Management Commentary

Obie Strickler, Chief Executive Officer

"The second quarter reflected our continued focus on disciplined execution in our existing markets while expanding our platform to serve more customers across the US. 2026 has been a big year of growth for us as we work to complete the New Jersey expansion, ramp our newly activated production facility in Illinois, and finish construction and begin operations in Minnesota. These expansion activities are supported by our relentless focus on cultivation operations, initiatives to strengthen our brand and selectively expand our product portfolio, and continued efforts to build the team required to support our growth.

"From a financial standpoint, New Jersey continues to demonstrate the value of pairing quality flower with disciplined execution in a higher priced market, and that's with cultivation KPIs that still have room for substantial improvement. In Oregon and Michigan, our KPIs show continued strong performance in cultivation operations, and it's great to see modest pricing improvements rewarding our discipline in these hyper-competitive environments. I have been particularly pleased with our execution in Michigan after completing the technology improvements resulting in record yields and record-low costs."

"We are building a foundation of people and systems that can travel across markets without losing the quality and consistency that define Grown Rogue. Cultivation is the engine of our business and quality-adjusted yield, cost discipline and sell-through are the hallmarks of what converts strong performance into durable profitability. Oregon and Michigan keep us focused on those fundamentals, while New Jersey, Illinois and Minnesota give us opportunities to apply those capabilities at different points in the market cycle. There is still substantial work ahead, but we believe the operating platform taking shape today can give Grown Rogue a meaningfully different financial profile entering 2027."

Andrew Marchington, Chief Financial Officer

"Excluding the Michigan excise tax, second quarter results reflected 36% year-over-year revenue growth to $11.3 million and a 36% increase in Adjusted EBITDA to $2.1 million. It's worth noting that during the second quarter we recognized revenue related to Michigan wholesale excise tax of $402,000 with the corresponding accrued expense recorded as general and administrative expense. We ended the quarter with $11.5 million of cash and remain focused on working capital discipline and deploying capital against clearly defined return objectives." 

"Based on our second quarter performance and current expectations for the balance of the year, we are updating our 2026 and 2027 guidance. Our outlook continues to recognize that Illinois and Minnesota will incur startup costs before generating meaningful revenue and that the New Jersey expansion will contribute more fully as its additional capacity ramps."

Josh Rosen, Chief Strategy Officer

"During the quarter, investors could begin to see the two principal components of our growth framework operating side by side. Minnesota represents a purpose-built new-market opportunity, while Illinois represents a capital-efficient turnaround of existing infrastructure. Both rely on the same underlying capabilities: disciplined underwriting, high-quality and high-performance cultivation, great people and repeatable operating systems."

Second Quarter 2026 Update

Second quarter results reflected continued execution across Grown Rogue's operating and expansion plan. New Jersey continued to increase its contribution to the business, Illinois moved from regulatory preparation into active cultivation, and Minnesota advanced toward commissioning. At the same time, the team remained focused on improving yield and cost discipline in Oregon and Michigan, while closely managing product quality, pricing and sell-through.

Management continues to evaluate each market through a focused set of operating KPIs, including total and "A" flower yield, cost per pound, average selling price and packaged-product mix. These metrics help the Company remain disciplined, identify areas for improvement and make informed operating decisions across the platform. Selected market KPIs are presented below.

Selected Second Quarter 2026 Financial Results (Unaudited)

n.m. = not meaningful. EBITDA and Adjusted EBITDA are non-GAAP financial measures. See "Non-GAAP Financial Measures" and the reconciliation tables included below. Reported Q2 2026 revenue includes approximately $402,000 of Michigan wholesale excise taxes. Excluding the tax, consolidated revenue increased approximately 36% year over year and Adjusted EBITDA margin was 18.9%.

Selected Quarterly Financial Results by Segment (Unaudited)

Guidance and Long-Term (3-5 Year) Growth Objectives

Management is updating the financial framework introduced in April 2026 to assist investors in evaluating the Company's growth strategy and capital allocation discipline. The guidance and long-term objectives set out below reflect current expectations, assumptions and management objectives as of the date of this release and are subject to the forward-looking statements disclosure.

Growth Framework

• Selective new builds in undersupplied markets where craft-quality flower is expected to earn attractive wholesale economics and support the capital intensity of new-build projects.

• Fixer-upper takeovers and distressed opportunities where management believes disciplined execution can improve yield, consistency, and cost controls, typically with lower capital expenditure requirements.

• Focused product expansion, including flower-forward vape formats, intended to grow wallet share while maintaining a disciplined SKU set and consistent quality standards.

