loans payable on the Consolidated Balance Sheets. These deferred financing fees are amortized and expensed in accordance with ASC 835 Interest. See Note 16 "Interest Expense, Net".
(c) Financing Liabilities
As of March 31, 2026, the Company has additional financing liabilities for which the incremental borrowing rates range from 11.3% to 17.5% with remaining terms between 3.8 and 14.3 years, consistent with the underlying lease liabilities. The interest expense associated with financing liabilities is discussed in Note 16 "Interest Expense, Net".
(d) Unsecured Promissory Notes
On March 9, 2026, the Company issued a $1.8 million unsecured promissory note. The note bears interest at 8% per annum, capitalized to principal on each anniversary, with principal and accrued interest due 36 months post-closing. Prepayment is permitted without penalty. The note has an effective interest rate of 13.3%.
On December 8, 2025, the Company issued a $1.3 million unsecured promissory note. The note bears interest at 8% per annum, payable quarterly, with principal and accrued interest due 18 months post-closing. Prepayment is permitted without penalty. The note has an effective interest rate of 13.2%.

NOTE 10. DISAGGREGATION OF REVENUE
(a)Revenues
The following table represents the Company's disaggregated revenue by source, due to the Company's contracts with its customers, for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Wholesale $ 48,782 $ 54,167
Retail 102,543 111,590
Revenues, net $ 151,325 $ 165,757
NOTE 11. RELATED PARTY TRANSACTIONS
(a)Transactions with Key Management Personnel and Certain Board Members
As of March 31, 2026 and December 31, 2025, related parties, including key management personnel and certain board members, hold 65.9 million and 66.8 million, respectively, of Redeemable Units, which
19


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

accounts for a deficit of $71.8 million and $68.9 million, respectively, in non-controlling interests. During the three months ended March 31, 2026 and 2025, 57.2% and 58.8%, respectively, of required tax distribution payments to unit holders of Cresco Labs, LLC were made to related parties including to key management personnel and certain board members.
(b)Related Parties - Leases
For the three months ended March 31, 2026 and 2025, the Company had lease liabilities for real estate lease agreements in which the lessors have a minority interest in MedMar Inc. ("MedMar"). The lease liabilities were incurred in January 2019 and May 2020 and expire in 2027 through 2030.
Below is a summary of the expense resulting from the related party lease liabilities for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) Classification 2026 2025
Operating Leases
Lessor has minority interest in MedMar Rent expense $ 73 $ 73
Finance Leases
Lessor has minority interest in MedMar Depreciation expense $ 76 $ 76
Lessor has minority interest in MedMar Interest expense 40 49

Additionally, below is a summary of the ROU assets and lease liabilities attributable to related party leases as of March 31, 2026 and December 31, 2025:
March 31, 2026 December 31, 2025
($ in thousands) ROU Asset Lease Liability ROU Asset Lease Liability
Operating Leases
Lessor has minority interest in MedMar $ 963 $ 1,023 $ 1,005 $ 1,065
Finance Leases
Lessor has minority interest in MedMar $ 1,042 $ 1,518 $ 1,119 $ 1,606

NOTE 12. COMMITMENTS AND CONTINGENCIES
(a)Claims and Litigation
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. The Company accrues for estimated costs for a contingency when a loss is probable and can be reasonably estimated. The Company accrued $5.3 million for matters that were pending litigation as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026 and December 31, 2025, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the Company's results of operations, financial positions, or cash flows. There are also no proceedings in which any of the Company's directors, officers, or affiliates are an adverse party or has a material interest adverse to the Company's interest. As of March 31, 2026, the Company is in discussion with certain county regulators in the state of Illinois regarding the potential reimbursement of overpaid fees.

