VRNO 10-K & 10-Q changes, risk factors and insider trading

•the current illegality of cannabis under federal law, the U.S. federal regulatory landscape and enforcement related to medical or adult use cannabis, including political risks, civil asset forfeiture and regulation by additional regulatory authorities;

•our corporate structure and our resulting reliance on the performance of our subsidiaries and affiliates;

•our lack of portfolio diversification by industry orand geographygeographic concentration;

•potential findings by regulatory authorities that one of our shareholdersstockholders is unsuitable;

•costcosts related to preserving our brand identity;

•our elimination of monetaryindividual liability and indemnification rights against our directors, officers and employees under British ColumbiaNevada law;

•the time and resources necessary to comply with corporate governance practices and securities rules and regulations in the U.S. and Canada;

•potential dilution if we issue additional Subordinateshares Votingof SharesCommon or Proportionate Voting SharesStock;

•market perception of sales of a substantial amount of SubordinateCommon Voting SharesStock;

•transfer restrictions on our SubordinateCommon Voting SharesStock;

•price volatility of our SubordinateCommon Voting SharesStock;

•our shareholders’stockholders’ limited participation in our affairs;

To date, in the U.S. 3840 states plus the District of Columbia and the U.S. territories of Puerto Rico, Guam, the Commonwealth of Northern Marina Islands, and the U.S. Virgin Islands have authorized comprehensive medical cannabis programs, 24 states plus the District of Columbia and the U.S. territories of Guam, the Commonwealth of Northern Mariana Islands, and the U.S. Virgin Islands have authorized comprehensive programs for medical and adult use (i.e. recreational) cannabis, and 7eight states allow the use of low THC and high CBD products for specified medical uses.

Under U.S. federal law, however, those activities are illegal. Cannabis, other than hemp, is currently a Schedule I controlled substance under the CSA, which means it is viewed by the U.S. federal government as a drug that has a high potential for abuse and no therapeutic value. Therefore, even in U.S. states and territories that have legalized cannabis to some extent, the cultivation, possession and sale of cannabis violates the Controlled Substances Act and is punishable by imprisonment, substantial fines and forfeiture. Moreover, individuals and entities may violate U.S. federal law if they aid and abet another in violating the Controlled Substances Act, or conspire with another to violate the law. Violating the Controlled Substances Act is also a predicate for other crimes in the U.S., including money laundering laws and the Racketeer Influenced and Corrupt Organizations Act. The U.S. Supreme Court has ruled that the U.S. federal government has the authority to regulate and criminalize the sale, possession and use of cannabis in the U.S., even for individual medical purposes, regardless of whether it is legal under state law. To date, however, the U.S. federal government has not enforced those laws against companies (and their vendors) complying with state cannabis law. In October of 2022, the Biden Administration announced its intention to review the regulation of cannabis under the CSA by directing the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to expeditiously review cannabis’s Schedule I status. In August of 2023, the HHS recommended to the DEA that cannabis be rescheduled to Schedule III under the CSA. On December 2, 2024, the DEA held a preliminary formal hearing regarding the rescheduling of cannabis, and additional hearings were scheduled from January 21, 2025 to March 6, 2025. On January 13, 2025, Chief Administrative Law Judge presiding over the rescheduling of cannabis ordered that the hearing scheduled for January 21, 2025 was cancelled, and that the proceedings in the matter were stayed, pending a resolution of an interlocutory appeal to the DEA Administrator. A joint status update must be provided to the tribunal ninety (90) days from the issuance of the order, and every ninety (90) days thereafter. In addition, in November 2024, Donald Trump was elected president of the U.S. and announced that Pam Bondi would be his pick for attorney general. WhileOn December 18, 2025, President Trump issued the Executive Order, which directs federal agencies to expedite the process of rescheduling cannabis from a Schedule I to a Schedule III controlled substance under the CSA. The effect of the Executive Order may be that the cultivation, manufacturing, distribution, sale or possession of cannabis in the U.S. is no longer federally illegal and would lessen criminal penalties at the federal level and remove Section 280E tax considerations, however, the final effects are dependent on other government actions. Despite such actions and the ongoing rule making process, there can be no guarantees that the rescheduling rule making process couldwill resultcontinue inon a certain timeline or at all under this administration or that any rules will come out of the decriminalizationrule making process that will benefit the Company. The Executive Order, and agency implementation of cannabisthe forExecutive Order does not federally legalize adult use and would not federally authorize or approve state sanctioned medical and adult-use by descheduling or rescheduling cannabis, there are no assurances if or when there could be any change in the regulation of cannabis under the CSA, particularly due to the change in administration and the stay to the rulemaking process.programs. Although we believe that our business activities are compliant with applicable state and local laws in the United States, strict compliance with state and local cannabis laws would not provide a defense to any federal proceeding which may be brought against us. Any such proceedings may result in a material adverse effect on us. We derive substantially all of our revenues from the cannabis industry. The enforcement of applicable U.S. federal laws poses a significant risk to us.

The likelihood of any future adverse enforcement against companies complying with state cannabis laws remains uncertain. In 2018, then-U.S. Attorney General Jeff Sessions issued the Sessions Memorandum rescinding the DOJ’s previous guidance under the Cole Memorandum that had given federal prosecutors discretion not to enforce federal law in states that legalized cannabis, as long as the state’s legal regime adequately addressed specified federal priorities. The Sessions Memorandum, which remains in effect, states that each U.S. Attorney’s Office should follow established principles that govern all federal prosecutions when deciding which cannabis activities to prosecute. As a result, federal prosecutors can use their prosecutorial discretion to decide to prosecute state-legal cannabis activities. Since the Sessions Memorandum was issued, however, U.S. Attorneys have not targeted state law compliant cannabis entities. The policy of not prosecuting companies complying with state cannabis laws continued under U.S. Attorney General Merrick Garland. The DOJ may change its enforcement policies at any time, with or without advance notice, under actingcurrent U.S. Attorney General, James McHenry, or pending nominee, Pam Bondi.

THE CONSEQUENCES OF SUCH GOVERNMENTAL ENFORCEMENT WOULD BE MATERIALLY DETRIMENTAL TO US, OUR BUSINESS AND THE VALUE OF THEOUR SUBORDINATECOMMON VOTING SHARESSTOCK AND COULD RESULT IN THE FORFEITURE OR SEIZURE OF ALL OR SUBSTANTIALLY ALL OF OUR ASSETS.

