What tax-related risks does C21 Investments Inc. (CWLXF) disclose for this period?

C21 reports an uncertain tax position of $14.09 million linked to potential application of U.S. Internal Revenue Code Section 280E and notes a (59)% effective tax rate for the quarter. The company states this uncertainty could materially affect its tax expense and financial position.

C21 Investments posts $7.6M Q1 revenue, wider loss

Q: How did C21 Investments Inc. (CWLXF) perform financially in the quarter ended June 30, 2026?

C21 reported revenue of $7.63 million (down 10.8% year over year), gross profit of $2.48 million with a 32.5% margin, and a net loss of $1.97 million versus a $0.76 million loss in the prior-year quarter.

Q: What is C21 Investments Inc.’s (CWLXF) liquidity and leverage position as of June 30, 2026?

C21 held $2.62 million in cash and had a working capital surplus of $1.50 million. Total liabilities were $29.35 million, including $0.42 million of convertible debentures and a $1.0 million settlement liability, against shareholders’ equity of $23.83 million.

Q: How much did C21 Investments Inc. (CWLXF) generate in operating cash flow in Q1 2026?

From continuing operations, C21 generated $0.79 million of cash provided by operating activities in the three months ended June 30, 2026, compared with $0.49 million in the same period of 2025.

C21 Investments Inc. (CWLXF) reported unaudited results for the three months ended June 30, 2026.

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

6-K

Rhea-AI Filing Summary

C21 Investments Inc. (CWLXF) reported unaudited results for the three months ended June 30, 2026. Revenue was $7.63 million, down 10.8% from $8.55 million a year earlier, as Nevada retail and wholesale cannabis sales faced price compression and increased competition. Gross profit was $2.48 million, a 32.5% margin versus 34.9% last year. The company recorded a net loss of $1.97 million versus a $0.76 million loss in the prior-year quarter, driven by lower margins, higher legal and professional fees related to the Vireo transaction and higher share-based compensation.

Operations still generated $0.79 million of cash from continuing activities, up from $0.49 million, with cash of $2.62 million and a working capital surplus of $1.50 million. Total assets were $53.17 million and shareholders’ equity $23.83 million, against total liabilities of $29.35 million including $0.42 million of convertible debentures and a $1.0 million remaining settlement liability.

The company has recognized an uncertain tax position of $14.09 million tied to the potential application of U.S. Internal Revenue Code Section 280E, contributing to a (59)% effective tax rate. C21 discusses recent U.S. federal rescheduling of certain medical marijuana products to Schedule III and notes that adult-use cannabis remains Schedule I; management states that changes in federal enforcement priorities or interpretation could impact operations and the ability to continue as a going concern. C21 also highlights a proposed acquisition by Vireo Growth Inc., under which shareholders are expected to receive 0.023052 Vireo subordinate voting share for each C21 common share, following shareholder approval and pending court and regulatory clearances.

Positive

$0.79 million cash provided by operating activities from continuing operations in Q1, up from $0.49 million a year earlier, indicating the core business remains cash-generative despite reporting a net loss.
$2.62 million cash and a working capital surplus of $1.50 million at June 30, 2026 provide near-term liquidity support for operations and obligations.
Convertible debenture balance decreased to $0.42 million from $0.73 million at March 31, 2026 through repayments, reducing future interest and accretion expense.

Negative

Quarterly revenue declined 10.8% year over year to $7.63 million, with retail and wholesale revenues both lower amid Nevada price compression and added competition.
Net loss widened to $1.97 million from $0.76 million in the prior-year quarter, as gross margin fell to 32.5% and legal, professional and share-based compensation expenses increased.
The company has recognized an uncertain tax position of $14.09 million related to potential application of Section 280E, contributing to a (59)% effective tax rate and representing a significant contingent tax exposure.
Management states that changes in U.S. federal cannabis enforcement or implementation of the rescheduling framework could impact operations and the company’s ability to continue as a going concern, highlighting elevated regulatory risk.

Filing Explained

Shareholder approval advanced the Vireo exchange, but court and regulatory approvals remained before the company's common shares could be acquired.

The company reports that shareholders approved Vireo Growth's proposed acquisition on August 7, 2026. The transaction would exchange each common share for 0.023052 of a Vireo subordinate voting share, but the company says court and regulatory approvals and other closing conditions remain outstanding.

The vote received approval from 96.58% of votes cast, and 96.48% excluding certain votes. The company planned to apply for the British Columbia Supreme Court's final order on August 13, 2026, with closing expected on or about August 21, 2026 if the remaining conditions are satisfied or waived.

Separately, the company reports that it issued 555,793 common shares on May 27, 2026 as settlement consideration. The balance sheet records the related commitment to issue shares at nil as of June 30, 2026, indicating that this delivery obligation had been completed rather than remaining a future commitment.

Key Figures

Revenue: $7,633,174 Net loss: $1,965,997 Cash provided by operating activities (continuing operations): $794,559 +5 more

8 metrics

Revenue $7,633,174 Three months ended June 30, 2026; down from $8,553,373 in 2025

Net loss $1,965,997 Three months ended June 30, 2026; compared with $758,820 in 2025

Cash provided by operating activities (continuing operations) $794,559 Three months ended June 30, 2026; versus $493,336 in 2025

Cash $2,623,416 Balance at June 30, 2026

Total assets $53,171,161 Balance sheet as of June 30, 2026

Total liabilities $29,345,893 Balance sheet as of June 30, 2026

Uncertain tax position $14,091,109 Balance at June 30, 2026 related to potential Section 280E application

Vireo share exchange ratio 0.023052 Vireo subordinate voting share per C21 common share Consideration under the proposed acquisition by Vireo Growth Inc.

Key Terms

Section 280E, uncertain tax position, Adjusted EBITDA, Restricted share units, +2 more

6 terms

Section 280E regulatory

"Section 280E of the Internal Revenue Code prohibits businesses engaged in the trafficking"

A U.S. federal tax rule that prevents businesses involved in trafficking federally controlled substances from deducting most ordinary business expenses on their federal income tax returns, while still permitting them to count the cost of goods sold. For investors it matters because it increases a company’s effective tax rate and reduces reported profits and cash flow—similar to a store allowed to subtract only the cost of its inventory but not rent or wages—affecting valuations and reinvestment capacity.

uncertain tax position financial

"the Company had recognized an uncertain tax position of $14,091,109"

An uncertain tax position is when a company takes a tax treatment on its returns but there is a real chance a tax authority could disagree, leading to additional taxes, interest or penalties. Investors care because resolving that disagreement can change a company’s reported profits and cash on hand — like getting a surprise bill after a meal — so it affects valuation, risk and future cash flow forecasts.

Adjusted EBITDA financial

""Adjusted EBITDA" is supplemental, non-GAAP financial measures."

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

Schedule I regulatory

"adult-use cannabis, which remains classified as a Schedule I substance"

FAQ

How did C21 Investments Inc. (CWLXF) perform financially in the quarter ended June 30, 2026?

C21 reported revenue of $7.63 million (down 10.8% year over year), gross profit of $2.48 million with a 32.5% margin, and a net loss of $1.97 million versus a $0.76 million loss in the prior-year quarter.

What is the status and exchange ratio of the proposed Vireo Growth Inc. acquisition of C21 (CWLXF)?

Under a definitive arrangement agreement, C21 shareholders are to receive 0.023052 of a Vireo subordinate voting share for each C21 common share. Shareholders approved the transaction on August 7, 2026; closing is targeted on or about August 21, 2026, subject to court and regulatory approvals.

What is C21 Investments Inc.’s (CWLXF) liquidity and leverage position as of June 30, 2026?

C21 held $2.62 million in cash and had a working capital surplus of $1.50 million. Total liabilities were $29.35 million, including $0.42 million of convertible debentures and a $1.0 million settlement liability, against shareholders’ equity of $23.83 million.

How much did C21 Investments Inc. (CWLXF) generate in operating cash flow in Q1 2026?

From continuing operations, C21 generated $0.79 million of cash provided by operating activities in the three months ended June 30, 2026, compared with $0.49 million in the same period of 2025.

How is the U.S. federal rescheduling of cannabis products described as affecting C21 (CWLXF)?

C21 notes that certain FDA-approved and state medical marijuana products were moved to Schedule III, with an expedited DEA registration process, but adult-use cannabis remains Schedule I. The company is assessing impacts and states that changes in enforcement priorities could affect operations and going-concern status.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Available on EDGAR 08/21/2026 - 06:03 AM Accepted by SEC EDGAR 08/21/2026 - 06:01 AM

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2026.

Commission File Number: 000-55982

C21 INVESTMENTS INC.
(Exact Name of Registrant as Specified in Charter)

Suite 1900-855 West Georgia St
Vancouver BC, V6C 3H4
Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ⊠ Form 40-F ⃞

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	C21 INVESTMENTS INC.
	(Registrant)

Date: August 21, 2026	By:	/s/ Michael Kidd
	Name:	Michael Kidd
	Title:	CFO

EXHIBIT INDEX

Exhibit		Description

99.1		Interim Financial Statements for the three months ended June 30, 2026
99.2		Management Discussion and Analysis for the three months ended June 30, 2026
99.3		CEO Certification
99.4		CFO Certification

Interim Condensed Consolidated Financial Statements

For the three months ended June 30, 2026 and 2025

(Unaudited - Expressed in U.S. Dollars)

Notice of Disclosure of Non-auditor Review of the Condensed Interim Consolidated Financial Statements for the Three Months Ended June 30, 2026 and 2025

Pursuant to National Instrument 51-102 Continuous Disclosure Obligations, part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of C21 Investments Inc. for the interim periods ended June 30, 2026 and 2025, have been prepared in accordance with accounting principles generally accepted in the United States of America and are the responsibility of the Company's management.

The Company's independent auditors, Davidson & Company LLP, have not performed a review of these condensed interim consolidated financial statements.