(b)Contingencies
The Company's operations are subject to a variety of federal, state, and local regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on the Company's operations, suspension or revocation of permits or licenses, or other disciplinary actions (collectively, "Disciplinary Actions") that could adversely affect the Company's financial position and results of operations. While
20


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

management believes that the Company is in substantial compliance with state and local regulations as of March 31, 2026 and December 31, 2025, and through the date of filing of these financial statements, these regulations continue to evolve and are subject to differing interpretations and enforcement. As a result, the Company may be subject to Disciplinary Actions in the future.

(c)Commitments
As of March 31, 2026 and December 31, 2025, the Company had total commitments of $5.7 million and $2.2 million, respectively, related to material construction projects.
The Company also has employment agreements with key management personnel which include severance in the event of termination with additional equity and/or compensation benefits totaling approximately $5.2 million as of March 31, 2026 and December 31, 2025, respectively.

NOTE 13. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial Instruments

The Company's financial instruments are held at amortized cost (adjusted for impairment or expected credit losses ("ECL"), as applicable) or fair value. The carrying values of financial instruments held at amortized cost approximate their fair values as of March 31, 2026 and December 31, 2025, due to their nature and relatively short maturity dates. There have been no transfers into or out of Level 3 for the periods ended March 31, 2026 and December 31, 2025.
The following tables summarize the Company's financial instruments as of March 31, 2026 and December 31, 2025:
March 31, 2026
($ in thousands) Level 1 Level 2 Level 3 Total
Financial Assets:
Loans receivable, short-term1
$ - $ - $ 1,128 $ 1,128
Loans receivable, long-term1
- - 278 278
Investments2
8 - 533 541
Financial Liabilities:
Deferred and contingent consideration, short-term $ - $ 4,797 $ 365 $ 5,162
Deferred and contingent consideration, long-term - - 7,674 7,674
Unsecured promissory notes3
- - 2,706 2,706
1Loans receivable, short-term and Loans receivable, long-term are included in "Other current assets" and "Other non-current assets" respectively, on the Unaudited Condensed Interim Consolidated Balance Sheets.
2Investments are included in "Other non-current assets" on the Unaudited Condensed Interim Consolidated Balance Sheets.
3Unsecured promissory notes are included in "Long-term notes and loans payable, net" on the Unaudited Condensed Interim Consolidated Balance Sheets.
21


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


December 31, 2025
($ in thousands) Level 1 Level 2 Level 3 Total
Financial Assets:
Loans receivable, short-term1
$ - $ - $ 1,119 $ 1,119
Loans receivable, long-term1
- - 480 480
Investments2
33 - 600 633
Financial Liabilities:
Deferred and contingent consideration, short-term $ - $ - $ 2,566 $ 2,566
Deferred and contingent consideration, long-term - - 5,815 5,815
Unsecured promissory note3
- - 1,138 1,138
1Loans receivable, short-term and Loans receivable, long-term are included in "Other current assets" and "Other non-current assets" respectively, on the Consolidated Balance Sheets.
2Investments are included in "Other non-current assets" on the Consolidated Balance Sheets.
3Unsecured promissory note included in "Long-term notes and loans payable, net" on the Consolidated Balance Sheets.

The following table presents a roll-forward of the balance sheet amounts measured at fair value on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on inputs for assets or liabilities that are not based on observable market data.
Three Months Ended March 31, 2026
Level 3 Fair Value Measurements
($ in thousands) Loans receivable, short-term Loans receivable, long-term Deferred and contingent consideration, short-term Deferred and contingent consideration, long-term
Unsecured promissory note
Balance as of December 31, 2025
$ 1,119 $ 480 $ 2,566 $ 5,815 $ 1,138
Additions1
- - - - 1,552
Change in fair value recorded in Other expense, net - 11 (521) 179 16
Payments (204) - - - -
Other2
213 (213) (1,680) 1,680 -
Balance as of March 31, 2026
$ 1,128 $ 278 $ 365 $ 7,674 $ 2,706
1See Note 8 "Business Combinations" for additional details.
2Other relates to reclassifications from short-term to long-term, or long-term to short-term, due to expected timing of payment.