In addition, the rule making process to reschedule cannabis to a Schedule III substance under the CSA is ongoing at the time of this filing. We cannot predict the effects such rescheduling would have on our business, and there is no guarantee that the formal rule making process will happen within a certain timeframe or that cannabis will be rescheduled. If cannabis were rescheduled to a Schedule III substance, we cannot predict the federal regulations that may be put into place regarding the cannabis industry. InOn particular,December Donald18, 2025, President Trump wasissued electedthe presidentExecutive Order, which directs federal agencies to expedite the process of rescheduling cannabis from a Schedule I to a Schedule III controlled substance under the CSA. The effect of the U.S.Executive Order may be that the cultivation, manufacturing, distribution, sale or possession of cannabis in 2024.the WhileU.S. Donaldis Trumpno haslonger generallyfederally expressedillegal supportand forwould regulationslessen criminal penalties at the federal level and remove Section 280E tax considerations; however, the final effects are dependent on other government actions. Despite such actions and the ongoing rule making process, there can be no guarantees that arethe favorablerescheduling rule making process will continue on a certain timeline or at all under this administration or that any rules will come out of the rule making process that will benefit the Company. The Executive Order, and agency implementation of the Executive Order does not federally legalize adult use and would not federally authorize or approve state sanctioned medical programs. Cannabis would still be subject to the U.S.same cannabisFDA industry,drug thereapproval isprocess noas guaranteeall thatother hesubstances, willand agreesales with President Biden’s reviewoutside of theFDA schedulingapproval, ofwould cannabisstill underbe criminal at the CSA,federal or how the new administration, including new attorney general, will affect the formal rule making process.level. In addition, particularly considering the U.S. congressional elections that occurred in 2024, there is no guarantee that on-going pro-cannabis federal legislative efforts such as the State Reform Act or the SAFER Act will continue, that the Executive Order will result in the rescheduling of cannabis on a particular timeframe or at all, that certain legislation, such as certain banking restrictions, will change as a result of the Executive Order, or that legislation that further restricts the cannabis industry at the federal U.S. level will not be proposed or passed. Many states held elections in 2024 as well, and as such, weWe cannot predict if newly-elected state officials will adversely change the regulatory schemes regarding cannabis in the states where we operate.

Any disruptions and volatility in U.S. and global financial markets, inflation, potential recession and declining consumer and business confidence could lead to decreased levels of consumer spending and higher costs. Our operations have been, and could continue to be affected by inflation, and could be effected by any potential recession, real or perceived market disruptions, the unemployment level, the impact of a federal government shutdown, or rising or elevated interest rates that reach levels that influence consumer trends and spending and, consequently, impact our sales volume, pricing, cost of goods and profitability. The Company takes a cautious approach in allocating its capital to maximize its returns while ensuring appropriate liquidity. Given inflation and the uncertainty of the future economic environment, the Company has taken additional measures in monitoring and deploying its capital to minimize the potentially negative impact on its operations and expansion plans. There is no guarantee that these measures will minimize such potentially negative impacts and that we may not continue to take further measures in the future. In addition, economic uncertainty may make it more difficult to access financing at the rates we have received previously. Further, continued high interest rates may increase the cost of servicing our debt, which may limit our ability to fund capital expenditures for new cultivation facilities. Additionally, as cannabis remains a discretionary purchase for many, inflationary pressure on household essentials, such as food, fuel and rent, could lead consumers to trade down to lower-margin value brands or reduce their overall frequency of purchase, potentially leading to further price compression in certain markets.

The Company and certain of our subsidiaries are borrowers under secured debt facilities, and we may be unable to repay, renew or refinance our indebtedness when it becomes due. Further, our debt facilities contain covenants that restrict our business and they may be difficult or costly for us to comply with. If we are unable to repay, renew or refinance our debts as they become due, it would have a material adverse effect on our business, financial condition and results of operations and the value of theour SubordinateCommon Voting Shares.Stock.

We may not be able to renew or refinance our indebtedness, including indebtedness under the 2022 Credit Agreement or the Loan Agreement on substantially similar terms, or at all, particularly in an environment of economic uncertainty such as the one discussed above in “—Challenging U.S. and global economic conditions may negatively impact our business, financial condition and results of operations.” Our ability to access short-term and long-term lending and capital markets to obtain, and the availability of acceptable terms and conditions of, financing are impacted by many factors, including the liquidity and volatility of the overall lending and capital markets, the cannabis regulatory environment and the current state of the economy, including the cannabis industry. There can be no assurances that we will be able to access the lending and capital markets to refinance our indebtedness. We may have to pay higher interest rates and additional fees and expenses, and we may have to agree to terms that could increase the cost of our indebtedness structure. If we are unable to renew or refinance our indebtedness on terms that are not materially less favorable than the terms currently available to us or obtain alternative or additional financing arrangements, we may not be able to timely repay our indebtedness, which may result in a default under our indebtedness, which could result in our lenders’ foreclosure on our assets securing our indebtedness.

The Company and our subsidiaries may incur additional indebtedness, and we may be unable to borrow on better or substantially similar terms to our existing indebtedness. New indebtedness facilities may contain covenants that further restrict our business and they may be difficult or costly for us to comply with. If we were to incur additional indebtedness that increases the cost of our indebtedness structure, it would have a material adverse effect on our business, financial condition and results of operations and the value of theour SubordinateCommon Voting Shares.Stock.

Despite quality control procedures, cultivators, manufacturers and distributors of cannabis products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. While we employ testing procedures, there is no guarantee such procedures will catch all defects. If any of our products or any of the products that we purchase from a third party are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall, and may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. A recall or return of our products could lead to a deterioration in our brand identity, decreased demand for our products or limit our ability to purchase from a third-party and could have a material adverse effect on our business, financial condition and results of operations.

We are subject to growth-related operational and execution risks, including integration of acquired businesses, facility,facilities, systems, personnel, and other capacity constraints, efficient management of assets and pressure on our internal systems and controls. Our ability to manage growth effectively will require us to continue to implement and improve our integration processes and operational and financial systems and to expand, train and manage our employee base. Our inability to effectively manage our growth may have a material adverse effect on our business financial results and financial condition.

We engage in acquisitions, dispositions and other strategic transactions, which present numerous execution risks. We may encounter unforeseen obstacles related to these transactions that would negatively impact our business, financial condition and results of operations and theour SubordinateCommon Voting Shares.Stock.

Material acquisitions, dispositions and other strategic transactions involve a number of execution risks, including: (i) potential disruptions to our ongoing business; (ii) distraction of management; (iii) our becoming more financially leveraged; (iv) the anticipated benefits and cost savings of those transactions not being realized fully, or taking longer to realize than expected; (v) an increase in the scope and complexity of our operations, including in employee relations as a result of growth or acquiring existing union and collective bargaining agreements; and (vi) a loss or reduction of control over our assets. Additionally, we may issue SubordinateCommon Voting SharesStock and other equity interests as consideration in such transactions, which issuances would dilute our existing shareholders’stockholders’ equity holdings in the Company.

Our acquisitions are subject to varying degrees of approval which include in some cases, among other things, (i) approval by the Company’s shareholdersstockholders; (ii) approval by local and state authorities of the change in ownership in the cannabis licensee or the deemed sale, transfer or assignment of the cannabis-related licenses; and (iii) other state and local regulatory approvals. We are unable to predict when all required approvals or authorizations will be obtained, if at all.