August 20, 2026

C21 INVESTMENTS INC.
Interim Condensed Consolidated Balance Sheets
(Unaudited - Expressed in U.S. dollars)

	June 30, 2026		March 31, 2026
	$		$
ASSETS
Current assets
Cash	2,623,416		2,234,306
Receivables	105,707		61,395
Inventory	3,749,412		4,590,546
Prepaid expenses and deposits	470,250		587,153
Note receivable	841,939		833,954
	7,790,724		8,307,354
Non-current assets
Property and equipment	2,150,829		2,299,350
Right-of-use assets	8,582,739		8,751,764
Intangible assets	5,992,867		6,406,481
Goodwill	28,541,323		28,541,323
Deferred tax asset	112,679		112,679
Total assets	53,171,161		54,418,951

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	2,477,960		1,861,171
Convertible debentures	424,749		732,638
Settlement liability - current portion	1,000,000		1,200,000
Income taxes payable	1,454,854		1,654,854
Deferred revenue	275,394		303,850
Lease liabilities - current portion	662,688		634,817
	6,295,645		6,387,330
Non-current liabilities
Settlement liability	-		100,000
Lease liabilities	8,959,139		9,136,307
Uncertain tax position	14,091,109		13,362,009
Total liabilities	29,345,893		28,985,646

SHAREHOLDERS' EQUITY
Common stock, no par value; unlimited shares authorized; 118,678,994 and 117,836,067 shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively	108,035,494		107,244,066
Subordinate shares, no par value; unlimited shares authorized; 100,000,000 and 100,000,000 shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively	72		72
Commitment to issue shares	-		439,443
Accumulated other comprehensive loss	(2,179,640	)	(2,185,615	)
Deficit	(82,030,658	)	(80,064,661	)
Total shareholders' equity	23,825,268		25,433,305
Total liabilities and shareholders' equity	53,171,161		54,418,951

Commitments (Note 15)

Subsequent events (Note 21)

Approved and authorized for issue on behalf of the Board of Directors:
/s/ "Bruce Macdonald"	Director	/s/ "Michael Kidd"	Director

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

C21 INVESTMENTS INC.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Expressed in U.S. dollars, except number of shares)

	Three months ended June 30,
	2026		2025
	$		$

Revenue	7,633,174		8,553,373
Cost of sales	5,151,881		5,569,382
Gross profit	2,481,293		2,983,991

Selling, general and administrative expenses	3,681,303		2,776,578

Income (loss) from operations	(1,200,010	)	207,413

Accretion expense	(45,038	)	(118,458	)
Interest expense	(20,634	)	(62,140	)
Other income (loss)	28,785		41,726
Net income (loss) from continuing operations before income tax expense	(1,236,897	)	68,541
Income tax expense	(729,100	)	(825,500	)
Net loss from continuing operations after income tax expense	(1,965,997	)	(756,959	)

Net loss from discontinued operations after income tax expense	-		(1,861	)

Net loss	(1,965,997	)	(758,820	)

Other comprehensive income (loss):
Cumulative translation adjustment	5,975		(83,563	)
Comprehensive loss	(1,960,022	)	(842,383	)

Basic and diluted loss per share from continuing operations	(0.02	)	(0.01	)
Basic and diluted loss per share from discontinued operations	(0.00	)	(0.00	)
Basic and diluted loss per share	(0.02	)	(0.01	)
Weighted average number of common shares outstanding - basic	117,879,506		117,882,484
Weighted average number of common shares outstanding - diluted	118,435,299		118,675,577

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

C21 INVESTMENTS INC.
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited - Expressed in U.S. dollars, except number of shares)

	Number of common shares		Common stock and reserves		Number of subordinate shares	Subordinate share capital	Commitment to issue shares		Accumulated other comprehensive loss		Deficit		Total shareholders' equity
	#		$		#	$	$		$		$		$
Balance, March 31, 2025	117,996,814		107,006,777		-	-	628,141		(2,138,198	)	(76,820,943	)	28,675,777
Share-based compensation	-		93,945		-	-	-		-		-		93,945
Repurchase and cancellation of shares	(184,500	)	(28,285	)	-	-	-		-		-		(28,285	)
Net loss and comprehensive loss for the period	-		-		-	-	-		(83,563	)	(758,820	)	(842,383	)
Balance, June 30, 2025	117,812,314		107,072,437		-	-	628,141		(2,221,761	)	(77,579,763	)	27,899,054
Share-based compensation	-		142,834		-	-	-		-		-		142,834
Repurchase and cancellation of shares	(295,000	)	(74,749	)	-	-	-		-		-		(74,749	)
Exercise of debentures	318,753		103,544		-	-	-		-		-		103,544
Issuance of subordinate shares	-		-		100,000,000	72	-		-		-		72
EFF Settlement	-		-		-	-	(188,698	)	-		-		(188,698	)
Net loss and comprehensive loss for the period	-		-		-	-	-		36,146		(2,484,898	)	(2,448,752	)
Balance, March 31, 2026	117,836,067		107,244,066		100,000,000	72	439,443		(2,185,615	)	(80,064,661	)	25,433,305
Share-based compensation	-		391,598		-	-	-		-		-		391,598
Issuance of EFF shares	555,793		439,443		-	-	(439,443	)	-		-		-
Issuance of shares for RSUs	287,134		(39,613	)	-	-	-		-		-		(39,613	)
Net loss and comprehensive loss for the period	-		-		-	-	-		5,975		(1,965,997	)	(1,960,022	)
Balance, June 30, 2026	118,678,994		108,035,494		100,000,000	72	-		(2,179,640	)	(82,030,658	)	23,825,268

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

C21 INVESTMENTS INC.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited - Expressed in U.S. dollars)

	Three months ended June 30,
	2026		2025
	$		$
OPERATING ACTIVITIES
Net loss from continuing operations after income tax expense	(1,965,997	)	(756,959	)
Adjustments to reconcile net loss to cash provided by operating activities:
Accretion expense	45,038		118,458
Amortization of right-of-use assets	183,325		169,834
Depreciation and amortization	447,751		445,616
Interest expense	20,634		62,140
Interest and accretion income included in other income	(16,485	)	(16,186	)
Share-based compensation	391,598		93,945
Changes in operating assets and liabilities:
Receivables	(44,312	)	(101,119	)
Inventory	962,268		9,111
Prepaid expenses and deposits	116,903		168,181
Accounts payable and accrued liabilities	616,789		396,007
Settlement liability	(300,000	)	-
Income taxes payable	(200,000	)	(691,451	)
Uncertain tax position	729,100		716,951
Deferred revenue	(28,456	)	17,498
Lease liabilities	(163,597	)	(138,690	)
Cash provided by operating activities of continuing operations	794,559		493,336
Cash used in operating activities of discontinued operations	-		(2,855	)

INVESTING ACTIVITIES
Purchases of property and equipment	(6,750	)	(37,329	)
Cash used in investing activities of continuing operations	(6,750	)	(37,329	)

FINANCING ACTIVITIES
Issuance of shares for RSUs	(39,613	)	-
Interest payments received on note receivable	8,500		8,500
Principal repayments on convertible debentures	(346,746	)	(346,803	)
Interest paid in cash	(20,634	)	(62,140	)
Repurchase and cancellation of shares	-		(28,285	)
Cash used in financing activities of continuing operations	(398,493	)	(428,728	)

Effect of foreign exchange on cash	(206	)	5,323
Change in cash during the period	389,110		29,747
Cash, beginning of period	2,234,306		2,625,461
Cash, end of period	2,623,416		2,655,208

Supplemental disclosure of cash flow information:
Income tax paid in cash	200,000		800,000
Interest payments received on note receivable	8,500		-
Interest paid in cash	20,634		62,140

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

C21 INVESTMENTS INC.
Notes to the Interim Condensed Consolidated Financial Statements
For the three months ended June 30, 2026 and 2025
(Unaudited - Expressed in U.S. dollars, except as noted)

1. NATURE OF OPERATIONS

C21 Investments Inc. (the "Company" or "C21") was incorporated on January 15, 1987, under the Company Act of British Columbia. The Company is a publicly traded company with its registered office at 170-601 West Cordova Street, Vancouver, BC, V6B 1G1. The Company is listed on the Canadian Securities Exchange under the symbol CXXI and on the OTCQB® Venture Market under the symbol CXXIF.

The Company is a cannabis operator in Nevada, USA and is engaged in the cultivation of and manufacturing of cannabis flower products, vape products and extract products for wholesale and retail sales. The Company initially had operations in the state of Oregon. During the year ended January 31, 2022, the Company made a strategic decision to cease operations in Oregon. The results of the Company's Oregon operations are presented as discontinued operations.

As at June 30, 2026, the Company had a working capital surplus of $1,495,079 (March 31, 2026 - $1,920,024) and an accumulated deficit of $82,030,658 (March 31, 2026 - $80,064,661). During the three months ended June 30, 2026 and 2025, the Company generated $794,559 and 493,336, respectively in cash from operating activities.

At the federal level, cannabis, other than certain medical cannabis products, currently remains a Schedule I controlled substance under the Controlled Substances Act of 1970. Under U.S. federal law, a Schedule I drug or substance is characterized by a high potential for abuse, no currently accepted medical use in the United States, and a lack of accepted safety for use under medical supervision. As such, even in those states in which cannabis has been legalized under state law, the manufacture, importation, possession, use or distribution of cannabis remains illegal under U.S. federal law. This has created a dichotomy between state and federal law, whereby many states have elected to regulate and remove state-level penalties regarding a substance that remains illegal at the federal level.

On April 23, 2026, the U.S. Department of Justice announced that it had moved FDA-approved marijuana products and marijuana products produced and dispensed pursuant to qualifying state medical marijuana licenses to Schedule III of the Controlled Substances Act. The DOJ also announced that the Drug Enforcement Administration ("DEA") would withdraw its prior notice of hearing and terminate those proceedings, with new administrative hearings scheduled to begin on June 29, 2026.

On April 28, 2026, the DEA published a rule in the Federal Register formalizing the rescheduling of FDA-approved marijuana products and marijuana products produced pursuant to state medical marijuana programs from Schedule I to Schedule III (the "Rescheduling Rule"). The Rescheduling Rule also established an expedited process for state-licensed medical marijuana operators to register with the DEA, which would permit such entities, subject to registration, to manufacture, distribute, and dispense marijuana for medical purposes under federal law. The Rescheduling Rule did not address or amend the status of adult-use cannabis, which remains classified as a Schedule I substance and is expected to be considered as part of the new administrative hearings beginning June 29, 2026. The Company is currently assessing the potential impact of these developments on its operations and financial reporting; however, the effects, if any, have not yet been determined.

