CHICAGO--(BUSINESS WIRE)--Cresco Labs, Inc. (CSE:CL) (“Cresco” or “the Company”) one of the largest vertically integrated multistate cannabis operators in the United States, today released its financial results for the third quarter and nine months ended September 30, 2018. All financial information presented in this release is in U.S. dollars, unless otherwise noted.

Subsequent to the end of third quarter 2018, the Company completed a business combination with Randsburg International Gold Corp. upon which its subordinate voting shares were approved for listing on the Canadian Securities Exchange (“CSE”) under the symbol “CL.” Cresco’s shares began trading on the CSE on Monday, December 3, 2018. The Company is in the process of receiving approval by FINRA to list on the OTC market in the U.S. and is currently trading under the symbol “CRLBF.” Concurrent with its public listing on the CSE, Cresco launched its new investors website at investors.crescolabs.com.

1 Revenue presented in the text herein is calculated net of excise taxes.

2 Pro forma revenue and adjusted EBITDA information reflect consolidated results of less than majority owned affiliates.

3 See "Non-IFRS Financial Measures" at the end of this press release for more information regarding Cresco Labs’ use of non-IFRS financial measures.

Management Commentary

“ As one of the early cannabis companies to establish a national geographic footprint with substantial population reach and production capacity, Cresco is leading the way in normalizing and professionalizing our industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “As a multi-state operator (“MSO”), we have repeatedly proven our ability to get access to markets, get operational, get product to markets, and get disproportionate market share. Early on in our formation, we realized that cannabis is a natural fit within consumer-packaged goods (“CPG”) – an industry that requires consistency, reliability and availability. We therefore developed a unique and sophisticated ‘house of brands’ that addresses each major market segment and covers all price points. In essence, we developed a disciplined business blueprint that enables our rapid entry into regulated markets, where operator obligations are stringent, where our products can be accessible to customers, and where we can capture leading market share right from the start.

“ Through our differentiated business approach, we have already proven that our capital starts working immediately to the benefit of our shareholders, regulators, legislators and consumers,” Bachtell continued. “ Now, with increased access to the capital markets through our public listing, we can take our expansion strategy to the next level. We believe that Cresco has built the foundation needed to generate strong growth and attractive shareholder returns in the years ahead.”

Financial Results for the Third Quarter Ended September 30, 2018

Revenue for the third quarter of 2018 was $12.2 million, an increase of 335% compared to revenue of $2.8 million for the third quarter of 2017. The increase in revenue was driven by market expansion and gains in market share in the states where the Company operates. Third quarter revenue increased 51% compared to $8.1 million for the second quarter of 2018.

On a pro forma basis, revenue for the third quarter was $16.3 million compared to $11.8 million for the second quarter of 2018, an increase of 39%.

Third quarter gross profit, before the gain from biological assets, was $5.4 million, or 45% of revenues, compared to less than $0.1 million, or 1% of revenues, for the third quarter of 2017 and $3.5 million, or 43% of revenues, for the second quarter of 2018.

Net income for the third quarter was $3.9 million, compared to net loss of $0.2 million for the prior-year period. Net income nearly doubled from $2.0 million for the second quarter of 2018.

Adjusted EBITDA for the third quarter was $5.3 million, compared to less than $0.1 million for the third quarter of 2017 and $2.1 million for the second quarter of 2018. Pro forma adjusted EBITDA was $5.9 million for the third quarter and $2.7 million for the second quarter of 2018.

Balance Sheet and Liquidity

As of September 30, 2018, the Company had total assets of $149.5 million, including cash and cash equivalents of $93.9 million, which does not reflect the full amount of proceeds from financing activities completed subsequent to the end of the quarter. Long-term liabilities totaled $2.0 million. At September 30, 2018, the Company had a working capital position of $105.3 million.

Subsequent to the end of the third quarter of 2018, the Company increased its liquidity through additional capital raises:

In October, the Company closed a $100 million Series F private funding raise, the second largest private funding round in U.S. cannabis history at that time. A portion of the round was funded in late September and a substantial amount was funded during the fourth quarter of 2018.

In November, in connection with its business combination with Randsburg International Gold Corp., Cresco raised gross proceeds of $85 million comprised primarily of funds from institutional investors, and on December 3, 2018, the Company began trading on CSE under the ticker symbol "CL."