Three Months Ended March 31, 2025
Level 3 Fair Value Measurements
($ in thousands) Deferred and contingent consideration, short-term Deferred and contingent consideration, long-term
Balance as of December 31, 2024
$ 2,486 $ 7,736
Change in fair value recorded in Other expense, net1
(20) 3
Balance as of March 31, 2025
$ 2,466 $ 7,739
1See Note 8 "Business Combinations" for additional information on deferred and contingent considerations.

22


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

The following table presents information about the significant unobservable inputs for financial assets and liabilities measured at fair value:
Financial asset
Valuation techniques Significant unobservable inputs Relationship of unobservable inputs to fair value
Loans receivable
Discounted cash flow
1) Discount Rate
Increase or decrease in the discount rate will result in a lower or higher fair value, respectively.
Financial liabilities
Valuation techniques Significant unobservable inputs Relationship of unobservable inputs to fair value
Deferred consideration Discounted cash flow 1) Expected future cash flows Increase or decrease in expected future cash flows will result in an increase or decrease in fair value.
2) Discount rate Increase or decrease in the discount rate will result in a lower or higher fair value, respectively.
Contingent consideration Discounted cash flow
1) Probability and timing of consideration payment
Increase or decrease in probability of consideration payment and earlier or later timing of payment will result in an increase or decrease in fair value.
2) Discount rate Increase or decrease in the discount rate will result in a lower or higher fair value, respectively.
Unsecured promissory note
Discounted cash flow
1) Discount Rate
Increase or decrease in the discount rate will result in a lower or higher fair value, respectively.

(a)Loans receivable, short-term
During the fourth quarter of 2025, in connection of the sale of Sonoma's Finest, the Company issued a $1.7 million loan receivable to Kolaboration Ventures Corporation ("Kolaboration"). The loan receivable has a 18-month term and interest accruing at 8% per annum, paid on a monthly basis. At the inception of the loan, an ECL determination was made. As of March 31, 2026 and December 31, 2025, the short-term portion of the loan was $0.9 million and $1.1 million, respectively.
(b)Loans receivable, long-term
The following is a summary of Loans receivable, long-term balances and valuation classifications (discussed further below) as of March 31, 2026 and December 31, 2025:
($ in thousands) Valuation
classification 		March 31, 2026 December 31, 2025
Long-term loans receivable - Illinois Incubator, net of ECL Amortized cost $ 832 $ 832
Long-term loans receivable - Kurvana, net of ECL Amortized cost 618 603
Long-term loans receivable - Kolaboration, net of ECL
Level 3 fair value
278 480
Total Loans receivable, long-term $ 1,728 $ 1,915
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Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025


Pursuant to the Illinois Cannabis Regulation and Tax Act, the Company has issued $0.3 million in loans to an Illinois company which has secured a Craft Grower License to operate in the state and $1.0 million in loans to groups that have been identified by the state of Illinois as having the opportunity to receive Conditional Adult Use Dispensing Organization Licenses. One (1) $0.1 million loan related to the Craft Grower License matures on July 20, 2026. The remaining loans of $1.2 million mature on July 20, 2027. The loans are measured at amortized cost and bear no interest. Loss on provision on short-term and long-term loans receivable is recorded in Other income, net in the Unaudited Condensed Interim Consolidated Statements of Operations.

(c)Investments
The Company currently has investments in two (2) entities: IM Cannabis Corp. ("IMC"), a pharmaceutical manufacturer that specializes in cannabis, and OLD PAL LLC ("Old Pal"), a cannabis operator/licensor. Old Pal is held at fair value and classified as a equity security without a readily determinable fair value. The IMC investment is classified as a marketable security with a readily determinable fair value. During the three months ended March 31, 2026, the Company wrote off the remaining balance of its 420 Capital Management, LLC investment balance of $0.1 million, which is recorded in Other income, net in the Unaudited Condensed Interim Consolidated Statements of Operations.