There remains uncertainty regarding the U.S. federal government's overall position on cannabis, particularly with respect to adult-use cannabis and the implementation of the Rescheduling Rule. Any changes in federal enforcement priorities or interpretation could impact the Company's operations and its ability to continue as a going concern.

Proposed Acquisition by Vireo Growth Inc.

On June 15, 2026, the Company announced that it had entered into a definitive arrangement agreement (the "Arrangement Agreement") with Vireo Growth Inc. ("Vireo"), pursuant to which Vireo will acquire all of the issued and outstanding common shares of the Company by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) (the "Transaction"). Under the terms of the Arrangement Agreement, shareholders of the Company will receive 0.023052 of a subordinate voting share of Vireo for each common share of the Company held. The Transaction was approved by the Company's Board of Directors following the recommendation of a special committee of independent directors and remains subject to shareholder, court and regulatory approvals, as well as the satisfaction of customary closing conditions.

On August 7, 2026, the Company held a special meeting of C21's shareholders, at which shareholders approved the Transaction. The Company intends to apply for a final order of the Supreme Court of British Columbia approving the Transaction on August 13, 2026. Subject to the receipt of all required court and regulatory approvals and the satisfaction or waiver of customary closing conditions, the Transaction is expected to close on or about August 21, 2026.

2. BASIS OF PREPARATION

a) Basis of presentation

These unaudited interim condensed consolidated financial statements for the three months ended June 30, 2026 and 2025 ("consolidated financial statements") are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") applicable to interim financial information and do not include all of the information and disclosures required in annual financial statements. They should be read in conjunction with the Company's audited consolidated financial statements for the years ended March 31, 2026 and 2025 ("Annual Financial Statements"). These consolidated financial statements have been prepared on an accrual basis and are based on historical costs, except for certain financial instruments classified as fair value through profit or loss.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.

Failure to arrange adequate financing on acceptable terms and/or achieve profitability may have an adverse effect on the financial position, results of operations, cash flows and prospects of the Company. These consolidated financial statements do not give effect to adjustments to assets or liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

b) Functional and reporting currency

The functional currency of the Company is Canadian dollars ("C$"), and the functional currency of the Company's subsidiaries is U.S. dollars ("US$"). C21 has determined that the US$ is the most relevant and appropriate reporting currency as the Company's operations are conducted in US$ and its financial results are prepared and reviewed internally by management in US$. The consolidated financial statements are presented in US$ unless otherwise noted.

c) Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and all the entities in which the Company has a controlling voting interest and is deemed to be the primary beneficiary. All consolidated entities were under common control during the entirety of the periods for which their respective results of operations were included in the consolidated statements from the date of acquisition. All intercompany balances and transactions are eliminated upon consolidation.

A summary of the Company's subsidiaries included in these consolidated financial statements as at June 30, 2026 is as follows:

Name of subsidiary ⁽¹⁾	Principal activity
320204 US Holdings Corp.	Holding Company
320204 Nevada Holdings Corp.	Holding Company
320204 Re Holdings, LLC	Holding Company
Silver State Cultivation LLC	Cannabis producer
Silver State Relief LLC	Cannabis retailer
Workforce Concepts 21, Inc.	Payroll and benefits services

(1) All subsidiaries of the Company were incorporated in the USA, are wholly owned and have US$ as their functional currency.

3. ACCOUNTING POLICIES

The significant accounting policies applied in these unaudited interim condensed consolidated financial statements are consistent with those applied in the Company's Annual Financial Statements, except as described below. These interim financial statements do not include all of the information and disclosures required in annual financial statements and should be read in conjunction with the Company's Annual Financial Statements.

3. ACCOUNTING POLICIES (continued)

a) Share-based compensation

The Company measures equity settled share-based payments based on their fair value at their grant date and recognizes share-based compensation expense over the vesting period based on the Company's estimate of equity instruments that will eventually vest. Consideration paid to the Company on the exercise of stock options is recorded as common stock.

The Company accounts for Stock-Based Compensation for their Deferred Stock Units (the "DSUs"), Restricted Stock Units (the "RSUs"), and stock options granted to executive officers, directors, and employees, collectively referred to as the "awards", in accordance with ASC 718, Share Based Payments, classifying such as equity classified awards. Fair value of the awards is determined on grant date, with compensation cost in the financial statements recognized over the requisite service period with a corresponding impact to stockholders' equity.

b) Significant accounting judgement, estimates and assumptions

The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from those estimates and judgments.

Areas requiring a significant degree of judgement and estimation relate to the assessment of the transactions as business combinations or asset acquisitions, the determination of recoverability of goodwill, recoverability of intangible assets, fair value less costs to sell of assets classified as held for sale, estimates used in valuation and costing of inventory, impairment of long-lived assets and inventory, fair value measurements, useful lives, depreciation and amortization of property, equipment and intangible assets, the recoverability and measurement of deferred tax assets and liabilities, share-based compensation, and fair value of derivative liability.

c) Recently issued accounting pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). The Company adopted ASU 2023-07 as of April 1, 2024. This update enhances the disclosure requirements for reportable segments, including significant segment expenses and interim period disclosures. The Company has disclosed the title and position of our Chief Operating Decision Maker (CODM) to provide clarity on who is responsible for making operating decisions. These disclosures aim to enhance transparency and provide more decision-useful information to investors and other stakeholders.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requiring entities to disclose more detailed information about income tax expense (benefit), significant components of income tax expense (benefit), separate disclosure of income tax expense (benefit) for domestic and foreign jurisdictions and by major jurisdictions. The Company adopted ASU 2023-09 on April 1, 2025 on a prospective basis. The adoption did not have a material impact on the Company's consolidated financial statements but resulted in enhanced income tax disclosures (Note 19).

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3. ACCOUNTING POLICIES (continued)

Recently issued accounting pronouncements not yet effective

In November 2024, the FASB issued Accounting Standards Update 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): update required disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026. The Company has not adopted this standard early. The Company is currently evaluating the impact of the adoption of this amendment.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The amendments clarify when the settlement of convertible debt should be accounted for as an induced conversion versus a debt extinguishment and update related accounting and disclosure requirements. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years and is effective for the Company beginning April 1, 2026. The Company has evaluated the impact of adopting ASU 2024-04 based on its current convertible debt arrangements and recent conversion activity. During the six months ended June 30, 2026, conversions of convertible debentures were completed in accordance with their original contractual terms and did not involve the provision of incremental consideration to induce conversion. As the Company has not entered into, and does not currently expect to enter into, arrangements to induce early conversion of its convertible debt, the adoption of ASU 2024-04 is not expected to have a material impact on its financial statements and disclosures.

4. RECEIVABLES

A summary of the Company's receivables is as follows:

	June 30, 2026	March 31, 2026
	$	$
Taxes receivable	28,833	4,311
Trade receivables	76,874	57,084
	105,707	61,395

There was no provision for expected credit losses on trade receivables as at June 30, 2026 and March 31, 2026.

5. INVENTORY

A summary of the Company's inventory is as follows:

	June 30, 2026	March 31, 2026
	$	$
Finished goods	2,143,927	2,321,417
Work in process	1,334,746	1,864,438
Raw materials	270,739	404,691
	3,749,412	4,590,546

6. NOTE RECEIVABLE

The Company has a note receivable that was issued in connection with the sale of a building on March 28, 2025. The note receivable has a principal balance of $850,000 and bears interest at a fixed rate of 4% per annum payable by the holder monthly. The principal is due at maturity on September 30, 2026. On initial recognition, the note receivable was recorded at fair value of $802,766, reflecting a market interest rate of 8% per annum.

The Company evaluates the collectability of the note receivable based on the borrower's financial condition and compliance with the note terms. As at June 30, 2026, there are no indicators that the borrower's financial condition raises doubt regarding the collectability of the note receivable and the borrower is in compliance with the note terms.

A summary of the Company's note receivable is as follows:

	$
Balance, March 31, 2026	833,954
Interest income	8,500
Accretion income	7,985
Interest payments received	(8,500	)
Balance, June 30, 2026	841,939

During the three months ended June 30, 2026, the Company earned interest income of $8,500 (2025 - $8,500), accretion income of $7,985 (2025 - $7,686) and received interest payments of $8,500 (2025 - $8,500).

7. PROPERTY AND EQUIPMENT AND RIGHT-OF-USE ASSETS

a) Property and equipment

A summary of the Company's property and equipment is as follows:

	June 30, 2026		March 31, 2026
	$		$
Leasehold improvements	2,227,928		2,227,928
Furniture and fixtures	369,206		369,206
Computer equipment	6,659		6,659
Machinery and equipment	2,514,647		2,507,897
	5,118,440		5,111,690
Less: Accumulated depreciation	(2,967,611	)	(2,812,340	)
	2,150,829		2,299,350

In June 2024, as part of the acquisition of the new dispensary store, the Company acquired furniture and fixtures as well as leasehold improvements with a fair value of $86,353 and estimated useful life of 5 years.

Total depreciation of property and equipment for the three months ended June 30, 2026 was $155,271 (2025 - $150,662). During the three months ended June 30, 2026, $118,861 (2025 - $118,890) of total depreciation was allocated to inventory.

b) Right-of-use assets

The Company's right-of-use assets result from its operating leases and consist of land and buildings used in the cultivation, processing, and warehousing of its products.