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Form 10-K. See “Cautionary Note on Forward-Looking Statements” and “Risk Factors” in this Form 10-K. Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future. We have omitted discussion of the earliest of the three years covered by our consolidated financial statements presented in this report because that disclosure was already included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on MarchFebruary 15,27, 2024.2025. You are encouraged to reference Part II, Item 7, within that report, for a discussion of our financial condition and result of operations for the fiscal year ended December 31, 20222024 compared to the fiscal year ended December 31, 2023.

Verano Holdings Corp., a Nevada corporation (“Verano,” the “Company,” “we,” “us,” or “our”), one of the U.S. cannabis industry’s leading companies based on historical revenue, geographical scope and brand performance, is a vertically integrated, multi-state operator embracing a mission of saying Yes to planplant progress and the bold exploration of cannabis. AnAs an operator of licensed cannabis cultivation, processing, wholesale distribution and retail facilities, our goal is theto ongoing development ofsupport communal wellness by providing responsible access to regulated medical and adult use cannabis products to discerning customers.products. As of FebruaryMarch 25,10, 2025,2026, through our subsidiaries and affiliates we operate businesses in 13 states, including 153160 retail dispensaries and 1514 cultivation and processing facilities with over 1.1 million square feet of cultivation capacity. We produce a wide variety of high quality cannabis products sold under our portfolio of consumer brands, including Encore™, Avexia™, MÜV™, Savvy™, (the) Essence™, BITS™, HYPHEN™, Swift Lifts™ and Verano™. We also design, build and operate branded retaildispensaries environmentsoperating includingunder the Zen Leaf™ and MÜV™ dispensariesretail banners, among others, that deliver a cannabis shopping experience in both medical and adult use markets.

Notwithstanding the permissive regulatory environment of medical, and in some cases, also adult use (i.e., recreational) cannabis, at the state level, it remains illegal under U.S. federal law to cultivate, manufacture, distribute, sell or possess cannabis in the U.S. Because federal law prohibits transporting any federally restricted substance across state lines, cannabis cannot be transported across state lines. As a result of current federal law prohibitions, the U.S. cannabis industry is conducted on a state-by-state basis. To date, in the U.S. 3840 states plus the District of Columbia and the U.S. territories of Puerto Rico, Guam, the Commonwealth of Northern Marina Islands, and the U.S. Virgin Islands have authorized comprehensive medical cannabis programs, 24 states plus the District of Columbia and the U.S. territories of Guam, the Commonwealth of Northern Mariana Islands, and the U.S. Virgin Islands have authorized comprehensive programs for medical and adult use (i.e. recreational) cannabis, and 7eight states allow the use of low tetrahydrocannabinol (THC) and high cannabidiol (CBD) products for specified medical uses. Verano operates within states where cannabis use, medical or both medical and adult use, has been approved by state and local regulatory bodies. Strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company or any of its subsidiaries. On December 18, 2025, President Trump issued the Executive Order which directs federal agencies to expedite the process of rescheduling cannabis from a Schedule I to a Schedule III controlled substance under the CSA. The effect of the Executive Order may be that the cultivation, manufacturing, distribution, sale or possession of cannabis in the U.S. is no longer federally illegal and would lessen criminal penalties at the federal level and remove Section 280E tax considerations, however, the final effects of the Executive Order are dependent on other government actions. Despite such actions and the ongoing rule making process, there can be no guarantees that the rescheduling rule making process will continue on a certain timeline or at all under this administration or that any rules will come out of the rule making process that will benefit the Company. The Executive Order, and agency implementation of the Executive Order does not federally legalize adult use and would not federally authorize or approve state sanctioned medical programs. Cannabis would still be subject to the same FDA drug approval process as all other substances, and sales outside of FDA approval, would still be criminal at the federal level.

Substantially all of the Company’s business, operating results and financial condition relate to U.S. cannabis-related activities. Our strategy is to vertically integrate as a single cohesive company in multiple states through the consolidation of seed-to-sale cultivating, manufacturing, distributing, and dispensing cannabis brands and products at scale. Our cultivation, processing and wholesale distribution of cannabis consumer packaged goods are designed to guarantee shelf-space insupport our national retail dispensary chains,dispensaries, as well as to develop and foster long term wholesale supply relationships with third-party retail operators. Our model includes geographic diversity by establishing a diverse geographic footprint tothat allowallows us to adapt to changes in both industry and market conditions.

Revenues, net of discounts for the year ended December 31, 20242025 was $878,585,$821,504, a decrease of $(59,86757,081) or (6.46.5)%, compared to revenues, net of discounts of $938,452$878,585 for the year ended December 31, 2023.2024. The year-over-year decrease in revenues, net of discounts, thatwas driven primarily by third-party price compression in established markets coupled with the CompanyCompany's experiencedaccounts receivable strategy in the cultivation (wholesale) segment, of maintaining a number of accounts on hold for non-payment. This was causedpartially offset by aan decreaseincrease in the retail segment revenues, net of discounts, which was driven primarily by continuedproduct expected declines in New Jersey and Illinois retail markets as third-party dispensaries continue to open across the states during the year ended December 31, 2024. Additionally, revenues, net of discounts,availability in the Florida market decreasedand year-overthe yearacquisition dueof toCC cultivationEast Virginia and processCannabist facility enhancements that temporarily reduced production. This is partially offset by increasesAZ in revenues, net of discounts, from the Maryland and Ohio markets in relation to the adult use program launches in July 2023 and August 2024, respectively,which and acquisition activity duringincreased the yearCompany’s endedretail December 31, 2024.footprint. During the year ended December 31, 2024,2025, the Company opened nineseven new retail stores, onetwo in Connecticut, sixthree in Florida, one in New JerseyOhio and one in Pennsylvania.West Additionally, the Company acquired eight additional retail stores, two in Arizona and six in Virginia, as part of acquisition activity during the third quarter of 2024. Consistent with other multi-state cannabis operators, the Company has continued to see increased competition and promotional activity in select retail markets, specifically in New Jersey and Illinois during the year ended December 31, 2024 compared to the year ended December 31, 2023.Virginia. Retail revenues, net of discounts, for the year ended December 31, 20242025 comprised 65.5%67.9% of revenues, net of discounts, compared to 68.0%65.5% of revenues, net of discounts, for the year ended December 31, 2023,2024, excluding intersegment eliminations. The Company experienced an increase in cultivation (wholesale) revenues, net of discounts, driven by increased third-party wholesale sales in the New Jersey and Illinois markets, coupled with the adult use launch in the Ohio market, both of which attributed to increased production output and sales of cannabis flower and cannabis related products, when comparing the year ended December 31, 2024 to the year ended December 31, 2023. Cultivation (wholesale) revenues, net of discounts, made up 34.5%32.1% of revenues, net of discounts for the year ended December 31, 2024,2025, as compared to 32.0%34.5% for the year ended December 31, 2023,2024, excluding intersegment eliminations. Please see “Results of Operations by Segment” for information regarding year over year performance of our retail revenue and cultivation (wholesale) revenues.