Financial Risk Management
As of March 31, 2026, the Company had one customer that accounted $5 million, or 11.6% of the Company's gross accounts receivable balance. As of December 31, 2025, the Company had no customers that accounted for 10% or more of the Company's gross accounts receivable balance.
The Company's summary of activity for allowance for expected credit losses for the three months ended March 31, 2026 and 2025 was as follows:
($ in thousands) 2026 2025
Balance at January 1 $ 5,021 $ 8,308
Provision expense 316 46
Write-offs (56) (1,248)
Balance at March 31
$ 5,281 $ 7,106
In addition, the Company recorded $0.1 million and $1.3 million of bad debt expense for the three months ended March 31, 2026 and 2025, respectively.
NOTE 14. VARIABLE INTEREST ENTITIES
On November 26, 2025, the Company entered into a support service agreement with Strategic Capital and Management Services, LLC ("SCMS"). On March 9, 2026, SCMS entered into multiple agreements which will result in SCMS's acquisition of four (4) adult-use dispensary licenses, pending regulatory approval. On February 25, 2025, the Company entered into a management service agreement ("MSA") with KSKYAPP, LLC, holder of a Kentucky cultivation license. Similarly, on March 3, 2025, the Company entered into a MSA with BSRKYAPP, LLC, holder of a Kentucky dispensing license. On June 7, 2025, the Company entered into another MSA with RSKYAPP, LLC, holder of a Kentucky processing license. Additionally, in 2020 the Company entered into multiple agreements with Cresco Labs Michigan, LLC.
The following table presents the summarized financial information about the Company's consolidated VIEs, which are included in the Unaudited Condensed Interim Consolidated Balance Sheets as of March 31, 2026 and
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Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

December 31, 2025. All of these entities were determined to be VIE, as the Company possesses the power to direct activities through written agreements and is subject to the risks and rewards associated with its involvement:
($ in thousands) March 31, 2026 December 31, 2025
Current assets $ 15,081 $ 20,468
Non-current assets 152,484 119,100
Current liabilities (11,109) (4,184)
Non-current liabilities (198,524) (173,430)
Non-controlling interests 2,237 1,759
Deficit attributable to Cresco Labs Inc. 39,831 36,287
The following table presents the summarized financial information about the Company's consolidated VIEs, which are included in the Unaudited Condensed Interim Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Revenue $ 4,337 $ 5,613
Net loss attributable to non-controlling interests (478) (208)
Net loss attributable to Cresco Labs Inc. (3,591) (1,141)
Net loss (4,069) (1,349)

NOTE 15. SEGMENT INFORMATION
During the fourth quarter of 2025, the Company reorganized our internal reporting and realigned our operating segments following the completed sale of its Sonoma's Finest cultivation facility and exit of the California market. The change resulted in the identification of two (2) new operating segments consolidated wholesale and consolidated retail with the Chief Executive Officer as the sole Chief Operating Decision Maker ("CODM"). As such, the segment information for prior periods has been recast to conform to current period presentation.
The Company operates in the cultivation, manufacturing, distribution, and sale of cannabis. For evaluating financial performance and allocating resources, the CODM review certain financial information presented on a consolidated basis accompanied by information disaggregated by wholesale and retail customers.
The following table reflects revenues net of discounts, significant expenses, and gross profit by segment for the three months ended March 31, 2026 and 2025:
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Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,
($ in thousands) 2026 2025
Wholesale $ 84,709 $ 97,546
Retail 102,543 111,590
Intersegment eliminations
(35,927) (43,379)
Revenues, net $ 151,325 $ 165,757
Wholesale $ 48,388 $ 55,742
Retail 63,415 74,763
Intersegment eliminations (35,927) (43,379)
Total Cost of Goods Sold $ 75,876 $ 87,126
Wholesale $ 36,320 $ 41,804
Retail 39,129 36,827
Intersegment eliminations - -
Total Gross Profit $ 75,449 $ 78,631

The Company's assets are aggregated into two reporting units wholesale and retail which aligns with our operating segments. All revenues are generated from customers in the U.S. and all assets are located in the U.S.