8. INTANGIBLE ASSETS AND GOODWILL

a) Intangible assets

A summary of the Company's intangible assets subject to amortization is as follows:

	June 30, 2026		March 31, 2026
	$		$
Licenses	15,303,921		15,303,921
Brands	644,800		644,800
Customer relationships	1,540,447		1,540,447
	17,489,168		17,489,168
Less: Accumulated amortization	(11,496,301	)	(11,082,687	)
	5,992,867		6,406,481

During the three months ended June 30, 2026, the Company recognized amortization expense on intangible assets of $413,614 (2025 - $416,117). Of the total amortization expense, $2,273 (2025 - $2,273) was allocated to inventory.

b) Goodwill

As at June 30, 2026, the Company had goodwill of $28,541,323 (March 31, 2026 - $28,541,323), which was allocated to the Nevada reporting unit. There was no impairment on goodwill identified during the year ended March 31, 2026.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

A summary of the Company's accounts payable and accrued liabilities is as follows:

	June 30, 2026	March 31, 2026
	$	$
Accounts payable	1,942,746	1,348,230
Accrued liabilities	535,214	512,941
	2,477,960	1,861,171

10. CONVERTIBLE DEBENTURES

On May 6, 2024, the Company closed a non-brokered private placement, issuing 4,000 debenture units for aggregate proceeds of $2,920,562 (C$4,000,000). Each unit contains one convertible debenture and 1,000 common share purchase warrants. Each convertible debenture has a principal of C$1,000, maturing 30 months from the issue date, with interest accruing at 12% per annum, payable quarterly in cash. The principal and accrued interest may be converted into common shares at a price of C$0.45 per share at the holder's option any time before maturity.

The proceeds from the private placement were allocated to convertible debentures and warrants using the relative fair value method. Accordingly, $1,954,534 was allocated to convertible debentures and $966,028 to warrants. The Company accounts for the convertible debenture as a financial liability in its entirety, as the conversion feature does not require bifurcation and recognition as derivative liability.

10. CONVERTIBLE DEBENTURES (continued)

A summary of the Company's convertible debentures is as follows:

	$
Balance, March 31, 2025	1,688,184
Accretion expense	372,018
Interest expense	187,241
Repayment	(1,473,420	)
Conversion to common shares	(103,544	)
Effect of foreign exchange	62,159
Balance, March 31, 2026	732,638
Accretion expense	45,038
Interest expense	20,634
Repayment	(367,380	)
Effect of foreign exchange	(6,181	)
Balance, June 30, 2026	424,749

During the three months ended June 30, 2026, the Company incurred interest expense of $20,634 (2025 - $62,140) and accretion expense of $45,038 (2025 - $118,458).

11. LEASE LIABILITIES

The Company has four active leases comprised of land and buildings used in cultivation, processing, warehousing, and dispensary of its products. All leases were classified as operating leases in accordance with ASC 842.

A summary of the Company's weighted average discount rate used in calculating lease liabilities and weighted average remaining lease term is as follows:

	June 30, 2026	March 31, 2026
Weighted average discount rate	10.00%	10.00%
Weighted average remaining lease term (years)	8.41	8.64

On June 11, 2024, the Company entered into a lease agreement for the new dispensary store in South Reno, Nevada. The lease commenced on July 1, 2024, and will expire on June 30, 2034. Monthly payments are required at the beginning of each calendar month, with the first payment of $14,300 made on the lease commencement date. The base rent will increase by 3% annually. The lease is classified as an operating lease with an implicit interest rate of 10%. Accordingly, the Company recognized a lease liability valued at $1,221,143.

For the three months ended June 30, 2026, the Company incurred operating lease costs of $411,697 (2025 - $411,697). Of these amounts, during the three months ended June 30, 2026, $203,092 (2025 - $203,092) were allocated to inventory.

A summary of the maturity of contractual undiscounted liabilities associated with the Company's operating leases as at June 30, 2026 is as follows:

	$
2027	1,190,318
2028	1,629,756
2029	1,678,649
2030	1,729,008
2031	1,780,878
Thereafter	6,580,491
Total undiscounted lease liabilities	14,589,100
Effects of discounting	(4,967,273	)
Total present value of minimum lease payments	9,621,827
Current portion of lease liability	662,688
Lease liabilities	8,959,139

12. SHARE CAPITAL

Share capital consists of fully paid common shares with no par value and fully paid subordinate voting shares that are convertible to common shares at a rate of 0.000001 per common share, subject to the discretion of the Board of Directors or at such time that the Company ceases to be a foreign private issuer. The Company is authorized to issue an unlimited number of common shares and subordinate voting shares. All shares are equally eligible to receive dividends and repayment of capital. Common shares represent one vote at the Company's shareholders' meetings while each subordinate voting share has the functional equivalent of 0.000001 of the voting power of a common share.

a) Commitment to issue shares

In connection with the acquisition of EFF on June 13, 2018, the Company issued a promissory note payable to deliver 1,977,500 shares to the vendors of EFF in the amount of $1,905,635, without interest, any time after October 15, 2018. As at March 31, 2026 shares issued pursuant to this commitment total $1,184,407. As part of the settlement of legal proceedings with EFF (Note 18), the number of shares to be delivered was reduced by 237,300 shares. On May 27, 2026, pursuant to the terms of the EFF Agreement (Note 18), the Company issued an aggregate of 555,793 common shares to certain Vendors. As at June 30, 2026, there were nil shares remaining to be issued (March 31, 2026 - 555,793).

b) Repurchase and cancellation of shares

During the three months ended June 30, 2026, the Company did not repurchase or cancel any common shares under its Normal Course Issuer Bid (NCIB) program (three months ended June 30, 2025 - 184,500 common shares). Shares repurchased and cancelled during the year ended March 31, 2026 were acquired at an average price of $0.21 (C$0.30) per share, for a total cost of $103,034 (C$141,644).

c) Warrants

A summary of the Company's warrant activity is as follows:

	Number of warrants	Weighted average exercise price
	#	C$
Balance, June 30, 2026 and March 31, 2026	4,000,000	0.55

On May 6, 2024, the Company closed its debenture unit private placement (Note 10) and issued 4,000,000 warrants. Each warrant is exercisable into one common share at a price of C$0.55 per share for a period of 30 months from the issuance date. Proceeds of $966,028 were allocated to the warrants and recorded in reserves.

A summary of the Company's outstanding and exercisable warrants as at June 30, 2026 is as follows:

Expiry date	Exercise price	Number of warrants outstanding	Weighted average remaining life
	C$	#	Years
November 6, 2026	0.55	4,000,000	0.35

As at June 30, 2026 and March 31, 2026, outstanding and exercisable warrants had intrinsic values of $nil and $nil, respectively.

d) Stock options

The Company is authorized to grant options to executive officers and directors, employees, and consultants, enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. The exercise price of each option equals the market price of the Company's shares as calculated on the date of grant. The options can be granted for a maximum term of 10 years. Vesting is determined by the Board of Directors.

12. SHARE CAPITAL (continued)

A summary of the Company's stock option activity is as follows:

	Number of options	Weighted average exercise price
	#	C$
Balance, March 31, 2026	5,375,000	0.53
Balance, June 30, 2026	5,375,000	0.53

On May 13, 2024, the Company granted 5,425,000 stock options to certain officers, directors, and employees. Each stock option entitles the holder to acquire one common share of the Company at an exercise price of C$0.53, expiring on May 13, 2027. Of the options granted, one-third vests immediately, with the remaining two-thirds vesting in equal parts every twelve months thereafter. The fair value of these options was $1,129,810 (C$1,544,676).

A summary of the Company's stock options outstanding and exercisable as at June 30, 2026, is as follows:

Expiry date

Exercise price

Number of
options
outstanding

Number of
options
exercisable

Weighted
average
remaining life

Years

May 13, 2027

0.53

5,375,000

0.87

As at June 30, 2026 and March 31, 2026, outstanding and exercisable stock options had intrinsic values of $nil and $nil, respectively.

During the three months ended June 30, 2026, the Company recorded share-based compensation expense on vesting of stock options of $23,673 (2025 - $93,945).

e) Restricted share units

On April 1, 2026, the Company granted 1,250,000 RSUs to certain directors, officers and employees. On May 1, 2026, 416,661 RSUs vested and 287,134 common shares were issued in settlement, net of shares withheld to satisfy applicable tax obligations. As at June 30, 2026, 833,339 RSUs remained outstanding.

A summary of the Company's RSUs activity is as follows:

	Number of RSUs		Weighted average grant date fair value
	#		C$
Balance, March 31, 2026	-		-
Granted	1,250,000		0.38
Vested	(416,661	)	0.38
Balance, June 30, 2026	833,339		0.38

A summary of the Company's RSUs outstanding as at June 30, 2026, is as follows:

Vesting date	Number of RSUs outstanding	Weighted average grant date fair value
	#	C$
March 31, 2027	416,665	0.38
March 31, 2028	416,674	0.38

During the three months ended June 30, 2026, the Company recorded share-based compensation expense on vesting of RSUs of $145,746 (2025 - $nil).

12. SHARE CAPITAL (continued)

f) Deferred share units

On April 1, 2026, the Company granted 1,275,000 DSUs to certain directors and officers. As at June 30, 2026, 1,275,000 DSUs remained outstanding.

A summary of the Company's DSUs activity is as follows:

	Number of DSUs	Weighted average grant date fair value
	#	C$
Balance, March 31, 2026	-	-
Granted	1,275,000	0.38
Balance, June 30, 2026	1,275,000	0.38

A summary of the Company's DSUs outstanding as at June 30, 2026, is as follows:

Vesting date	Number of RSUs outstanding	Weighted average grant date fair value
	#	C$
April 1,2026	1,275,000	0.38

During the three months ended June 30, 2026, the Company recorded share-based compensation expense on vesting of DSUs of $222,179 (2025 - $nil).

13. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

A summary of the Company's selling, general and administration expenses is as follows:

	Three months ended June 30,
	2026	2025
	$	$
Accounting and legal	345,142	28,589
Depreciation and amortization	447,751	445,616
License fees, taxes, and insurance	370,152	373,416
Office facilities and administrative	109,261	107,531
Operating lease costs	208,605	208,605
Other expenses	203,927	133,205
Professional fees and consulting	333,604	189,556
Salaries and wages	1,173,801	1,118,997
Sales, marketing, and promotion	83,531	61,165
Share-based compensation	391,598	93,945
Shareholder communications	649	2,001
Travel and entertainment expense	13,282	13,952
	3,681,303	2,776,578

14. SEGMENTED INFORMATION

The Company defines its major geographic operating segments as Oregon and Nevada. Due to the ever-present jurisdictional cannabis compliance issues in the industry, each state operation is by nature operationally segmented.