Gross profit for the year ended December 31, 20242025 was $443,931,$413,497, representing a gross profit margin of 50.5%.50.3%. This is compared to gross profit for the year ended December 31, 20232024 of $475,206,$443,931, representing a 50.6%50.5% gross profit margin. The slight decrease was attributableprimarily todriven anby impactoverall relatedtop-line torevenue andecline inventorycoupled step-upwith increased promotional activity in established markets, partially offset by more efficient harvests from acquisitions,expanded coupledcultivation with, continued pricing pressure during the year ended December 31, 2024 when compared to the year ended December 31, 2023.facilities.

Cost of goods sold, net includes the costs directly attributable to cultivatingproduct sales and processingincludes cannabisamounts andpaid for retail purchases of finished goods, such as flower, edibles, and concentrates.concentrates, as well as packaging and other supplies, fees for services and processing, rent, utilities, and related costs. Cost of goods sold, net, for the year ended December 31, 20242025 was $434,654,$408,007, a decrease of $(28,59226,647) or (6.26.1)%, from the year ended December 31, 2023.2024. The decrease was primarily driven by aoverall decline in revenues,top-line netrevenue ofcoupled discounts,with withinmore efficient harvests from expanded cultivation facilities. Additionally, the retaildecrease marketswas duealso attributable to expectedthird declinesparty price compression in the Newcultivation Jersey(wholesale) and Illinois markets as third-party dispensaries continue to open across the states, driving increased competition. Additionally, the Company recorded a $3,846 non-cash impact related to the inventory step-up from acquisitions during the year ended December 31, 2024.segment.

During the year ended December 31, 2025, the Company determined that a license associated with its Pennsylvania cultivation (wholesale) reporting unit was impaired and as such, the Company recorded intangible asset impairment charges of $90,849. Additionally, during the year ended December 31, 2025 the Company recorded a fixed asset impairment charge of $428 associated with a Massachusetts cultivation facility as the carrying value exceeded the fair value by such amount and an impairment charge of $5,400 resulting from a reduction in the carrying value of a cultivation facility in Pennsylvania. Comparatively, during the year ended December 31, 2024, the Company recorded intangible asset impairment charges of (i) $293,688 related to the Company’s Pennsylvania retail licenses, (ii) $5,687 related to the Company’s Arizona cultivation (wholesale) tradenames, (iii) $34 related to the Company’s Maryland retail tradenames; and (iv) $425 related to the Company’s Arizona cultivation (wholesale) technology, on the remaining net book value during the year ended December 31, 2024.value. Additionally, during the year ended December 31, 2024, the Company recorded (i) a fixed asset impairment charge of $10,526 associated with an Arizona cultivation facility, (ii)and an impairment on a held-for-sale asset related to a cultivation facility in Pennsylvania of $9,160 as the carrying value exceeded the fair value less cost to sell by such amount; and (iii) a goodwill impairment charge of $8,179 associated with its Arizona cultivation (wholesale) reporting unit. During the year ended December 31, 2023, the Company recorded an intangible asset impairment charge of $5,113 on the remaining net book value related to the Company’s Massachusetts cultivation (wholesale) license, a fixed asset impairment charge of $8,573 related to the Company’s Massachusetts cultivation facility, and goodwill impairment charges of (i) $33,622 associated with its Arizona cultivation (wholesale) reporting unit, (ii) $4,245 associated with its Nevada retail reporting unit, and (iii) $64 associated with its Massachusetts cultivation (wholesale) reporting unit, as the carrying values of the reporting units exceeded the estimated fair value by such amounts.amount.

Provision for income taxes for the year ended December 31, 20242025 was $41,944,$91,678, aan decreaseincrease of $103,202$49,734 or 71.1%118.6% as compared to the year ended December 31, 2023.2024. The increaseyear-over-year change in income tax expense was primarily driven by impacts from impairment losses recognized in each respective period. For the year ended December 31, 2024, the provision for income taxes was largelymainly attributableimpacted toby the Lossloss on Impairmentimpairment of Intangiblesintangibles &and Fixedfixed Assetsassets. In contrast, for the year ended December 31, 2023.2025, the provision reflected lower impairment losses on intangibles, fixed assets, and assets held for sale. The variation in the amounts of impairment charges between the two years resulted in the comparative fluctuation in income tax expense.

Revenues, net of discounts, for the retailcultivation (wholesale) segment was $672,252$318,389 for the year ended December 31, 2024,2025, a decrease of $(69,08235,087) or (9.39.9)%, excluding intersegment eliminations, compared to the year ended December 31, 2023.2024. TopMarkets that were top contributors to retailthe salescultivation (wholesale) revenues, net of discounts were mainly due to increases in MarylandIllinois and OhioNew retail markets due to the adult use program launches in July 2023 and August 2024, respectively, and acquisition activityJersey during the year ended December 31, 2024.2025. The overall decrease in retailcultivation (wholesale) revenues, net of discounts, was primarily driven by continued increased competition and promotional activity, as expected, in select retail markets, specifically in New Jersey and Illinois. Additionally, modest pricing pressure and promotional activity contributedattributable to the decreaseexpected third-party price compression in revenues,established netmarkets coupled with the Company's accounts receivable strategy, which was to maintain a number of discounts,accounts on hold for non-payment when comparing the year ended December 31, 20242025 to the year ended December 31, 2023.2024.

The Company derives its revenue from both its cultivation (wholesale) business in which it cultivates, produces and sells cannabis products to third-party retail customers, and its retail business, in which it directly sells cannabis products to retail patients and consumers. For the year ended December 31, 2025, approximately 32.1% of the Company’s revenue was generated from the cultivation (wholesale) business and approximately 67.9% from the retail business, excluding intersegment eliminations. For the year ended December 31, 2024, approximately 34.5% of the Company’s revenue was generated from the cultivation (wholesale) business and approximately 65.5% from the retail business, excluding intersegment eliminations. For the year ended December 31, 2023, approximately 32.0% of revenue was generated from the cultivation (wholesale) business and approximately 68.0% from the retail business, excluding intersegment eliminations.

The Company’s expansion strategy and revenue growth have taken priority and will continue to do so for the foreseeable future as it expands its footprint, by exploring new markets and opening or acquiring new dispensary locations, and scales production within certain markets. In the core markets in which the Company is already operational and, as the state markets mature, the Company anticipateshas that there will beexperienced pressure on margins inwithin the cultivation (wholesale) and retail channels.channels and expects this to continue as markets mature. The Company’s current production capacity has not been fully realized and it is expected that price compression at the cultivation (wholesale) level, will be partially offset by operational optimization.

Selling costs generally correlate to revenue. As a percentage of sales, selling costs are expected to continue to increase slightly in currently operational markets as facility and market expansion occurs. The increase is expected to continue to be driven primarily by the growth of the Company’s retail and cultivation (wholesale) channels and the ramp up from new retail openings.

