What version of Go are you using (go version)?

$ go version
go version go1.12 darwin/amd64

Does this issue reproduce with the latest release?

Yes. With GOPATH built version (version v0.1.0-cmd.gopls, built in $GOPATH mode) as well as the Go Module built version:

$ gopls version
golang.org/x/tools/cmd/gopls v0.1.0-cmd.gopls
    golang.org/x/tools@v0.0.0-20190621195816-6e04913cbbac h1:MQEvx39qSf8vyrx3XRaOe+j1UDIzKwkYOVObRgGPVqI=

What operating system and processor architecture are you using (go env)?

$ go env
GOARCH="amd64"
GOBIN=""
GOCACHE="/Users/brendensoares/Library/Caches/go-build"
GOEXE=""
GOFLAGS=""
GOHOSTARCH="amd64"
GOHOSTOS="darwin"
GOOS="darwin"
GOPATH="/Users/brendensoares/.gvm/pkgsets/go1.12/global"
GOPROXY=""
GORACE=""
GOROOT="/Users/brendensoares/.gvm/gos/go1.12"
GOTMPDIR=""
GOTOOLDIR="/Users/brendensoares/.gvm/gos/go1.12/pkg/tool/darwin_amd64"
GCCGO="gccgo"
CC="clang"
CXX="clang++"
CGO_ENABLED="1"
GOMOD=""
CGO_CFLAGS="-g -O2"
CGO_CPPFLAGS=""
CGO_CXXFLAGS="-g -O2"
CGO_FFLAGS="-g -O2"
CGO_LDFLAGS="-g -O2"
PKG_CONFIG="pkg-config"
GOGCCFLAGS="-fPIC -m64 -pthread -fno-caret-diagnostics -Qunused-arguments -fmessage-length=0 -fdebug-prefix-map=/var/folders/tj/xht24r711bn6clhjkvtr76v00000gq/T/go-build968408658=/tmp/go-build -gno-record-gcc-switches -fno-common"

What did you do?

1. Setup local Go Module
   1.1. create local git repo in folder ./testx
   1.2. run go mod init github.com/org/testx in ./testx
   1.3. add ./testx/reporter/reporter.go
   1.4. add cli folder with main.go that imports github.com/org/testx/reporter
2. view ./testx/cli/main.go in VS Code with Go extension using gopls

Project Structure:

testx/
  cli/
    main.go
  reporter/
    reporter.go
  go.mod

What did you expect to see?

No error which is what I see when using the non-LPS go tools with the VS Code Go extension.

What did you see instead?

The import line for github.com/org/testx/reporter is highlighted as an error. VS Code Output for gopls shows:

[Trace - 1:05:05 PM] Received notification 'textDocument/publishDiagnostics'.
Params: {"uri":"file:///Users/brendensoares/Developer/testx/cli/main.go","diagnostics":[{"range":{"start":{"line":5,"character":1},"end":{"line":5,"character":51}},"severity":1,"source":"LSP","message":"could not import github.com/org/testx/reporter (no parsed files for package github.com/org/testx/reporter)"}]}

Notes

• go list all shows the package as importable, as expected
• x/tools/gopls: auto import failed #32612 looks similar