The CODM is the Company's CEO, Sonny Newman. The CODM's review consists of revenue, cost of sales, and gross profit as the primary measures of segment performance. The CODM reviews key categories of operating expenses including general and administration expenses, sales, marketing, and promotion expenses, and operating lease costs. The Corporate segment does not conduct income generating activities and its results are reviewed for cost management. As the Company continues to expand via acquisition, the segmented information will expand based on management's agreed upon allocation of costs beyond gross margin.

A summary of the Company's segmented operational activity and balances from continuing operations for the three months ended June 30, 2026 is as follows:

	Nevada		Corporate		Total
	$		$		$
Total revenue	7,633,174		-		7,633,174
Gross profit	2,481,293		-		2,481,293
Operating expenses:
General and administration	(1,448,081	)	(1,101,737	)	(2,549,818	)
Sales, marketing, and promotion	(83,531	)	-		(83,531	)
Operating lease cost	(208,605	)	-		(208,605	)
Depreciation and amortization	(424,722	)	(23,029	)	(447,751	)
Share-based compensation	-		(391,598	)	(391,598	)
Interest expense and other income (loss)	12,300		(49,187	)	(36,887	)
Net income (loss) from continuing operations before income tax expense	328,654		(1,565,551	)	(1,236,897	)

A summary of the Company's segmented operational activity and balances from continuing operations for the three months ended June 30, 2025 is as follows:

	Nevada		Corporate		Total
	$		$		$
Total revenue	8,553,373		-		8,553,373
Gross profit	2,983,991		-		2,983,991
Operating expenses:
General and administration	(1,399,180	)	(568,067	)	(1,967,247	)
Sales, marketing, and promotion	(61,165	)	-		(61,165	)
Operating lease cost	(208,605	)	-		(208,605	)
Depreciation and amortization	(422,587	)	(23,029	)	(445,616	)
Share-based compensation	-		(93,945	)	(93,945	)
Interest expense and other income (loss)	1,791		(140,663	)	(138,872	)
Net income (loss) from continuing operations before income tax expense	894,245		(825,704	)	68,541

Entity-wide disclosures

All revenue for the three months ended June 30, 2026 and 2025 was earned in the United States. For the three months ended June 30, 2026 and 2025, no customer represented more than 10% of the Company's net revenue. As at June 30, 2026 and March 31, 2026, no customer represented more than 10% of the Company's receivables.

15. COMMITMENTS

The Company and its subsidiaries are committed under lease agreements with third parties and related parties, for land, office space, and equipment in Nevada. A summary of the Company's future minimum payments as at June 30, 2026 is as follows:

Year ending March 31,	Third parties	Related parties	Total
	$	$	$
2027	579,124	611,192	1,190,316
2028	792,462	837,293	1,629,755
2029	816,236	862,412	1,678,648
2030	840,723	888,285	1,729,008
2031	865,945	914,933	1,780,878
Thereafter	4,915,543	1,664,952	6,580,495
	8,810,033	5,779,067	14,589,100

16. RELATED PARTY TRANSACTIONS

A summary of the Company's transactions with related parties including key management personnel is as follows:

	Three months ended June 30,
	2026	2025
	$	$
Consulting fees paid to a director	15,000	5,000
Amounts paid to CEO or companies controlled by CEO for leases	201,714	195,839
Amounts paid to CEO or companies controlled by CEO for remuneration	46,154	46,154
Salary paid to directors and officers	163,809	123,739
Share-based compensation	244,603	59,744
	671,280	430,476

A summary of the Company's related balances included in accounts payable and accrued liabilities, and lease liabilities is as follows:

	June 30, 2026	March 31, 2026
	$	$
Lease liabilities due to a company controlled by the Chief Executive Officer ("CEO")	4,193,644	4,288,924
Due to the Chief Financial Officer ("CFO")	3,061	400
	4,196,705	4,289,324

Due to the CFO consists of reimbursable expenses incurred in the normal course of business.

17. EARNINGS PER SHARE

A summary of the Company's calculation of basic and diluted earnings per share is as follows:

	Three months ended June 30,
	2026		2025
	$		$
Net loss from continuing operations after income taxes	(1,965,997	)	(756,959	)
Net loss from discontinued operations after income taxes	-		(1,861	)
Net loss	(1,965,997	)	(758,820	)

Weighted average number of common shares outstanding	117,879,506		117,882,484
Diluted weighted average number of common shares outstanding	118,435,299		118,675,577

Basic and diluted loss per share, continuing operations	(0.02	)	(0.01	)

Basic and diluted loss per share, discontinued operations	(0.00	)	(0.00	)

Basic and diluted loss per share	(0.02	)	(0.01	)

The computation of diluted earnings per share excludes the effect of the potential exercise of warrants and stock options when the average market price of the common stock is lower than the exercise price of the respective warrant or stock option and when inclusion of these amounts would be anti-dilutive. For the three months ended June 30, 2026 and 2025, the number of warrants excluded from the computation was 4,000,000 and 4,000,000, respectively. For the three months ended June 30, 2026 and 2025, the number of outstanding stock options excluded from the computation was 5,375,000 (exercisable - 5,375,000) and 3,616,667 (exercisable - 1,808,333), respectively.

18. SETTLEMENT OF LEGAL PROCEEDINGS

On September 4, 2025, the Company entered into a settlement agreement (the "EFF Settlement Agreement") with respect to certain actions filed in the Oregon State Circuit Court for Clackamas County and the Oregon Court of Appeals by two owners (each, a "Vendor") of Proudest Monkey Holdings, LLC ("Proudest Monkey"), an entity that was previously the sole owner of EFF (the "Oregon Actions") and an action filed in the Supreme Court of British Columbia by Proudest Monkey and one of its owners (the "BC Action", and together with the Oregon Actions, the "Litigation"). The Company acquired all the membership units of EFF from Proudest Monkey pursuant to a purchase and sale agreement dated January 19, 2018 (the "EFF Agreement").

Pursuant to the Oregon Actions, two Vendors made claims related to contract, employment and statutory damages against the Company, its wholly-owned subsidiaries 320204 US Holdings Corp, EFF, Swell Companies Limited, and Phantom Brands LLC, and three directors, two officers, and one former employee of the Company. The Company alleged breach and default under the EFF Agreement in connection with certain conduct by the Vendors which occurred prior to and after the completion of the acquisition of EFF. As a result, the Company withheld issuing certain equity consideration payable to the Vendors pursuant to the terms of the EFF Agreement, as a result of which Proudest Monkey and one of the Vendors launched the BC Action, to which the Company filed counterclaims.

In addition to such other terms and conditions as agreed to among the parties, pursuant to the EFF Settlement Agreement, the parties to the Litigation agreed to (a) fully and finally settle all claims between them, have each action dismissed with respect to all remaining claims on a with prejudice basis and to mutually release each other from all claims asserted in the BC Action and Oregon Actions, (b) the Company agreed to pay to the plaintiffs under the Litigation (the "Plaintiffs") the total cash sum of $2,400,000 (the "Settlement Amount") as follows: (i) $500,000 payable on or before September 12, 2025 (the "Initial Payment Date"); (ii) $100,000 per month payable over a period of 19 months commencing one month after the Initial Payment Date, and (c) pursuant to the terms of the EFF Agreement, the Company agreed to issue to certain of the Vendors an aggregate of 555,793 (reduced from 793,093) common shares of the Company (the "Share Consideration").

18. SETTLEMENT OF LEGAL PROCEEDINGS (continued)

The Settlement resulted in the cash liability in respect of the payment of the Settlement Amount being offset by the extinguishment of convertible promissory and the accounts payable Litigation related accrual of $612,500. The recognition of the $2,400,000 settlement liability, extinguishment of liabilities totaling $1,768,759, and reduction of the commitment to issue shares possessing a value of $188,698 (C$260,950) resulted in a loss on settlement of legal proceedings of $442,543.

During the three months ended June 30, 2026, the Company made payments toward the Settlement Amount totaling $300,000 and as at June 30, 2026, the settlement liability was $1,000,000 (March 31, 2026 - $1,300,000). On May 27, 2026, the Company issued 555,793 shares associated with the Share Consideration.

19. INCOME TAXES

The Company is subject to income taxes in Canada and the United States. The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items recognized in the period. The Company's effective tax rate differs from the Canadian statutory rate primarily as a result of the application of Section 280E of the Internal Revenue Code and movements in the Company's uncertain tax position.

		Three months ended June 30,
		2026			2025
Net income (loss) from continuing operations before income taxes	$	(1,236,897	)	$	68,541
Provision for income taxes	$	729,100		$	825,500
Effective tax rate		(59)%			1,205%

Section 280E of the Internal Revenue Code prohibits businesses engaged in the trafficking of Schedule I or II controlled substances, within the meaning of U.S. federal law, from deducting ordinary and necessary business expenses, other than cost of goods sold, for U.S. federal income tax purposes. Management asserts, based on a legal opinion, that Section 280E should not apply to the Company; this position is uncertain and has resulted in the recognition of an uncertain tax position.

As at June 30, 2026, the Company had recognized an uncertain tax position of $14,091,109 (March 31, 2026 - $13,362,009), representing management's assessment of the potential application of Section 280E and associated interest.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States, introducing changes to U.S. federal tax law. The Company continues to evaluate the impact of the OBBBA on its financial statements.

20. FINANCIAL INSTRUMENTS

As at June 30, 2026, the Company has no financial instruments classified as fair value through profit or loss.

21. SUBSEQUENT EVENTS

During July 2026, the Company repurchased and cancelled 77,000 shares at a weighted average share price of $0.21 (C$0.30) per share for gross proceeds of $16,258 (C$22,910).

As described in Note 1, on August 7, 2026, the Company's shareholders approved the proposed acquisition by Vireo Growth Inc. The transaction remains subject to customary closing conditions, including court and regulatory approvals, and is expected to close on or about August 21, 2026.

C21 INVESTMENTS INC.