SG&A expenses also include personnel costs incurred at the Company’s corporate offices, primarily related to back-office personnel costs,incurred, including salaries, incentive compensation, benefits, stock-based compensation and professional service costs. Going forward, SG&A expenses aremay expected to continueincrease in lineconnection with supporting the Company’sbusiness expansion plans. Furthermore,and the Company expectscould to continue to incur acquisition and transaction costs related to these expansion plans and anticipatesexperience an increase in stock compensation expenses related to recruiting and hiring talent, along with legal and professional fees associated with being a public-reporting company and publicly traded in Canada and a public-reporting company in the U.S.company.

As of December 31, 20242025 and 2023,2024, the Company had total current liabilities of $197,968$140,261 and $412,188,$203,112, respectively, and had cash and cash equivalents of $87,796$82,724 and $174,760,$87,796, respectively, to meet its current obligations. The Company had working capital of $159,541$264,390 and a working capital deficit of $(17,992),$159,541, for the years ended December 31, 20242025 and 2023,2024, respectively. This increase in working capital of $177,533$104,849 for the year ended December 31, 20242025 when compared to the year ended December 31, 2023,2024, was primarilyattributable to an increase in inventory driven by thehigher Company’sproduction positionvolumes thatand itmore doesefficient notharvests owefrom taxesexpanded attributablecultivation facilities coupled with a reduced income tax payable balance due in part to the applicationCompany's treatment of Section 280E of the Code,Code thuswhich reducingshifted itsa Incomeportion Taxesof Payablethe balanceshort-term liability to a long-term liability on the Company's Condensed Consolidated Balance Sheets.

The Company generates cash from revenues and deploys its capital to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and long term. Capital is primarily being utilized for capital expenditures, facility improvements, strategic investment opportunities, productand developmentgeneral and marketing,administrative as well as customer, supplier, and investor and industry relations. The Company takes a cautious approach in allocating its capital to maximize its returns while ensuring appropriate liquidity. Given inflation and the uncertainty of the future economic environment, the Company has taken additional measures in monitoring and deploying its capital to minimize the potentially negative impact on its operations and expansion plans.expenses.

Our long-term liquidity requirements consist primarily of completing additional acquisitions, scheduled debt payments andpayments, future payments of income tax payables, maintaining and expanding our operations and other general business needs. We expect to meet our long-term liquidity requirements through various sources of capital, which may include future debt or equity issuances, net cash provided by operations and other secured and unsecured borrowings. We believe that the foregoing sources of capital will provide sufficient funds for our operations, anticipated expansion and scheduled debt payments for the long-term. Our ability to fund our operating needs will depend on our future ability to continue to generate positive cash flow from operations and our ability to obtain debt or equity financing on acceptable terms.

2022 Credit Facility

InOn October 27, 2022, Verano and certain of its subsidiaries and affiliates, as the Borrowers, entered into the 2022 Credit Agreement with Chicago Atlantic, as administrative agent for the lendersLenders, and the Lenders party thereto, pursuant to which the lendersLenders advanced the Borrowers a $350,000 senior secured term loan, and which also provides the Borrowers with the right, subject to conditions, to request an additional incremental term loan of up to $100,000; provided that the lendersLenders elect to fund such incremental term loan. At funding, all the proceeds of the loans made under the 2022 Credit Agreement were used to repay the amounts owing under the Company's previous senior secured term loan credit facility. In connection with such repayment, such previous credit facility was terminated and is no longer in force or effect.

The 2022 Credit Agreement allowsalso provides the Borrowers with the right to (ia) incur up to $120,000 of additional indebtedness from third-party lenders secured by real estate excluded as collateral under the 2022 Credit Agreement, (iib) incur additional mortgage financing from third-party lenders secured by real estate acquired after the initialclosing funding of the 2022 Credit Agreement,date, and (iiic) upon the SAFE Banking Act or similar legislation making banking services available to U.S. cannabis companies being passed by the United States Congress, incur up to $50,000 underpursuant to a revolving credit facility from third-party lenders that is pari passu or subordinated to the 2022 Credit Agreement obligations, alleach of which are subject to customary conditions.

The obligations under the 2022 Credit Agreement are secured by substantially all of the assets of the Borrowers, excluding vehicles, specified parcels of real estate and other customary exclusions. The 2022 Credit Agreement provides for a floating annual interest rate equal to the prime rate then in effect plus 6.50%, which rate may be increased by 3.00% upon an event of default that is not a material event of default or 6.00% upon a material event of default as provided in the 2022 Credit Agreement. The initially funded $350,000 loan requires scheduled amortization payments of $350 per month beginning in October 2023 with the remaining principal balance due in full on October 30, 2026.

At any time, the BorrowersCompany may voluntarily prepay up to $100,000 of the principal balance, subject to a one-time $1,000 prepayment premium upon the first prepayment, and may prepay the remaining outstanding principal balance for a prepayment premium at varying rates based on the timing of any subsequent prepayments. The Borrowers may not voluntarily prepay more than $100,000 of the principal balance without prepaying the entire outstanding principal balance of the loan.

On April 30, 2024, the Company made a Permitted Partial Optional Prepayment (as defined in the 2022 Credit Agreement) in the amount of $50,000 pursuant to the 2022 Credit Agreement and paid a $1,000 prepayment premium in connection therewith. In connection with such Permitted Partial Optional Prepayment, Chicago Atlantic and certain Lenders agreed to (a) release the Releasedcertain Borrowers from their obligations under, and as parties to, the 2022 Credit Agreement and related agreements and (b) release all liens over the Releasedsuch Borrowers’ property, including real estate, held by Chicago Atlantic for the benefit of the Lenders, in each case, pursuant to a limited consent and waiver, dated as of April 29, 2024, by and among the Borrowers, certain of the Lenderslenders party thereto and Chicago Atlantic.

The 2022 Credit Agreement includes customary representations, warranties andwarranties, covenants and customary events of default, includingincluding, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.

The 2022 Credit Agreement also includes customary negative covenants limiting the Borrowers’ ability to incur additional indebtedness and grant liens,liens that are not otherwise permitted, and the ability to enter into definitive documents or consummate acquisitions or dispositions that are not otherwise permitted thereunder,permitted, among others. Additionally, the 2022 Credit Agreement requires the Borrowers to meet certain financial tests regarding minimum cash balances, minimum levels of Adjusted EBITDA (as defined in the 2022 Credit Agreement) and a minimum fixed charge coverage ratio.

This management discussion and analysis (this “MD&A”) of the financial condition and results of operations of the Company is for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. It is supplemental to, and should be read in conjunction with, the Company’s Unaudited Interim Condensed Consolidated Financial Statements and the accompanying notes for the three and six months ended MarchJune 31,30, 2026 and with the Company’s Audited Consolidated Financial Statements and the accompanying notes for the years ended December 31, 2025 and 2024 included in the Form 10-K. The financial statements referenced in this MD&A are prepared in accordance with GAAP. Financial information presented in this MD&A is presented in United States dollars (“$” or “US$”) and expressed in thousands, unless otherwise indicated. This MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the Form 10-K. See “Cautionary Statement Regarding Forward-Looking Statements” above, “Risk Factors” in Part II, Item 1A below and “Risk Factors” in the Form 10-K. The Company's management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of the Company's financial condition and results of operations in the future.