NOTE 16. INTEREST EXPENSE, NET
Interest expense, net consisted of the following for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Interest expense - notes and loans payable1
$ (11,199) $ (10,864)
Interest expense - financing activities1
(2,765) (2,844)
Accretion of debt discount and amortization of deferred financing fees1
(635) (1,211)
Interest expense - leases (684) (745)
Interest income 407 813
Other interest expense (51) (3)
Interest expense, net $ (14,927) $ (14,854)
1See Note 9 "Long-term Notes and Loans Payable, Net" for additional information on Interest expense - notes and loans payable, Interest expense - financing activities, and Accretion of debt discount and amortization of deferred financing fees.

NOTE 17. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES
The U.S. federal government treats cannabis as subject to the limits of Internal Revenue Code ("IRC") Section 280E for U.S. federal income tax purposes, which also applies to certain states. Under IRC Section 280E, the Company is only allowed to deduct expenses directly related to cost of goods sold. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. However, certain states including California, Illinois, Massachusetts, Michigan, New York, and Pennsylvania do not conform to IRC Section 280E and, accordingly, the Company generally deducts all operating expenses on its income tax returns in these states.
26


Cresco Labs Inc.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three Months Ended March 31, 2026 and 2025

During the first quarter of 2026 and 2025, the Company recorded the following significant tax and tax-related items due to uncertain tax positions that its operations are not subject to IRC Section 280E and therefore intends to deduct such expenses with a related uncertain tax liability offsetting such deductions.
•During the three months ended March 31, 2026 and 2025, the Company recorded $13.4 million and $13.3 million, respectively, in Uncertain tax position liability on the Unaudited Condensed Interim Consolidated Balance Sheets.
The Company is treated as a United States corporation for U.S. federal income tax purposes under IRC Section 7874 and is subject to U.S. federal income tax on its worldwide income. However, for Canadian tax purposes the Company, regardless of any application of IRC Section 7874, is treated as a Canadian resident company, as defined in the Income Tax Act (Canada), for Canadian income tax purposes. As a result, the Company is subject to taxation both in Canada and the United States.

Provision for income taxes consists of the following for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in thousands) 2026 2025
Loss before income taxes $ (2,794) $ (918)
Income tax expense 14,220 14,316
Effective tax rate (508.9) % (1,559.5) %
NOTE 18. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through May 8, 2026, which is the date on which these financial statements were issued.
On April 23, 2026, the U.S. Department of Justice issued an order placing FDA-approved cannabis products and cannabis products subject to qualifying state medical cannabis licenses, into Schedule III under the Controlled Substances Act. In addition, the Drug Enforcement Administration ("DEA") has announced new hearings scheduled to begin on June 29, 2026 which will include the proposed broader rescheduling of adult use cannabis to Schedule III.

The Company is currently assessing the impact of the order to its medical use cannabis business, including its federal and state tax positions, compliance obligations, licensing, access to financial services, and capital markets activities. The Company is evaluating the impact on our financial statements related to its IRC Section 280E position for state-licensed medical cannabis operations, including the allocation of revenues, costs of goods sold, and operating expenses between medical and non-medical cannabis activities.

Because implementation guidance, regulatory interpretation, and the outcome of additional DEA proceedings remain uncertain, the Company cannot reasonably estimate the financial statement impact of the April 2026 order as of the date these consolidated financial statements were issued. As a result, the Company has not adjusted the accompanying consolidated financial statements for this subsequent event.

During the first quarter of 2026, the Company entered into a purchase agreement, pending approval, which will result in the acquisition of 9 dispensaries, for the purpose of expanding the Company's national presence. On April 12, 2026, the Company entered into an MSA covering operation of these dispensaries and resulting in consolidation. Total consideration is an estimated $50.0 million, subject to certain closing adjustments.
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Cresco Labs Inc. published this content on May 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 08, 2026 at 11:52 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]