Management's Discussion and Analysis

For the three months ended June 30, 2026

(Expressed in U.S. Dollars)

GENERAL

C21 Investments Inc. (the "Company", "C21", "we", "us" and "our") was incorporated in the Province of British Columbia under the Company Act (British Columbia) on January 15, 1987 as Empire Creek Mines Inc. On May 11, 1987, the Company changed its name to Curlew Lake Resources Inc. Effective November 24, 2017, the Company changed its name to C21 Investments Inc. On June 15, 2018, the Company's common shares (the "Common Shares") were delisted from the TSX Venture Exchange and on June 18, 2018, the Common Shares commenced trading on the Canadian Securities Exchange ("CSE") under the symbol CXXI. The Company registered its Common Shares in the United States ("U.S.") and on May 6, 2019, its Common Shares were cleared by the Financial Industry Regulatory Authority for trading on the OTC Markets platform under the U.S. trading symbol CXXIF. On August 23, 2019 the Company announced it had been approved for trading on the OTCQB Venture Market, and on September 28, 2020 the Company upgraded to trading on the OTCQX Best Market.

The Company's unaudited interim condensed consolidated financial statements for the three months ended June 30, 2026, were authorized for issuance on August 20, 2026 by the Board.

Additional information related to the Company is available for viewing on SEDAR at www.sedar.com or the Company website at www.cxxi.ca.

DESCRIPTION OF BUSINESS

The Company is a vertically integrated cannabis company that cultivates, processes, distributes and sells quality cannabis and hemp-derived consumer products in Nevada, U.S.A. The Company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing, and distribution assets in strategic markets, leveraging industry-leading retail revenues together with high-growth potential and multi-market branded consumer packaged goods ("CPG").

The Company focuses on scalable opportunities in key markets that take advantage of its core competencies, including: (i) retail operational excellence and expanding its retail footprint through value-add acquisitions in existing markets, and (ii) branded CPG expansion through both captive retail and wholesale channels. The Company focuses on acquiring businesses that provide immediate contribution to overall profitability, or have a path to profitability within twelve months, where it can leverage existing assets, brands, and domain expertise.

The Company currently holds licenses in Nevada spanning the entire cannabis supply chain.

The Company's management team has significant professional experience, including deep experience both within the cannabis industry and other fast-paced growth industries like technology and venture capital. Management also includes experts from more traditional industries like forestry, manufacturing, real estate, and capital markets.

Strategic Focus and Growth

Our operations in Reno, Nevada under the Silver State Relief brand continues its strong financial performance generating healthy cash flow and satisfied customers. Building around this strong core we have accomplished much in the past twelve months:

On August 7, 2026, the Company announced that shareholders of C21 approved, at the special meeting of C21's shareholders held earlier today (the "Meeting"), the special resolution (the "Arrangement Resolution") in respect of a statutory plan of arrangement under the Business Corporations Act (British Columbia) pursuant to which Vireo Growth Inc. ("Vireo") will acquire all of the issued and outstanding common shares of C21, after conversion of all subordinate voting shares of C21 (the "Arrangement").

The Arrangement Resolution was passed with approval by 96.58% of votes cast by C21 shareholders at the Meeting in person or by proxy, and by 96.48% of votes cast by C21 shareholders at the Meeting in person or by proxy excluding the votes cast by certain persons as required by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions.

C21 plans to apply for a final order of the Supreme Court of British Columbia for approval of the Arrangement on August 13, 2026. Assuming the satisfaction or waiver of other customary closing conditions and subject to the receipt of all relevant regulatory and court approvals, the Arrangement is expected to close on or about August 21, 2026.

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On June 15, 2026, The Company announced that it had entered into a definitive arrangement agreement (the "Arrangement Agreement") with Vireo Growth Inc. ("Vireo"), pursuant to which Vireo will acquire all of the issued and outstanding common shares of the Company by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) (the "Transaction"). Under the terms of the Arrangement Agreement, shareholders of the Company will receive 0.023052 of a subordinate voting share of Vireo for each common share of the Company held. The Transaction was approved by the Company's Board of Directors following the recommendation of a special committee of independent directors and remains subject to shareholder, court and regulatory approvals, as well as the satisfaction of customary closing conditions. The shareholder meeting to consider the Transaction is to be held on August 7, 2026.

After June 30, 2026, and up to the date of this report, the Company purchased for cancellation 77,000 of its own shares in the open market. Total common share purchased pursuant to the NCIB (see below December 5, 2025) is 332,500.
On May 1, 2026, 416,661 of the RSU's (see below) vested and were issued in settlement for 287,134 common shares of the Company, net of shares withheld to satisfy applicable tax obligations.

On April 1, 2026, the Company granted 1,250,000 restricted share units ("RSUs") to officers and employees. One third of the RSU's will vest and become exercisable on May 1, 2026, provided the holder remains actively employed or engaged with the Company on that date. The remaining two-thirds will vest in equal installments on April 1, 2027 and April 1, 2028, subject to the holders continued active employment of engagement with the Company.

On April 1, 2026, the Company granted 1,275,000 deferred share units ("DSUs") to directors of the company. Of the DSU's granted, 50% vested and became exercisable on the grant date, the other 50% will vest and become exercisable on April 1, 2027. Common shares are issued upon departure of individuals according to the number of DSU's vested as at the departure date.
On Dec 5, 2025 the Company announced that it intends to commence a normal course issuer bid (NCIB) under which it may purchase up to 5,898,596 common shares of the Company representing approximately 5% of the issued and outstanding shares of the Company. The Company may purchase common shares for a period of 12 months ending on December 9, 2026. All shares will be purchased on the open market at the prevailing market prices. The Company has not repurchased any shares to date.

During the first three quarters of the FYE March 31, 2026 and ending on December 2, 2025, the Company purchased for cancelation 224,000 of its own common shares in the open market pursuant to the NCIB (see below November 26, 2024). This NCIB ended on December 2, 2025.

On September 8, 2025, the Company announced the completion of a non-dilutive creation and issuance of subordinate voting shares. Representing the same economic interest as 100 common shares of the Company, these 100 million shares will not impact in any way the economic or voting rights of the Common Shares outstanding at any time and are non-dilutive. The purpose of the issuance of these subordinate voting shares is to ensure the Company maintains its "Foreign private issuer" status in the United States. Each of the 100 million subordinate voting shares is convertible into .000001 of a common share of the Company. See the News release of September 8, 2025 for complete details.

On September 4, 2025, the Company announced the settlement of the Eco Firma Farms litigation. This settlement represents the resolution of the final remaining dispute in the Companies' exit from the Oregon market. This settlement is offset by the resulting extinguishment of $1.16 million in Convertible notes and $0.61 million in accounts payable. The Company will pay $2.4 million in cash consideration over 19 months including an initial payment of $0.5 million (made on September 11, 2025) and monthly payments of $0.1 million thereafter. The Company will also issue 555,793 shares in share consideration (which was recorded in 2018 as a commitment to issue shares).

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NEVADA

The Company acquired Silver State Relief and Silver State Cultivation ("Silver State") on January 1, 2019. The Nevada business operates in Reno, Sparks and Fernley, Nevada.

Cultivation, Processing and Wholesale

Through Silver State in Nevada, the Company operates its indoor cultivation and processing out of a 104,000 square foot facility now with 37,000 square feet of cultivation and 1,200 square feet dedicated to volatile extraction. Silver State completed a $3 million expansion of its grow facility in April 2022, more than doubling capacity to 11,500 pounds of biomass with 8,100 pounds of flower and 3,300 pounds of trim annually.

The Company's extraction processing supports branded CPG in both captive retail and wholesale channels. Silver State manufactures Hood Oil cartridges, Phantom Farms pre-rolls, and flower strains, together with the Silver State branded products which include Flower, pre-rolls, and concentrates. These in-house brands make up 26% of sales in the dispensaries. With the addition of our third dispensary, more production has been allocated to our own stores, and wholesale sales fell to $1.4 million for the year ended March 31, 2025 ($3.0 million in year ended January 31, 2024).

Retail

The Company operates three dispensaries with the acquisition of the third, the South Reno Dispensary, finalized on June 7, 2024, with its grand opening occurring on June 26, 2024. It is a 6,500 square foot, purpose-built, retail cannabis dispensary. With the dispensary's desirable location in a high traffic, flourishing area of Southern Reno, the Company anticipates strong revenue growth from this acquisition, along with the added benefit of allowing it to expand the portion of its cultivation capacity sell through.

Our two established stores, an 8,000-square foot retail dispensary, located in Sparks, Nevada, and a 6,000-square foot dispensary located in Fernley, Nevada. Silver State Relief had total retail sales of $28.7 million during the year ended March 31, 2025 as compared to $25.3 million in the year ended January 31, 2024. The three stores now collectively service a total of more than 180,000 recreational and medical cannabis customers per quarter, with over 700 SKUs in each store.

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INTERIM MD&A - QUARTERLY HIGHLIGHTS

Summary derived from the Company's consolidated financial statements:

"Revenue" includes retail revenues from our three stores and wholesale revenue from our cultivation operations. The Q1 total revenues were down 10.8% at $7.6 million versus the Prior Year Quarter of $8.6 million and increased by 2.5% sequentially from the Prior Quarter of $7.5 million. Retail revenues in Q1 were $7.4 million, down 7.6% versus Prior Year Quarter of $8.0 million, and up sequentially 2.7% versus Prior Quarter of $7.2 million. Wholesale revenues in Q1 of $0.21 million were down on the Prior Year Quarter of $0.52 million and down sequentially on the Prior Quarter of $0.22 million.

The decreases in retail revenue are due to the general trend of price compression causing a fall in sales dollars in the State of Nevada and additional competition in our markets. In the 12 months to June 30, 2026 State of Nevada Sales fell over 12%.

"Cost of Sales" includes the costs directly attributable to cultivating and processing cannabis plus the cost of product purchases from third parties, for sale in our stores. We use an average costing model which captures and averages costs over several quarters.

"Gross profit" Q1 gross profit margin % has decreased to 32.5% from 34.9% in the Prior Year Quarter and decreased sequentially from 43.5% in the Prior Quarter. The decrease sequentially reflects seasonal factors attributable to Q1 each year.

"Income from operations" for Q1 is $(1.2 million) down versus the Prior Year Quarter of $0.2 million and down sequentially versus Prior Quarter $0.5 million. This decrease is due to the decrease in gross profit margin, increases in legal and professional fees attributable to the Vireo definitive arrangement agreement, and increases in share based compensation expense.

p. 5

Expenses

"General and administration" includes all overhead costs that have not otherwise been allocated to cost of sales. These include salaries and wages, professional fees including legal and accounting, insurance and some local taxes. Q1 costs of $2.6 million was up versus the Prior Year Quarter of $2.0 million, and up from $2.0 million sequentially in the Prior Quarter.