Operational Highlights

Operations

Nevada: Launched Mindy’s Edibles and Mindy’s Kitchen with expansive distribution.

Ohio: While the program has experienced slight delays, Cresco’s first harvest in Yellow Springs will take place in the fourth quarter and the Wintersville dispensary will be the first dispensary in the state to receive operational approval during the same period.

Pennsylvania: Developing expansion plan of 75,000 square feet in Brookville cultivation facility including a new greenhouse that will increase capacity by four times.

California: First harvest from seven-acre production site located along the central coast.

Illinois: Doubled cultivation capacity and quadrupled production and manufacturing capacity across three facilities; added a sophisticated edibles kitchen.

Business Development

Illinois: Acquired 100% of the membership interests of FloraMedex, LLC and an affiliated real estate entity, including an operational medical marijuana dispensary in Elmwood Park.

Illinois: Market growth in the state has been driven by an increasing number of registered patients and the recently passed Illinois Alternatives to Opioids Act which, when fully implemented during the first quarter of 2019, is expected to vastly expand the population of patients that can access medical cannabis in place of pharmaceutical opioid medications.

Massachusetts: Acquisition of Hope Heal Health, Inc. (“HHH”) and an affiliated real estate entity with assets including state registration and licensing that will allow for cultivation, manufacturing, processing, and the establishment and operation of a medical marijuana dispensary, with the ability to obtain up to three medical marijuana dispensary licenses and three adult-use dispensary licenses.

Arizona: Acquisition of Arizona Facilities Supply, LLC and certain of its subsidiaries, providing two cultivation facilities, one processing facility and one dispensary.

Recent Developments

Awards and Recognition

Co-Founder and CEO Charlie Bachtell was appointed to the cannabis subcommittee of Illinois Governor-elect JB Pritzker’s transition team. Bachtell is the only cannabis industry operator appointed to provide input that will shape the future of the cannabis program in Illinois.

Cresco was named to the prestigious “Cannabis 100” list recognizing industry leaders and entrepreneurs by Green Entrepreneur , a division of Entrepreneur.com.

, a division of Entrepreneur.com. Cresco was named among the best companies to work for in cannabis by MJ Magazine.

Cresco was the first-ever cannabis company to win a national Healthcare Advertising Award.

Cresco was also the first-ever cannabis company to receive a Summit International Award for creative, marketing and advertising.

Key Hires

A core principle of the Company is to build a team of subject matter experts to propel Cresco’s growth in every vertical of the business. Recent hires include:

Chief Experience Officer: Scott Wilson, former global creative director for Nike.

Senior Vice President of Product Development and Commercialization: Todd West, former Lifeway Foods executive.

Vice President of Consumer Experience: Cris Rivera, previously a senior director of marketing for MillerCoors.

Vice President of Brand Marketing: Cory Rothschild, former director of consumer engagement for Gatorade, a PepsiCo company.

In addition to the above key hires, Cresco has recruited experts across every industry from companies including Stericycle, Abbvie, Abbott, Cushman & Wakefield, Pandora and BMO Financial Group.

Conference Call and Webcast

The Company will hold a conference call and webcast to discuss its business and financial results next Monday, December 17, 2018 at 5 p.m. Eastern Time (4 p.m. Central Time). The conference call may be accessed via Cresco Labs’ investors website at investors.crescolabs.com or by dialing 866-688-4235 (409-216-0711 for international callers) and entering conference ID 5047018. Archived access to the webcast will be available for one year on Cresco's investors website.

Consolidated Financial Statements

The Company’s unaudited consolidated interim financial statements and accompanying notes for the third quarter 2018 are available under the Company's profile on SEDAR at www.sedar.com and on Cresco’s investors website at investors.crescolabs.com.

Cresco references certain non-IFRS financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-IFRS Financial Measures” section at the end of this press release for more detailed information.

About Cresco Labs, Inc.

Cresco Labs, based in Chicago, is a leading U.S. cannabis company with experienced management, access to capital and a demonstrated growth strategy. As a differentiated grower, processor and retailer of premium cannabis operating in seven states, the company focuses on entering highly regulated markets with outsized demand potential and high barriers to entry. Its impressive speed-to-market gives Cresco a distinct competitive advantage as it replicates its model to expand its national footprint. Cresco’s proven ability to execute is complemented by a cutting-edge brand strategy spearheaded by several of the brightest minds in consumer marketing in the nation. Cresco’s products are tailored to all major consumer segments: everyday cannabis, medicinally focused, connoisseur grade, and chef inspired edibles by James Beard Award-winning pastry chef Mindy Segal. Learn more about Cresco Labs at crescolabs.com.

