GLAS

• Regulatory Update • In late April 2026, medical cannabis was rescheduled to Schedule III, which management calls the most important US drug reform in decades, and expects further updates that will eventually normalize operations for cannabis consumers and operators. • ALJ hearings for adult use cannabis rescheduling concluded last month, and additional regulatory updates from California and the DEA are expected in coming months. Management states medical rescheduling alone is sufficient to open interstate commerce and international medical cannabis exports, which will dramatically expand the company's addressable market and unlock greater profitability than exclusive California operations. • The company has completed DEA registration of its cultivation and processing licenses, and converted all state licenses to medical licenses to comply with Schedule III requirements. • The elimination of IRS Section 280E tax burden for medical cannabis means the company will no longer recognize 280E in future tax provisions; it holds $38 million in uncertain tax provisions on its balance sheet but has not paid 280E cash taxes.

• Corporate Milestones • Completed deconsolidation of its legacy retail operations, which are now fully independent. Glass House retains a 90% economic interest in the retail business, continues to supply the stores, and expects ongoing collaboration. • Successfully uplisted from USOTC to the New York Stock Exchange, trading under ticker GLAS starting June 30, 2026, eliminating prior custody and liquidity constraints for investors. A bell-ringing ceremony is scheduled for August 28, 2026. The company has simplified its capital structure via warrant redemptions and conversions, terminating 30.6 million warrants in exchange for 362,000 shares and issuing 7.4 million shares for other warrant redemptions.

• Cultivation Operations • Q2 2026 biomass production hit a company record 246,000 pounds, exceeding the 240,000 pound guidance, and the company remains on track to produce 1 million pounds of biomass in 2026, exiting the year with a 1.1 million pound annual run rate. It retains a vacant sixth greenhouse for future development at its Camarillo farm. • The company won 17 awards in the Mixed Light Flower category at the 2026 California State Fair Cannabis Awards, demonstrating product quality and consistency. • Q2 2026 gross margin underperformance was driven by a higher-than-historical share of low-value trim in the production mix. The three drivers of higher trim are: 1) rushed sourcing of nursery stock after 2025 operational disruptions, which produced strains with higher trim yields (the company has now reverted to planned genetics); 2) a largely new workforce (90% through the rebuild) that is still gaining experience; 3) an offline co-generation unit that is the primary source of CO2, which is being repaired and expected back online in Q3 2026. • Greenhouse 2 is now fully planted, and full production contribution is expected by the end of Q3 2026. Management is implementing facility upgrades including UltraClema system optimization, additional cooling and airflow, improved shade and light management, and evaluating AI and automation upgrades to further improve yield, reduce costs, and enhance product quality.

• Strategic Preparation for New Markets • Engaged Pharma Compliance Group, led by a former senior DEA official, to support regulatory compliance for out-of-state and international sales, and is working with California regulators to develop tracking systems for cross-border and export sales consistent with Schedule III requirements. • The company is progressing toward GACP compliance, a prerequisite for supplying the European medical cannabis market, and is in active discussions with potential out-of-state and international customers and partners for future supply agreements. • Hemp commercial operations have launched, with the first harvest from Greenhouse 4 completed. This marks the first planned Glass House product sale outside of California, and serves as an operational test for future new market medical sales. The company is monitoring federal regulatory developments related to an intoxicating hemp ban (delayed from November to December 2026), and supports a federal one-plant rule that unifies hemp and cannabis regulation. It maintains optionality to shift production to intoxicating hemp if regulations allow, to leverage its low-cost high-volume production capability.

• Prior full-year guidance (which included deconsolidated retail revenue) is no longer valid, and the company is not updating full-year financial guidance at this time pending clarity on the timing of out-of-state sales, hemp regulatory outcomes, and farm expansion progress.
• Full-year 2026 biomass production guidance of approximately 1 million pounds is maintained, with the company on track to exit the year with a 1.1 million pound annual run rate.
• Management reaffirms the expectation that cost of production will fall below $100 per pound by the end of 2026, and the long-term target cost of production of $95 per pound remains intact.
• Management expects meaningful gross margin improvement in the second half of 2026 as production mix reverts to historical trim levels, workforce experience improves, and Greenhouse 2 reaches full production.