This increase is due to the professional fees incurred for the Vireo Growth Inc. definitive arrangement agreement of $558,501.

"Operating lease cost" is the cost of leases not included in cost of sales and was $208,605 for Q1 versus $208,605 in Prior Year Quarter.

"Depreciation and amortization" include provisions for fixed assets and intangibles not included in cost of sales. The total depreciation and amortization in Q1 was $0.45 million versus $0.45 million in the Prior Year Quarter.

"Share based compensation" is a non-cash item and reflects the issuance of stock options, RSU's and DSU's to employees, officers, and directors. The expense of $391,598 in Q1 is up from $93,945 in the Prior Year Quarter due to the issuance of RSU's and DSU's in the current quarter.

Other Items

"Interest expense" in Q1 was $20,634 versus $62,140 in the Prior Year Quarter. This interest is for the Convertible Debentures issued during the Quarter ending June 30, 2024. The reduction in costs is due to the continued paydown of the principal of the convertible debentures.

"Accretion expense" in Q1 was $45,038 versus $118,458 in the Prior Year Quarter. This accretion is due to the issuance of the C$4 million Convertible Debentures during the Quarter ending June 30, 2024.

"Change in fair value of derivative liabilities" is a periodic revaluation of the earn out shares outstanding to vendors of businesses purchased by the Company. These earn-out shares are revalued using a Monte Carlo simulation. The fair value of this liability will increase with an increase in the stock price of the Company and vice versa. The change in fair value must be recorded through the Company's profit or loss statement. As a result, a share price increase period-over-period will result in a reduction in net income and vice versa. In February and March 2023, the Company entered into cancelation agreements with the majority of the Swell Vendors who had rights to Swell Earn-Out shares, canceling those rights for a one-time cash payment. Of the 6.0 million original Swell Earn-Out shares, all of these have expired as of May 24, 2026. Of the original 10.5 million of earn out shares to both Phantom and Swell, none remain outstanding.

"Provision for income taxes" in Q1 of $0.7 million is down versus Prior Year Quarter of $0.8 million.

"Other comprehensive income (loss)," specifically the cumulative translation adjustment, comes about in GAAP when translating the balances between the parent company (investments made in C$) and the US subsidiaries (US$). These foreign exchange gains or losses at each reporting date result from the translation of C$ amounts to US$ (which is our reporting currency).

"Net income (loss) from discontinued operations" the Company has classified all of its Oregon operations to 'discontinued operations'. The revenues and expenses pertaining to the Oregon operations are shown in this line item. We have had no active business in Oregon since early 2022. The effect of this treatment is to lower our revenues (Q1 -$nil, Prior Year Quarter -$nil) and increase our gross profit (Q1-$nil, Prior Year Quarter -$nil) and increase our income from operations and net income (Q1-$5,975, Prior Year Quarter- decrease of $1,861). There is no effect of discontinuing the Oregon operations on our Nevada operations as the cannabis business in each state is unique and separate, which is due to the regulation of the cannabis industry. In the fourth quarter ended March 31, 2025 the Company sold the remaining real property in central and southern Oregon.

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INTERIM MD&A - QUARTERLY HIGHLIGHTS (continued)

Operations

Inventory balance at June 30, 2026 has decreased since March 31, 2026 mainly due to the spike in sales occurring during April and a reduction in purchasing to match the market.

Adjusted EBITDA for quarter ended June 30, 2026 decreased compared to the prior quarter ended March 31, 2026 due to decreased margins and to market weakening. See the previous page under "Gross Profit" and the discussion of general and administration expenses. Also see Non-GAAP measures below. Federal corporate income taxes are very high in the cannabis industry due to the restrictions of Section 280E of the tax code. Therefore, the measure of income before these taxes is a useful measure. In the table above we calculate income from continuing operations, adding back share-based compensation, in the Quarterly table above, as a useful measure.

Non-GAAP Financial Measures

"Adjusted EBITDA" is supplemental, non-GAAP financial measures. The Company defines EBITDA as earnings before depreciation and amortization, depreciation and interest in cost of sales, income taxes, and interest. Additionally, the Company's Adjusted EBITDA presented above excludes accretion, loss from discontinued operations, one-time transaction costs and all other non-cash items. The Company has presented "Adjusted EBITDA" because its management believes it is a useful measure for investors when assessing and considering the Company's continuing operations and prospects for the future. Furthermore, "Adjusted EBITDA" is a commonly used measurement in the financial community when evaluating the market value of similar companies. "Adjusted EBITDA" is not a measure of performance calculated in accordance with GAAP, and these metrics should not be considered in isolation of, or as a substitute for, the measurement of the Company's performance prepared in accordance with GAAP. "Adjusted EBITDA," as calculated and reconciled in the table above, may not be comparable to similarly titled measurements used by other issuers and is not necessarily a measure of the Company's ability to fund its cash needs. Figures have been restated to match the current presentation.

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"Free Cash Flow" is defined as Cash Provided by Operating Activities from Continuing Operations adding back income tax expense and before changes in working capital, minus capital expenditures. Management believes that Free Cash Flow, which measures our ability to generate cash from our continuing business operations, is an important financial measure for use in evaluating the Company's financial performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.

RELATED PARTY TRANSACTIONS

A summary of the Company's related balances included in accounts payable and accrued liabilities is as follows:

	June 30, 2026	March 31, 2026
	$	$
Lease liabilities due to a company controlled by the CEO	4,193,644	4,288,924
Due to the CFO of the Company	3,061	400
	4,196,705	4,289,324

Due to the CFO consists of reimbursable expenses incurred in the normal course of business.

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A summary of the Company's transactions with related parties including key management personnel for the three months ended June 30, 2026 and 2025 is as follows:

	2026	2025
	$	$
Consulting fees paid to a director	15,000	5,000
Amounts paid to CEO or companies controlled by CEO for leases	201,714	195,839
Amounts paid to CEO or companies controlled by CEO for remuneration	46,154	46,154
Salary paid to directors and officers	163,809	123,739
Share-based compensation	482,630	59,744
	909,307	430,476

Amounts paid to CEO or companies controlled by CEO consists of salary and lease payments. The CEO owned all three buildings which Silver State operates from when the Company purchased Silver State in 2019. On June 5, 2023, a company controlled by the CEO sold its interest in the Silver State Relief LLC (Sparks) property. The Company continues to lease this facility from a third party. On August 19, 2023, a company controlled by the CEO sold its interest in the Silver State Relief LLC (Fernley) property. The Company continues to lease this facility from a third party.

CONTRACTUAL OBLIGATIONS

The following table includes the Company's obligations to make future payments for each of the next five years that represent contracts and other commitments that are known and committed:

(1) Amounts in the table reflect minimum payments due for the Company's leased facilities and certain leased equipment under various lease agreements and purchase agreements.

(2) Amounts in the table reflect the contractually required principal payments payable under various convertible note and convertible debenture agreements and include the EFF Settlement obligation.

ADDITIONAL INFORMATION

LEGAL PROCEEDINGS

For a summary of the current legal proceedings, please refer to the Company's MD&A for the years ended March 31, 2026, and March 31, 2025 for detailed disclosure in this regard.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this MD&A, the Company has not entered into any off-balance sheet arrangements.

SHARE CAPITAL

The Company is authorized to issue an unlimited number of Common Shares.

As of June 30, 2026, there were:

- 118,678,994 Common Shares issued and outstanding;

- 5,375,000 options outstanding to purchase Common Shares, of which 5,375,000 options had vested;

- 4,000,000 warrants outstanding to purchase Common Shares;

- 100 million subordinate voting shares, equivalent of 100 common shares when converted; and

- 2,108,339 Restricted share units ("RSUs") and Deferred Stock Units ("DSU's") outstanding to purchase Common Shares.

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As of August 20, 2026 (the date of this MD&A) the Company had the following securities outstanding:

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION

The Company's financial statements and the other financial information included in this MD&A are the responsibility of the Company's management and have been examined and approved by the Board. The accompanying audited financial statements are prepared by management in accordance with GAAP, and include certain amounts based on management's best estimates using careful judgment. The selection of accounting principles and methods is management's responsibility.

Management recognizes its responsibility for conducting the Company's affairs in a manner that complies with the requirements of applicable laws and established financial standards and principles and maintains proper standards of conduct in its activities. The Board supervises the financial statements and other financial information through its audit committee, which is comprised of a majority of non-management directors.

The audit committee's role is to examine the financial statements and recommend that the Board approve them, to examine the internal control and information protection systems, and all other matters relating to the Company's accounting and finances. To do so, the Audit Committee meets annually with the external auditors, with or without the Company's management, to review their respective audit plans and discuss the results of their examination. The Audit Committee is responsible for recommending the appointment of the external auditors or the renewal of their engagement.

ACCOUNTING POLICIES AND ESTIMATES

FINANCIAL RISK MANAGEMENT

The Board approves and monitors the risk management processes of the Company, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

CREDIT RISK

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash held in bank accounts. The Company's cash is deposited in bank accounts held with a bank in Canada, a credit union in Nevada, California and Colorado.

LIQUIDITY RISK

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management of the Company and the Board are actively involved in the review, planning and approval of significant expenditures and commitments.

The Company's consolidated financial statements for three months ended June 30, 2026 have been prepared on a going concern basis, which assumes that the Company will be able to continue its operations and realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

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At June 30, 2026, the Company had cash of $2,623,416, a working capital surplus of $1,495,079.

The Company has generated significant positive cash flow for the fiscal year ended March 31, 2026 and the fiscal year ended March 31, 2025. The Statement of Cash Flows for the three months ended June 30, 2026, shows cash flow from continuing operations of $0.8 million ($1.4 million for the fiscal year ended March 31, 2026, and $1.4 million for the fiscal year ended March 31, 2025).

The Company acquired, for $3.5 million, a third retail dispensary as of June 7, 2024. This store located in South Reno, Nevada opened for business on June 26, 2024. The acquisition was paid for with cash on hand generated by the Company and a C$4.0 million financing completed in May 2024. The Company has commenced repaying C$160,000 per month plus interest on this debt. The Company is also making periodic payments against its corporate income tax payable, totaling $200,000 in the three months ending June 30, 2026.