Non-IFRS Financial Measures

EBITDA and Adjusted EBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein.

Forward Looking Statements

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under "Risk Factors" in the company’s CSE Listing Statement filed with SEDAR; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco’s shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.

Cresco Labs, LLC Consolidated Statements of Financial Position For the Three and Nine Months Ended September 30, 2018 and 2017 September 30, December 31, 2018 2017 (Unaudited) (Audited) ASSETS Current Assets: Cash and Cash Equivalents $ 93,916,298 $ 27,043,219 Accounts Receivable, Net 2,897,429 1,010,620 Biological Assets 7,546,787 2,636,654 Inventory, Net 7,746,264 3,191,109 Other Current Assets 488,934 183,515 Total Current Assets 112,595,712 34,065,117 Property and Equipment, Net 23,571,685 4,973,447 Intangible Assets, Net 3,577,005 247,083 Investments 8,362,427 989,611 Security Deposits - Related Parties 1,354,458 1,342,049 TOTAL ASSETS $ 149,461,287 $ 41,617,307 LIABILITIES AND MEMBERS’ EQUITY Liabilities: Current Liabilities: Accounts Payable and Other Accrued Expenses $ 5,748,055 $ 2,640,582 Subscription Deposits Refundable - 399,800 Notes Payable - Related Parties - 328,125 Due to Related Parties 1,522,901 725,000 Total Current Liabilities 7,270,956 4,093,507 Deferred Rent 2,042,405 1,587,230 TOTAL LIABILITIES 9,313,361 5,680,737 TOTAL MEMBERS’ EQUITY 140,147,926 35,936,570 TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 149,461,287 $ 41,617,307

Cresco Labs, LLC Consolidated Statement of Operations and Comprehensive Income For the Three and Nine Months Ended September 30, 2018 and 2017 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenue $ 12,728,951 $ 2,934,918 $ 26,295,137 $ 7,665,318 Excise Taxes 557,241 136,444 1,243,293 461,792 Net Revenue 12,171,710 2,798,474 25,051,844 7,203,526 Inventory Production Costs Expensed to Cost of Sales 6,738,753 2,770,831 15,085,351 7,157,448 Gross Profit Before Unrealized Gain on Changes in Fair Value of Biological Assets 5,432,957 27,643 9,966,493 46,078 Unrealized Gain on Changes in Fair Value of Biological Assets 2,739,564 800,264 4,910,133 1,467,703 Gross Profit After Unrealized Gain on Changes in Fair Value of Biological Assets 8,172,521 827,907 14,876,626 1,513,781 Expenses: Selling, General and Administration 3,905,075 862,360 7,610,336 2,243,725 Depreciation and Amortization 51,514 9,767 141,295 29,015 Advertising and Marketing 418,196 140,921 1,065,541 282,019 Total Expenses 4,374,785 1,013,048 8,817,172 2,554,759 Gain (Loss) from Operations 3,797,736 (185,141) 6,059,454 (1,040,978) Other Income (Expense): Interest Income (Expense), Net (3,674) 16,097 (21,005) 32,213 Other Income (Expense), Net (36,417) 13,010 (19,287) 61,458 Shares of Income from Investment in Associate 177,962 - 498,786 - Total Other Income (Loss), Net 137,871 29,107 458,494 93,671 Net Income (Loss) 3,935,607 (156,034) 6,517,948 (947,307) Net (Income) Attributable to Non-Controlling Interests (1,056,986) - (1,657,845) - Net Income (Loss) Attributable to Controlling Interest $ 2,878,621 $ (156,034) $ 4,860,103 $ (947,307)