Verano Holdings Corp., a Nevada corporation (“Verano,” the “Company,” “we,” “us,” or “our”), one of the U.S. cannabis industry’s leading companies based on historical revenue, geographical scope and brand performance, is a vertically integrated, multi-state operator embracing a mission of saying Yes to plant progress and the bold exploration of cannabis. As an operator of licensed cannabis cultivation, processing, wholesale distribution and retail facilities, our goal is to support communal wellness by providing responsible access to regulated medical and adult use cannabis products. As of AprilAugust 28,3, 2026, through our subsidiaries and affiliates we operate businesses in 13 states, including 162163 retail dispensaries and 14 cultivation and processing facilities with over 1.1 million square feet of cultivation capacity. We produce a wide variety of cannabis products sold under our portfolio of consumer brands, including Encore™, Avexia™, MÜV™, Savvy™, (the) Essence™, BITSSwift Lifts™, HYPHEN™, SwiftEncore™, LiftsBITS™, Avexia™, MÜV™, CTPharma™, and Verano™. We also design, build and operate branded dispensaries operating under the Zen Leaf™ and MÜV™ retail banners, among others, that deliver a cannabis shopping experience in both medical and adult use markets.

Notwithstanding the permissive regulatory environment of medical, and in some cases, also adult use (i.e., recreational) cannabis, at the state level, it remains illegal under U.S. federal law to cultivate, manufacture, distribute, sellsell, or possess cannabis in the U.S. Because federal law prohibits transporting any federally restricted substance across state lines, cannabis cannot be transported across state lines. As a result of current federal law prohibitions, the U.S. cannabis industry is conducted on a state-by-state basis. To date, in the U.S. 40 states plus the District of Columbia and the U.S. territories of Puerto Rico, Guam, the Commonwealth of Northern Marina Islands, and the U.S. Virgin Islands have authorized comprehensive medical cannabis programs, 24 states plus the District of Columbia and the U.S. territories of Guam, the Commonwealth of Northern Mariana Islands, and the U.S. Virgin Islands have authorized comprehensive programs for medical and adult use (i.e. recreational) cannabis, and 8 states allow the use of low tetrahydrocannabinol and high cannabidiol products for specified medical uses. Verano operates within states where cannabis use, medical or both medical and adult use, has been approved by state and local regulatory bodies.

The following presents selected financial data derived from the (i) Unaudited Interim Condensed Consolidated Financial Statements for the three and six months ended MarchJune 31,30, 2026 and 2025 and (ii) the Condensed Consolidated Balance Sheets as of MarchJune 31,30, 2026 and December 31, 2025, and should be read in conjunction with the Unaudited Interim Condensed Consolidated Financial Statements and accompanying notes presented in Item 1 of this Form 10-Q. The selected Unaudited Interim Condensed Consolidated financial information below may not be indicative of the Company's future performance. All shares of Common Stock, RSUs, stock options, share capital and per share information presented in this report have been retroactively adjusted, where applicable, to reflect the Reverse Stock Split.

Three Months Ended MarchJune 31,30, 2026, as Compared to Three Months Ended MarchJune 31,30, 2025

Revenues, net of discounts, for the three months ended MarchJune 31,30, 2026 was $208,178,$217,918, aan decreaseincrease of $(1,631)$15,646 or (0.8)%,8%, compared to revenues, netrevenue of discounts, of $209,809$202,272 for the three months ended MarchJune 31,30, 2025. The decreaseincrease in revenues,revenue, net of discountsdiscounts, forwas driven by strong new product momentum, including the continued expansion of our HYPHEN™ and Swift Lifts™ product lines, as well as strategic collaborations, which broadened brand offerings in select markets and categories. Additionally, when comparing the three months ended MarchJune 31,30, 2026 was primarily driven by continued increased competition and promotional activity into the thirdthree partymonths wholesaleended markets.June This30, is2025, partiallyoperational offsetimprovements byattributed anto the increase inof revenues, net of discountsdiscounts, inincluding theextended retailstore marketshours drivenacross byour successfulFlorida new product launcheslocations and operationaltargeted efficiencies.marketing initiatives designed to improve customer acquisition and retention. During the three months ended MarchJune 31,30, 2026, the Company openedcontinued twoto grow its retail presence, including the opening of one new storesstore in Florida. These favorable factors were partially offset by competitive pressures in the Connecticut third party wholesale market. Retail revenues, net of discounts, for the three months ended MarchJune 31,30, 2026 was approximately 68.6%69.5% of total revenue compared to 68.0%69.7% of total revenue for the three months ended MarchJune 31,30, 2025, in each case, excluding intersegment eliminations. Cultivation (wholesale) revenues, net of discounts, made up 31.4% of revenues, net of discounts, for the three months ended MarchJune 31,30, 2026,2026 aswas approximately 30.5% of total revenue compared to 32.0%30.3% of total revenue for the three months ended MarchJune 31,30, 2025, in each case, excluding intersegment eliminations. Refer to “Results of Operations by Segment” for further discussion of our retail revenue and cultivation (wholesale) revenues, net of discounts.

Gross profit for the three months ended MarchJune 31,30, 2026 was $98,976,$99,699, representing a gross profit margin of 47.5%.46%. This is compared to gross profit for the three months ended MarchJune 31,30, 2025 of $99,581,$112,984, which represented a gross profit margin of 47.5%.56%. The slightdecrease decreasewas primarily attributable to price compression in grossthe profitthird-party duringcultivation (wholesale) segment when comparing the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, was primarily driven by overall revenue decline.2025.

Net Lossloss attributable to the Company for the three months ended MarchJune 31,30, 2026 was $(17,82313,411), ana increase in net lossdecrease of $6,308,$5,739, compared to a net loss of $(11,51519,150) for the three months ended MarchJune 31,30, 2025. The increase in net lossdecrease was largelyprimarily driven by a losslower on debt extinguishment related to the 2022 Credit Agreementprovision for income taxes, partially offset by an increase in operational expenses when comparing the three months ended MarchJune 31,30, 2026 when compared to the three months ended MarchJune 31,30, 2025.

Cost of goods sold, net includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and other supplies, fees for services and processing, rent, utilities, and related costs. Cost of goods sold, net for the three months ended MarchJune 31,30, 2026 was $109,202,$118,219, aan decreaseincrease of $(1,026)$28,931 or (0.9)%,32.4%, as compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarilymainly the result of continued competition in key markets, which ledattributable to aan reductionincrease in overall revenues, net of discounts.discounts, when comparing the three months ended June 30, 2026 to the three months ended June 30, 2025.