• Underwriting discipline based on mature-market, normalized pricing assumptions, without relying on perpetual early-cycle pricing upside to meet return targets.

Long-term (3-5 year) Targets and Guidance

• Long-term (3-5 year) targets, using 2027 as the base year

  • Revenue growth of 25% per year, compounded

  • Profit growth (Adjusted EBITDA1) of 35% per year, compounded

  • Return on Incremental Invested Capital ("ROIIC")2 of greater than 75%

• 2026 Guidance (Revenue / Adjusted EBITDA1): $38–$41 million (up from $34–$37 million) / $7–$9 million (up from $6–$8 million).

• 2027 Guidance (Revenue / Adjusted EBITDA1): $55–$63 million (up from $50–$58 million) / $14–$18 million.

2026 Guidance Assumptions:2026 guidance excludes the start-up (pre-revenue) expenses in both Illinois and Minnesota of approximately $1.5 million to $2.0 million each. Illinois is expected to begin contributing revenue in Q4 2026, with approximately 5,000 square feet of flowering canopy online and an additional 5,000 square feet under development. Minnesota is expected to begin contributing revenue in the first quarter of 2027 with approximately 8,000 square feet of flowering canopy coming online in stages. In New Jersey, the Company expects the current expansion to be substantially complete by Q4 2026, with ramp and sell-through reaching targeted levels by Q1 2027. As a result, the expansion is expected to contribute modestly to revenue and Adjusted EBITDA (non-GAAP) in 2026 and is more fully reflected in 2027 guidance. Overall, the Company anticipates consolidated gross margins of greater than 42% and corporate overhead expenses to increase by less than 10% in 2026.

2027 Guidance Assumptions: 2027 guidance assumes modest wholesale price normalization from 2026 levels in New Jersey and Illinois of approximately 10% and 5%, respectively. Minnesota is assumed to remain supply-constrained, supporting wholesale flower pricing for "A" flower quality above $2,500 per pound. In Oregon and Michigan, the guidance assumes no change in the current pricing environment, which management believes represents an appropriately conservative case for those markets. New Jersey assumes completion of the Phase II expansion in 2026, with 2027 reflecting a full year at expanded capacity. The Company currently plans to expand Illinois flowering canopy from 5,000 to 14,000 square feet and to expand Minnesota flowering canopy from 8,000 to approximately 16,000 square feet in mid-2027, utilizing existing capital and internally generated cash flow to fund the expansions. Overall, the Company anticipates consolidated gross margins of greater than 44% and corporate overhead expenses to increase by less than 25% in 2027.

General Assumptions. Guidance and long-term objectives exclude any potential changes in U.S. federal cannabis policy and do not assume M&A or additional distressed opportunities unless explicitly stated.

Flower Capacity

On average, Grown Rogue anticipates producing approximately 800–900 lbs of flower annually per 1,000 square feet of flowering canopy.

Conference Call and Webcast Information

Grown Rogue will host a conference call and webcast on Tuesday, August 4, 2026, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its second quarter 2026 results and provide a corporate update.

Conference Call Details

A telephone replay will be available until August 11, 2026, by dialing (+1) 888-660-6345 and entering replay code 57464#.

The earnings release, webcast, replay information, transcript, financial filings and related investor materials will be available on the Company's Investor Relations website at ir.grownrogue.com . Investors may also access press releases, SEC and SEDAR+ filings, governance materials, presentations, stock information, event details and email alerts through the site.

About Grown Rogue

Grown Rogue International Inc. (CSE: GRIN | OTC: GRUSF) is a flower-forward cannabis company rooted in Oregon's Rogue Valley, a region known for its deep cannabis heritage and commitment to quality. With operations in Oregon, Michigan and New Jersey, and expansion underway in Illinois and Minnesota, Grown Rogue specializes in producing designer-quality indoor flower. Known for exceptional consistency and care in cultivation, its products are valued by retailers, budtenders and consumers alike. By blending craft values with disciplined execution, the Company has built a scalable, capital-efficient platform designed to thrive in competitive markets. The Company believes sustained excellence in cannabis flower production is both the engine of the industry's supply chain and a key competitive advantage. For more information about Grown Rogue, please visit www.grownrogue.com.

The contents of the Company's website are not incorporated by reference into this press release or into any report or document filed or furnished by the Company with the SEC or Canadian securities regulators, and references to the website are intended to be inactive textual references only.