Cresco Labs, LLC Reconciliation of Net Income to Adjusted EBITDA For the Three and Nine Months Ended September 30, 2018 and 2017 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net Income (Loss) $ 3,935,607 $ (156,034) $ 6,517,948 $ (947,307) Interest Income/Expense, Net 3,674 (16,097) 21,005 (32,213) Other Income/Expense, Net 36,417 (13,010) 19,287 (61,458) Depreciation and Amortization 51,514 9,767 141,295 29,015 Shares of Income from Investment in Assoc. (177,962) - (498,786) - Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) (Non-IFRS) 3,849,250 (175,374) 6,200,749 (1,011,963) Adjustments for RTO and Acquisitions (Non-IFRS) 358,646 - 517,545 - Management Incentive Compensation (Share Based) 444,994 - 465,205 - Financing Fees 641,649 214,360 889,129 214,360 Adjusted EBITDA (Non-IFRS) $ 5,294,539 $ 38,986 $ 8,072,628 $ (797,603)

Cresco Labs, LLC Reconciliation of Net Income to Adjusted EBITDA For the Three and Six Months Ended June 30, 2018 and 2017 For the Three Months Ended For the Six Months Ended June 30, June 30, 2018 2017 2018 2017 Net Income (Loss) $ 1,981,986 $ (424,252) $ 2,582,346 $ (921,204) Interest Income/Expense, Net 8,088 (10,431) 17,331 16,155 Other Income/Expense, Net (29,748) 16,095 (17,130) 48,449 Depreciation and Amortization 50,230 9,847 89,780 19,248 Shares of Income from Investment in Assoc. (320,824) - (320,824) - Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) (Non-IFRS) 1,689,732 (408,741) 2,351,503 (837,352) Adjustments for RTO and Acquisitions (Non-IFRS) 135,023 - 158,899 - Management Incentive Compensation (Share Based) - - 20,211 - Financing Fees 247,480 - 247,480 - Adjusted EBITDA (Non-IFRS) $ 2,072,235 $ (408,741) $ 2,778,093 $ (837,352)

Cresco Labs, LLC Pro Forma Financial Information and Reconciliation of Net Income to Adjusted EBITDA For the Three and Nine Months Ended September 30, 2018 (Pro Forma) and 2017 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2018 (Pro Forma) 2017 (Pro Forma) 2017 Revenue $ 16,912,833 $ 2,934,918 $ 36,384,288 $ 7,665,318 Excise Taxes 570,619 136,444 1,264,139 461,792 Net Revenue 16,342,214 2,798,474 35,120,149 7,203,526 Inventory Production Costs Expensed to Cost of Sales 9,194,649 2,770,831 21,143,167 7,157,448 Gross Profit (Loss) Before Unrealized Gain on Changes in Fair Value of Biological Assets 7,147,565 27,643 13,976,982 46,078 Unrealized Gain on Changes in Fair Value of Biological Assets 2,739,564 800,264 4,910,133 1,467,703 Gross Profit After Unrealized Gain on Changes in Fair Value of Biological Assets 9,887,129 827,907 18,887,115 1,513,781 Expenses: Selling, General and Administration 4,845,193 862,360 9,786,958 2,243,725 Depreciation and Amortization 60,655 9,767 160,317 29,015 Advertising and Marketing 593,613 140,921 1,518,100 282,019 Total Expenses 5,499,461 1,013,048 11,465,375 2,554,759 Gain (Loss) from Operations 4,387,668 (185,141) 7,421,740 (1,040,978) Other Income (Expense): Interest Income (Expense), Net (3,674) 16,097 (21,005) 32,213 Other Income (Expense), Net (36,417) 13,010 (19,287) 61,458 Total Other Income (Loss), Net (40,091) 29,107 (40,292) 93,671 Net Income (Loss) $ 4,347,577 $ (156,034) $ 7,381,448 $ (947,307) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2018 (Pro Forma) 2017 (Pro Forma) 2017 Net Income (Loss) $ 4,347,577 $ (156,034) $ 7,381,448 $ (947,307) Interest Income/Expense, Net 3,674 (16,097) 21,005 (32,213) Other Income/Expense, Net 36,417 (13,010) 19,287 (61,458) Depreciation and Amortization 60,655 9,767 160,317 29,015 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) (Non-IFRS) 4,448,323 (175,374) 7,582,057 (1,011,963) Adjustments for RTO and Acquisitions (Non-IFRS) 358,646 - 517,545 - Management Incentive Compensation (Share Based) 444,994 - 465,205 - Financing Fees 641,649 214,360 889,129 214,360 Adjusted EBITDA (Non-IFRS) $ 5,893,612 $ 38,986 $ 9,453,936 $ (797,603) Note: The above tables include the results of Lighthouse Strategies, LLC and PDI Medical LLC beginning in February 2018 and May 2018, respectively