Selling, general and administrative expenses (“SG&A”) expenses for the three months ended MarchJune 31,30, 2026 were $85,877,$92,494, an increase of $1,298$6,149 or 1.5%,7%, compared to SG&A expenses of $84,579$86,345 for the three months ended MarchJune 31,30, 2025. SG&A expenses as a percentage of revenue waswere 41.3%42% and 40.3%43% for the three months ended MarchJune 31,30, 2026,2026 and MarchJune 31,30, 2025, respectively. The increase in SG&A expenses was drivenattributable primarilyto byadministrative costs and additional general and administrativeoperational costs associated with new storesstore openings when comparing the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025.

Other expense, net for the three months ended MarchJune 31,30, 2026, was $19,299,$(13,629), an increase of $10,131$3,420 as compared to $9,168the three months ended June 30, 2025. The increase in other expense, net was attributable to other non-operational costs when comparing the three months ended June 30, 2026 to the three months ended June 30, 2025. The year-over-year variance is partially offset by the Company's voluntary partial payoff agreement for the promissory note issued by the Company to Columbia Care East Virginia, LLC (the “CC East Virginia Promissory Note”) resulting in a Gain on Debt Extinguishment of $2,947 for the three months ended MarchJune 31,30, 2025.2025, Thewhen other expense increase was primarily duecompared to a loss on debt extinguishment related to the 2022 Credit Agreement obligations during the three months ended MarchJune 31,30, 2026. Additionally, the year-over-year variance is driven by a gain on deconsolidation relating to our Arkansas operations during the three months ended March 31, 2025.

Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. Income tax expense for the three months ended MarchJune 31,30, 2026, was $11,623$2,925, as compared to $17,349$35,152 for the three months ended MarchJune 31,30, 2025, a decrease of $5,726$32,227 or (33.0)%92% primarily due to the forecasted annualized effective tax rates, adjusted for discrete items when compared to the three months ended March 31, 2025.items.

The following tables summarize revenues, net of discounts, by segment for the three and six months ended MarchJune 31,30, 2026 and 2025:

Revenues, net of discounts, for the cultivation (wholesale) segment were $78,832$79,812 for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of $(729)$6,472 or (0.9)%,9%, compared to the three months ended MarchJune 31,30, 2025, in each case, excluding intersegment eliminations. During the three months ended March 31, 2026, cultivation (wholesale) revenues, net of discounts in the Illinois and New Jersey markets were the largest contributors. The decreaseincrease in cultivation (wholesale) revenues, net of discounts, was primarily driven by continuedthe increased demand for new products, new customer growth, and notable strength in the New Jersey, Ohio, Pennsylvania, and Virginia third party wholesale markets. This is partially offset by increased competition and promotional activity in thekey third partythird-party wholesale marketsmarkets, specifically in Connecticut when comparing the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025.

Revenues, net of discountsdiscounts, for the retail segment were $172,140$182,158 for the three months ended MarchJune 31,30, 2026, an increase of $3,333 or 2.0%,$13,060, compared to the three months ended MarchJune 31,30, 2025, in each case, excluding intersegment eliminations. DuringThe increase in retail revenue, net of discounts, was driven by strong new product momentum, including the threecontinued monthsexpansion endedof Marchour 31,HYPHEN™ 2026,and Swift Lifts™ product lines, as well as strategic collaborations, which broadened brand offerings in select markets and categories. Additionally, operational improvements attributed to the increase of retail revenues, net of discounts, inincluding theextended store hours across our Florida marketlocations wasand thetargeted largestmarketing contributorinitiatives designed to overallimprove revenues,customer net of discounts in the retail segment, excluding intersegment eliminations. The increase in retail revenues, net of discounts, was primarily driven by successful new product launchesacquisition and operational efficienciesretention, when comparing the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025.

The Company derives its revenue from both its cultivation (wholesale) business in which it cultivates, produces and sells cannabis products to third-party retail customers, and its retail business, in which it directly sells cannabis products to retail patients and consumers. For the three months ended MarchJune 31,30, 2026, approximately 31.4%30.5% of the Company’s revenue was generated from the cultivation (wholesale) business, excluding intersegment eliminations, and approximately 68.6%69.5% from the retail business, excluding intersegment eliminations. For the threesix months ended MarchJune 31,30, 2025,2026, approximately 32.0%30.9% of revenue was generated from the cultivation (wholesale) business, excluding intersegment eliminations,eliminations and approximately 68.0%69.1% from the retail business, excluding intersegment eliminations.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company had total current liabilities of $118,911$109,366 and $140,261, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, the Company had cash and cash equivalents of $74,026$85,195 and $82,724, respectively, to meet its current obligations. The Company had working capital of $275,610$294,916 as of MarchJune 31,30, 2026, an increase of working capital of $11,220$30,526 as compared to December 31, 2025. This increase in working capital was primarily driven by a reduction in current liabilities, especially accounts payable and accrued liabilities, which offset a modest decrease in current assets. Positive operating cash flow and increased management of payables and accruals contributed to this improvement during the threesix months ended MarchJune 30, 2026 compared to December 31, 2026.2025, was largely attributable to income tax payable balances due in part to the Company's treatment of Section 280E of the Code coupled with reductions in Accounts Payable and Accrued Liabilities.

On March 11, 2026, the Company repaid all amounts owing under the 2022 Credit Agreement together with a prepayment premium of $4,345. As a result of such payment, the 2022 Credit Agreement was then terminated and is no longer in force or effect.

On September 30, 2025, the Company entered into a credit agreement (as amended, the “Revolver”), by and among the Company, as a guarantor, certain subsidiaries of the Company from time-to-time party thereto as borrowers (the “Real Estate Subsidiaries”), the lenders from time-to-time party thereto, and Chicago Atlantic, as administrative agent for the lenders.

The Revolver may be drawn in $2,500 increments upon ten business days prior notice and any outstanding amount under the Revolver may be voluntarily prepaid in $2,500 increments upon five business days prior notice without any penalty or premium, unless such prepayment occurs within six months of the applicable advance, in which case, such prepayment shall beis subject to a six-month interest make whole. Any amounts prepaid may be redrawn subject to the same requirements set forth above. The Revolver was initially subject to a borrowing base which required the outstanding principal balance under the Revolver to be equal to or less than 60% of the appraised value, net of certain indebtedness, of the owned real estate serving as collateral for the Revolver from time to time.

The Revolver includes customary representations, warranties, covenants and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency. The Revolver also includes customary covenants, including, without limitation, limiting the Real Estate Subsidiaries’ ability to incur additional indebtedness, make guarantees and grant liens that are otherwise not permitted and enter into or consummate acquisitions or dispositions that are not otherwise permitted, among others. As of MarchJune 31,30, 2026, the Company was in compliance with such covenants.