The Company does not have any other significant capital expenditure plans in the next 12 months. We expect to continue to generate positive operations cash flow, and the addition of the third dispensary has improved our cash flow.

On September 4, 2025, the Company settled an outstanding lawsuit which includes a cash cost of $2.4 million payable over 19 months. This settlement eliminated payable amounts in current liabilities by $1.0 million. Additionally, as at June 30, 2026, the Company had current income taxes payable of $1,454,854, and an uncertain tax position of $14,091,109. See income tax discussion below. To manage liquidity risk, the Company endeavors to ensure it has sufficient cash resources to meet its financial obligations. The Company's ability to service its debt depends on sustaining the profitability of its operations and obtaining sufficient financing on acceptable terms.

There remains uncertainty about the U.S. federal government's position on cannabis with respect to cannabis-legal states. A change in its enforcement policies could impact the ability of the Company to continue as a going concern and have a material adverse impact on the business.

INTEREST RATE RISK

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not subject to any interest rate volatility as its long-term debt instruments and convertible notes are carried at a fixed interest rate throughout their term.

CAPITAL MANAGEMENT

The Company's objectives when managing its capital are to ensure there are enough capital resources to continue operating as a going concern and maintain the Company's ability to ensure sufficient levels of funding to support its ongoing operations and development. The purpose of these objectives is to provide continued returns and benefits to the Company's shareholders. The Company's capital structure includes items classified in debt and shareholders' equity.

The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business considering changes in economic conditions and the risk characteristics of the Company's underlying asset.

The Company works with its capital advisors, CB1 Capital based in New York, to identify the best strategic options to execute our corporate growth plans, as well as increasing financial flexibility in managing our debt.

U.S. INDUSTRY BACKGROUND AND REGULATORY ENVIRONMENT

INDUSTRY BACKGROUND AND TRENDS

The emergence of the legal cannabis sector in the United States, both for medical and adult use, has been rapid as more states adopt regulations for its production and sale. Today 79% of Americans live in a state where cannabis is legal in some form and 54% of the population lives in states where it is fully legalized for adult use.

The use of cannabis and cannabis derivatives to treat or alleviate the symptoms of a wide variety of chronic conditions has been generally accepted by a majority of citizens with a growing acceptance by the medical community as well. A review of the research, published in 2015 in the Journal of the American Medical Association, found evidence that cannabis can treat pain and muscle spasms. The pain component is particularly important, because other studies have suggested that cannabis can replace patients' use of highly addictive, potentially deadly opiates - meaning cannabis legalization literally improves lives.

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Polls throughout the United States consistently show overwhelming support for the legalization of medical cannabis, together with strong majority support for the full legalization of recreational adult-use cannabis. According to a January 2026 Pew Research Center survey, around nine-in-ten Americans favor some form of cannabis legalization, with only 11% saying cannabis should not be legal in any form. In that survey, 89% of U.S. adults support legalizing cannabis either for medical and recreational use (55%) or medical use only (33%). These views have held steady since April 2021 polling from the Pew Research Center. These are large increases in public support over the past 40 years in favor of legalized cannabis use.

Notwithstanding that 42 states and the District of Columbia have now legalized adult-use and/or medical cannabis, state legal cannabis remains illegal under U.S. federal law with cannabis listed as a Schedule I drug under the U.S. Federal Controlled Substances Act of 1970 ("CSA").

Currently the Company only operates in the state of Nevada. The Company may expand into other states within the United States that have legalized cannabis use either medicinally or recreationally.

FEDERAL REGULATORY ENVIRONMENT

For a complete summary of the Federal regulatory environment, please refer to the Company's MDA for the fiscal years ended March 31, 2026, and March 31, 2025, for detailed disclosure in this regard.

NEVADA REGULATORY UPDATE

For a summary of the Nevada regulatory environment, please refer to the Company's MDA for the fiscal years ended March 31, 2026, and March 31, 2025 for detailed disclosure in this regard.

RISK FACTORS

For a comprehensive list of the risk factors relating to the business and securities of the Company, please refer to the Company's MDA for the fiscal years ended March 31, 2026, and March 31, 2025 for detailed disclosure in this regard. The Company will face a few challenges and significant risks in the development of its business due to the nature of and present stage of its business. These risks and uncertainties are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or currently deemed immaterial by the Company, may also impair the operations of or materially adversely affect the securities of the Company. If any such risks occur, the Company's shareholders could lose all or part of their investment and the business, financial condition, liquidity, results of operations and prospects of the Company could be materially adversely affected. Some of the risk factors previously disclosed are interrelated and, consequently, readers should read such risk factors in connection with one another.

The acquisition of any of the securities of the Company is speculative, involving a high degree of risk and should be undertaken only by persons whose financial resources are enough to enable them to assume such risks and who have no need for immediate liquidity in their investment. An investment in the securities of the Company should not constitute a major portion of a person's investment portfolio and should only be made by persons who can afford a total loss of their investment.

In the event of a federal rescheduling of marijuana under the CSA, short of removal from the CSA (i.e., descheduling), there is the risk that FDA takes a more hands on approach to marijuana regulation, in addition to existing state-based regulations.

FORWARD LOOKING STATEMENTS

This MD&A includes "forward-looking information" and "forward-looking statements" within the meaning of Canadian securities laws and United States securities laws. All information, other than statements of historical facts, included in this MD&A that addresses activities, events or developments that the Company expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information includes, among other things, information regarding: statements relating to the business and future activities of, and developments related to, the Company, including such things as capital expenses and revenues, future business strategy, competitive strengths, goals, expansion and growth of the Company's business, operations and plans, ramping of Sales at the Company's third store, including information concerning the completion and timing of the completion of contemplated acquisitions or dispositions, expectations whether such proposed transactions will be consummated on the current terms or otherwise and contemplated timing, expectations and effects of such proposed transactions, including the potential number and location of cultivation and production facilities and dispensaries or licenses therefor to be acquired or sold and markets to be entered into or exited by the Company as a result of completing such proposed transactions, the ability of the Company to successfully achieve its business objectives as a result of completing such proposed acquisitions or dispositions, estimates of future cultivation, manufacturing and extraction capacity, expectations as to the development and distribution of the Company's brands and products, the expansion into additional U.S. and international markets, any potential future legalization of adult-use and/or medical cannabis under U.S. federal law, expectations of market size and growth in the United States and the states in which the Company operates or contemplates future operations and the effect such growth will have on the Company's financial performance, expectations for other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally, and other events or conditions that may occur in the future.

p. 12

Readers are cautioned that forward-looking information and statements are based on reasonable assumptions, estimates, analysis and opinions of management of the Company at the time they were provided or made in light of their experience and their perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements.

Forward-looking information and statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management at the date the statements are made including among other things assumptions about: the contemplated acquisitions and dispositions being completed on the current terms and current contemplated timeline; development costs remaining consistent with budgets; ability to manage anticipated and unanticipated costs; favorable equity and debt capital markets; the ability to raise sufficient capital to advance the business of the Company; favorable operating and economic conditions; political and regulatory stability; obtaining and maintaining all required licenses and permits; receipt of governmental approvals and permits; sustained labor stability; favorable production levels and costs related to the Company's operations; the pricing of various cannabis products; the level of demand for cannabis products; the availability of third party service providers and other inputs for the Company's operations; the Company's ability to conduct operations in a safe, efficient and effective manner; the ability of the Company to restructure and service its secured debt; the availability of securitized debt financing on terms acceptable to the Company, or at all. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks, uncertainties, contingencies and other factors that could cause actual performance, achievements, actions, events, results or conditions to be materially different from those projected in the forward-looking information and statements. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

Risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements include, among others, risks relating to U.S. regulatory landscape and enforcement related to cannabis, including governmental and environmental regulation, public opinion and perception of the cannabis industry, risks related to the ability to consummate any proposed acquisitions or dispositions on the proposed terms and the ability to obtain requisite regulatory approvals and third party consents and the satisfaction of other conditions, risks related to reliance on third party service providers, the limited operating history of the Company, risks inherent in an agricultural business, risks related to proprietary intellectual property, risks relating to financing activities, risks relating to the management of growth, increasing competition in the cannabis industry, risks associated to cannabis products manufactured for human consumption including health risks, potential product recalls, reliance on key inputs, reliance on a healthy global supply chain, suppliers and skilled labor (the availability and retention of which is subject to uncertainty), cyber-security risks, ability and constraints on marketing products, fraudulent activity by employees, contractors and consultants, risk of litigation and conflicts of interest, and the difficulty of enforcement of judgments and effecting service outside of Canada, risks related to future acquisitions or dispositions, limited research and data relating to cannabis, risks and uncertainties related to the lasting impact of the COVID-19 pandemic and the continued impact it may have on the global economy and the retail sector, particularly the cannabis retail sector in the states in which the Company operates, as well as those risk factors discussed elsewhere herein, including under "Risk Factors".

p. 13

Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information and statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The Company may elect to update such forward-looking information and statements at a future time, it assumes no obligation for doing so except to the extent required by applicable law.

p. 14

This is an unofficial consolidation of Form 52-109FV2 Certification of Interim Filings Venture Issuer Basic Certificate reflecting amendments made effective January 1, 2011 in connection with Canada's changeover to IFRS. The amendments apply for financial periods relating to financial years beginning on or after January 1, 2011. This document is for reference purposes only and is not an official statement of the law.

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Sonny Newman, Chief Executive Officer of C21 Investments Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of C21 Investments Inc. (the "issuer") for the interim period ended June 30, 2026.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: August 20, 2026

SIGNED: "Sonny Newman"

Sonny Newman, Chief Executive Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Michael Kidd, Chief Financial Officer of C21 Investments Inc., certify the following:

Date: August 20, 2026

SIGNED: "Michael Kidd"

Michael Kidd, Chief Financial Officer

NOTE TO READER

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

Source: View Original Filing on SEC EDGAR

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C21 Investments posts $7.6M Q1 revenue, wider loss

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How did C21 Investments Inc. (CWLXF) perform financially in the quarter ended June 30, 2026?

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