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
For the three and six months ended June 30, 2026 and 2025
(Expressed in United States Dollars, except share amounts) - Unaudited

Condensed Consolidated Balance Sheets
As at June 30, 2026 and December 31, 2025
(Expressed in United States Dollars) - Unaudited

Statement of Changes in Cash Flows
For the six months ended June 30, 2026 and 2025
(Expressed in United States Dollars, unless otherwise indicated) - Unaudited

Adjusted EBITDA Reconciliation Table (Unaudited)
For the three and six months ended June 30, 2026 and 2025
(Expressed in United States Dollars, except share amounts) - Unaudited

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and United States securities laws (collectively, "forward-looking statements"). Forward-looking statements include, without limitation, statements regarding: the Company's 2026 and 2027 financial guidance and long-term growth and return objectives; the assumptions underlying such guidance and objectives, including anticipated wholesale pricing, market supply and demand, gross margins, corporate overhead and pre-revenue start-up expenses; the timing, cost, completion, commissioning, capacity, ramp-up, production, harvest, sales and anticipated financial contributions of the Company's operations and expansion projects in New Jersey, Illinois and Minnesota; planned additions to flowering canopy and production capacity; anticipated product launches and expansion into additional markets; future capital allocation, working capital and capital requirements; the anticipated use of existing capital and internally generated cash flow to fund expansion; the expected benefits of operating systems, infrastructure investments and cultivation improvements; and the Company's growth opportunities and future operating and financial performance.

Forward-looking statements are often identified by words or phrases such as "may," "would," "could," "should," "will," "intend," "plan," "anticipate," "believe," "estimate," "expect," "target," "guidance," "outlook," "forecast," "objective" and similar expressions, including their negative forms. The absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements are based on management's current expectations, estimates, assumptions and projections as of the date of this release. These assumptions include, without limitation, assumptions regarding market conditions, wholesale pricing, consumer and retailer demand, competitive conditions, construction and commissioning timelines, the availability and cost of labour, materials and equipment, regulatory approvals and continued compliance with applicable licensing requirements, cultivation yields and product quality, the timing of new product and market launches, operating costs, access to capital and the Company's ability to fund its planned operations and expansion activities.

Although the Company believes these expectations and assumptions are reasonable, forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed or implied. These risks and uncertainties include, without limitation: changes in general economic, business, political and financial-market conditions; changes in cannabis laws, regulations or enforcement policies; the timing or availability of required regulatory approvals; the continued illegality of cannabis under United States federal law; declines or volatility in wholesale cannabis pricing and demand; increased competition; variations in cultivation yields, product quality and production costs; construction, commissioning or ramp-up delays and cost overruns; the availability of labour, equipment and supplies; the Company's ability to generate sufficient cash flow or obtain financing on acceptable terms; and the other risks described in the Company's public disclosure documents filed through SEDAR+ and EDGAR.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company does not undertake any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by applicable law. Future-oriented financial information and financial outlooks contained in this release are provided for the purpose of describing management's current expectations and may not be appropriate for other purposes.

The Company is indirectly involved, through its operating subsidiaries, in the cultivation, manufacture, possession, use, sale and distribution of cannabis in the adult-use cannabis marketplace in the United States. Although these activities are permitted under applicable state laws in the jurisdictions in which the Company operates, cannabis remains illegal under United States federal law.

NON-GAAP FINANCIAL MEASURES

This press release presents certain financial measures that are not calculated in accordance with United States generally accepted accounting principles ("GAAP"), including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and return on incremental invested capital ("ROIIC"). These non-GAAP financial measures do not have standardized meanings prescribed by GAAP and may not be comparable with similarly titled measures presented by other companies.

Management uses these non-GAAP financial measures as supplemental tools to evaluate the Company's underlying operating performance, compare results between periods and markets, and assess capital-allocation decisions. These measures should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP measures are included in the financial schedules accompanying this release. The specific adjustments used to calculate EBITDA and Adjusted EBITDA are identified in those reconciliation schedules.

The Company has not provided a quantitative reconciliation of its forward-looking Adjusted EBITDA guidance to the most directly comparable forward-looking GAAP measure because certain components of that GAAP measure cannot be reasonably predicted without unreasonable effort. These items could be material and could cause actual GAAP results to differ materially from the forward-looking non-GAAP guidance presented in this release.

Grown Rogue's current SEC disclosure identifies federal cannabis illegality and the availability of capital, operating cash flow and expansion funding as continuing risks. SEC rules also require historical non-GAAP reconciliations and specific disclosure when a forward-looking reconciliation cannot reasonably be provided.

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