On January 12, 2026, the Company entered into a First Amendment to Credit Agreement and Omnibus First Amendment to Credit Documents (the “First Amendment”), to amend the Revolver. The First Amendment increased the lending commitment of the Revolver from $75,000 to $100,000 and amended the date on which all outstanding amounts are due in full from September 29, 2028 to February 28, 2029. Additionally, the First Amendment amended the borrowing base for the Revolver to an advance rate of up to 80%, rather than 60%, of the appraised value, net of certain indebtedness, of the owned real estate serving as collateral for the Revolver. The First Amendment also includes certain other immaterial updates to the Revolver. No additional collateral was pledged to secure the Revolver in connection with the First Amendment. On March 11, 2026, the Company drew $50,000 under the Revolver, bringing the total amount drawn under the Revolver to $100,000, which was used to repay the amounts owing under the 2022 Credit Agreement.

On March 11, 2026, Verano and certain of its subsidiaries and affiliates from time-to-time party thereto (collectively, the “2026 Borrowers”), entered into a credit agreement (the “2026 Credit Agreement”) with Needham Bank (“Needham”), as collateral agent and administrative agent for the lenders, Chicago Atlantic Financial Services, LLC, as co-administrative agent for the lenders, and the lenders from time-to-time party thereto (the “2026 Lenders”), pursuant to which the 2026 Lenders advanced the 2026 Borrowers a $195,000 senior secured term loan, all of which was used to repay the amounts owing under the 2022 Credit Agreement as discussed above.Agreement. The Company is required to make scheduled amortization payments of $875 per month and the remaining principal balance is due in full on March 11, 2029; provided that the maturity date may be extended to March 11, 2030 upon the election of the Company, the payment of 1.5% of the then outstanding principal balance by the Company, and the consent of the 2026 Lenders. The 2026 Credit Agreement may be prepaid in part (in increments of $5,000 and in an amount not less than $10,000) or in full at any time, subject to a 1.5% prepayment premium during the first two years of the 2026 Credit Agreement and 0% thereafter; provided, that if the maturity date is extended to March 11, 2030, the prepayment premium will be 1.5% in all cases.

The obligations under the 2026 Credit Agreement are secured by substantially all of the assets of the 2026 Borrowers, excluding vehicles, specified parcels of real estate, other customary exclusions, and subject to compliance with the terms of the 2026 Credit Agreement, entities, assets and parcels of real estate acquired after the closing of the 2026 Credit Agreement. The 2026 Credit Agreement provides for a floating annual interest rate equal to one-month Term SOFR (subject to a minimum 4% SOFR floor) plus 5.5%, which rate may be increased by 5% upon an event of default as provided in the 2026 Credit Agreement. The 2026 Credit Agreement includes customary representations and warranties, covenants and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency. Additionally, the 2026 Credit Agreement requires the Borrowers to meet certain financial tests regarding minimum cash balances and a minimum fixed charge coverage ratio. As of MarchJune 31,30, 2026, the Company was in compliance with such covenants.

On April 23, 2026, the ActingJustice AttorneyDepartment Generalin signedaccordance awith the Executive Order issued the April Final Order reclassifying medical cannabis from Schedule I to Schedule III under the CSA. This action, taken pursuant to the Attorney General’s Authority under the CSA to schedule substances in compliance with the Single Convention on Narcotic Drugs, 1961, applies only to state licensed and approved medical cannabis; adult-useall cannabisother forms of cannabis. including adult use, remains classified as Schedule I. The April Final Order, effective as of theApril date26, of publication in the Federal Register,2026, provides an expedited registration process for state medical licensees and specifically states that registered state medical licensees will no longer be subject to the constraints of Section 280E. Separately, the Attorney General filed notices withdrawing the pending hearing on the proposed rulemaking notice filed in 2024, and instituted a new hearing on the proposed rule towhich beginbegan on June 29, 2026 and concluded on July 15, 2026. This expedited hearing willaddressed addressrescheduling allthe formsplant in its entirety, outside of cannabis,state sanctioned medical programs. The evidentiary hearing concluded on July 15, 2026, and adultinitial use.briefings are due from the parties on August 17, 2026. To date, no schedule has been set for an issuance of a final order on the hearing. The IRS, in a press release, has indicated that, for Section 280E purposes, rescheduling will generally apply to the full taxable year that includes the effective date of the April Final Order, for activities no longer involving Schedule I or II substances. In May 2026, several petitions were filed challenging the April Final Order, along with a motion to stay the April Final Order. The outcome of this litigation and its impact on the April Final Order and the hearing are uncertain. However, formal guidance from the IRS remains pending. The ultimate impact of thisthe order,April Final Order and the hearing — including the resolution of accrued UTPs, remains uncertain and is subject to ongoing evaluation due to the complexity of the regulatory and tax environment. The Company continues to assess the financial statement impact and is unable to reasonably estimate the effect at this time.

Net Cash Provided by (Used in) Operating Activities, Investing and Financing Activities

Net cash provided by (used in) operating, investing, and financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 were as follows:

Cash Flows from Operating Activities. Cash flow generated from operating activities provides us with a source of liquidity. Our cash flows from operating activities result from cash received from our customers, offset by cash payments we make for products and services, operational costs, and income taxes. During the threesix months ended MarchJune 31,30, 2026 and 2025, the Company had net cash inflows of $18,587$49,211 and $1,786,$12,686, respectively. The $16,801$36,525 increase was largely driven by thean changeimprovement in theinventory management coupled with lower income tax payablecash balanceoutflows onattributable to the CondensedCompany's Consolidated Balance Sheetstreatment of $(812)Section during280E as not applying to limit its deduction of ordinary and necessary business expenses when comparing the threesix months ended MarchJune 31,30, 2026, compared2026 to $(19,903) during the threesix months ended MarchJune 31,30, 2025.

Cash Flows from Investing Activities. During the threesix months ended MarchJune 31,30, 2026 and 2025, the Company had net cash outflows of $14,907$(26,752) and $4,771,$(15,183), respectively. The $10,136$(11,569) increase in net cash outflows during the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025 was largely driven by $9,071 of net cash inflows from the deconsolidation of Noah's ArkArk, deconsolidationLLC during the threesix months ended MarchJune 31,30, 2025. Additionally, purchases of property, plant and equipment were $14,937$26,807 during the threesix months ended MarchJune 31,30, 2026, compared to purchases of property, plant and equipment of $13,864$24,333 during the threesix months ended MarchJune 31,30, 2025.

Cash Flows from Financing Activities. During the threesix months ended MarchJune 31,30, 2026 and 2025, the Company had net cash outflows of $12,378$(19,988) and $591,$(16,727), respectively. The $11,787$(3,261) increase in net cash outflows during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was largely driven by the debt issuance costs paid related to the 2026 Credit Agreement and the First Amendment of $11,337, coupled with the payments of debt extinguishment of $4,345 related to the 2022 Credit AgreementAgreement, when comparing the threesix months ended MarchJune 31,30, 2026 to the threesix months ended MarchJune 31,30, 2025. Additionally, the Company had a $2,003 cash outflow during the six months ended June 30, 2026, related to the repurchase of 320,000 shares of Common Stock as part of the publicly announced share repurchase program.