Following the deconsolidation of its 10-store retail operations (classified as discontinued operations post-transaction), Glass House Brands reported total Q2 2026 revenue of $47 million (excluding retail revenue, down from $47.6 million in Q2 2025). Of this reported revenue, 88.7% ($41.7 million) came from wholesale biomass, and 11.3% ($5.3 million) came from CPG sales, compared to 88.4% and 11.6% respectively in Q2 2025. Retail revenue through the June 11 deconsolidation date was $10 million, down from $12 million for the full Q2 2025. The company produced 246,000 pounds of sellable wholesale biomass, an increase from 152,000 pounds in Q1 2026 and 231,000 pounds in Q2 2025, and sold 198,000 pounds of wholesale biomass in the quarter, up from 140,000 pounds in Q1 2026 but down from 204,000 pounds in Q2 2025. Average wholesale selling price per pound was $211, up from $206 in Q2 2025. Cost of production per pound was $122, down from $175 in Q1 20026 and $129 in H2 2025, but above the Q2 2025 record low of $91 per pound. Consolidated gross profit was $15.8 million with a 34% gross margin; retail gross margin through deconsolidation was approximately 50%. Adjusted EBITDA was $5.7 million, down from $18.1 million in Q2 2025 but up from a $4.2 million loss in Q1 2026. Operating cash flow for Q2 2026 was $139,000. Initial commercial hemp operations launched in Q2 2026, but sales were not material to quarterly results.

• California's cannabis market remains extremely challenging due to fierce competition, high regulatory costs and taxes, depressed wholesale pricing driven by large-scale illicit market competition, even as the number of active cultivators has fallen by half in recent years to ~4,000.
• Transient operational issues related to post-disruption replanting and new workforce training have increased trim share and reduced near-term gross margins, though management expects these issues to resolve over time.
• One of the company's primary co-generation CO2 sources is offline, which had a larger negative impact on production than expected, though repairs are underway and it is expected back online in Q3 2026.
• The timing and scope of regulatory changes to open interstate commerce and international exports remain uncertain, and hemp regulatory changes could eliminate potential market opportunities if a permanent intoxicating hemp ban is implemented (though management notes existing hemp R&D operations remain compliant even if the ban goes into effect).
• Higher than expected capital pre-spending is required to bring new greenhouse capacity online before revenue from that capacity is realized, which near-term impacts SG&A and cost per pound calculations.

Q: Can you explain the Q2 gross margin shortfall and what the evolution of gross margins will look like in the second half? / A: The primary driver was a higher mix of low-value trim, which sells for ~$25 per pound compared to ~$500 per pound for flower. Even small shifts in trim share significantly lower margins, and excess trim held in inventory further depressed results due to its lower value. This is a transient issue from ramping up production after a year of mostly empty greenhouses, where the team first focused on opening and scaling, then moved to optimization. It is not a product quality issue: flower pricing and demand remain strong, and the company won 17 cultivation awards this quarter. Management expects margins will rise significantly as trim mix returns to historical levels, and the long-term $95 per pound production cost target remains intact.

Q: If the federal ban on intoxicating hemp is delayed, will you scale hemp production, and what is your risk profile if the ban goes into effect? / A: All current R&D and initial hemp operations focus on CBD flower with less than 0.3% THC, which remains fully compliant with federal law regardless of whether the ban goes into effect, so there is no downside risk for existing operations. If the ban is delayed or canceled, it opens an additional large market opportunity for the company. Since hemp and cannabis are the same plant, the company can easily shift production to leverage existing greenhouse capacity, so management retains full optionality to pursue this opportunity if regulations allow.

Q: How far along are discussions for out-of-state supply agreements, and how will the interstate cannabis market develop? / A: The company is in active discussions with operators in other US states and international markets, with strong demand for low-cost high-quality California-grown cannabis. Many new markets lack existing cultivation infrastructure and do not want to wait years to build expensive indoor capacity, so they are open to importing cannabis. Management expects that regulatory approval for out-of-state shipments will not require new federal legislation, similar to how the company secured legal banking without formal safe banking legislation. No formal supply agreements are ready to announce yet, but there is broad interest.

Q: What is the likelihood of securing supply agreements and shipping product out of California/overseas by the end of 2026? / A: Management expects the company will announce more than one supply agreement before the end of 2026, and estimates international shipments are more likely to occur before the end of the year than domestic interstate shipments, as the team works daily to advance regulatory approval and commercial partnerships.