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What changed in Cronos Group Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Cronos Group Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+618 added−652 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Cronos Group Inc.'s 2024 10-K

618 paragraphs added · 652 removed · 457 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

127 edited+35 added−50 removed18 unchanged
Biggest changeAs a result, we are no longer operating facilities that leverage the patented intellectual property under the Ginkgo Strategic Partnership, although Cronos may leverage this intellectual property, either through production at the Peace Naturals Campus or through a contract manufacturer, and Cronos continues to utilize these cultured cannabinoids in our products sold in Canada.
Biggest changeCronos may still utilize this intellectual property through production at its Peace Naturals Campus or via contract manufacturers and continues incorporating cultured cannabinoids into products sold in Canada. Ginkgo has also filed patent applications to protect the biosynthesis methods developed under the partnership, with Cronos holding exclusive licensing rights for target cannabinoids covered by these patents.
Our common shares are currently listed on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Global Market (“Nasdaq”) under the trading symbol “CRON.” Description of the Business Overview Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development.
Cronos common shares are currently listed on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Global Market (“Nasdaq”) under the trading symbol “CRON.” Description of the Business Overview Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development.
Under its current licenses, Cronos GrowCo is permitted to sell certain cannabis products to other license holders in the wholesale channel, as well as to provincial cannabis control authorities. Cronos GrowCo holds Global GAP and ICANN GAP certifications (equivalent to IMC-GAP) for the export of dried flower to Israel. • Cronos Fermentation.
Under its current licenses, Cronos GrowCo is permitted to sell certain cannabis products to other license holders in the wholesale channel, as well as to provincial cannabis control authorities. Cronos GrowCo holds Global GAP and ICANN GAP certifications (equivalent to IMC-GAP) for the export of dried flower to Israel.
In addition, our website includes, among other things, our Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is also available in print to any shareholder upon request without charge from our Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004.
In addition, the Company’s website includes, among other things, the Company’s Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is also available in print to any shareholder upon request without charge from our Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004.
The Peace Naturals Campus is engaged in processing, finishing, packaging and shipping activities, as well as R&D activities, including cannabinoid product formulation, product development, tissue culture and micro propagation.
The Peace Naturals Campus is engaged in production, processing, finishing, packaging and shipping activities, as well as R&D activities, including cannabinoid product formulation, product development, tissue culture and micro propagation.
In addition, for so long as the Altria Group continues to beneficially own greater than 10% but less than 40% of our issued and outstanding common shares, Altria is entitled to nominate a number of Altria Nominees that represents its proportionate share of the number of directors comprising the Board (rounded up to the next whole number) based on the percentage of our issued and outstanding common shares beneficially owned by the Altria Group at the relevant time.
In addition, for so long as the Altria Group continues to beneficially own greater than 10% but less than 40% of Cronos’ issued and outstanding common shares, Altria is entitled to nominate a number of Altria Nominees that represents its proportionate share of the number of directors comprising the Board (rounded up to the next whole number) based on the percentage of Cronos’ issued and outstanding common shares beneficially owned by the Altria Group at the relevant time.
“Top-Up Securities” means any of our common shares issued: • on the exercise, conversion or exchange of our convertible securities issued prior to the date of the Investor Rights Agreement or on the exercise, conversion or exchange of our convertible securities issued after the date of the Investor Rights Agreement in compliance with the terms of the Investor Rights Agreement, in each case, excluding any of our convertible securities owned by any member of the Altria Group; • pursuant to any share incentive plan of the Company; • on the exercise of any right granted by us pro rata to all shareholders to purchase additional common shares and/or other securities of the Company (other than a right issued in a rights offering in which Altria had the right to participate); • in connection with bona fide bank debt, equipment financing or non-equity interim financing transactions with our lenders, in each case, with an equity component; or • in connection with bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures undertaken and completed by us, in each case, other than (A) common shares issued pursuant to Altria’s pre-emptive right and (B) common shares issued pursuant to the Ginkgo Collaboration Agreement.
“Top-Up Securities” means any Cronos common shares issued: • on the exercise, conversion or exchange of Cronos convertible securities issued prior to the date of the Investor Rights Agreement or on the exercise, conversion or exchange of Cronos convertible securities issued after the date of the Investor Rights Agreement in compliance with the terms of the Investor Rights Agreement, in each case, excluding any of Cronos convertible securities owned by any member of the Altria Group; • pursuant to any share incentive plan of the Company; • on the exercise of any right granted by Cronos pro rata to all shareholders to purchase additional common shares and/or other securities of the Company (other than a right issued in a rights offering in which Altria had the right to participate); • in connection with bona fide bank debt, equipment financing or non-equity interim financing transactions with Cronos’ lenders, in each case, with an equity component; or • in connection with bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures undertaken and completed by Cronos, in each case, other than (A) common shares issued pursuant to Altria’s pre-emptive right and (B) common shares issued pursuant to the Ginkgo Collaboration Agreement.
Subject to applicable regulatory approvals, strategic international business opportunities pursued by us could include: • production, distribution, sales and marketing in jurisdictions that have passed legislation to legalize the production, distribution and possession of cannabis products at all relevant levels of government; and • the export of cannabis products to markets that permit the import of such products.
Subject to applicable regulatory approvals, strategic international business opportunities pursued by Cronos could include: • production, distribution, sales and marketing in jurisdictions that have passed legislation to legalize the production, distribution and possession of cannabis products at all relevant levels of government; and • the export of cannabis products to markets that permit the import of such products.
Pre-Emptive Rights and Top-Up Rights Pursuant to the terms of the Investor Rights Agreement and provided the Altria Group continues to beneficially own at least 20% of our issued and outstanding common shares, Altria has a right to purchase, directly or indirectly by another member of the Altria Group, upon the occurrence of certain issuances of common shares by us (including issuances of common shares to Ginkgo under the Ginkgo Collaboration Agreement (each, a “Ginkgo Issuance”)) (each, a “Triggering Event”) and subject to obtaining the necessary approvals, up to such number of our common shares issuable in connection with the Triggering Event which will, when added to our common shares beneficially owned by the Altria Group immediately prior to the Triggering Event, result in the Altria Group beneficially owning the same percentage of our issued and outstanding common shares that the Altria Group beneficially owned immediately prior to the Triggering Event (in each case, calculated on a non-diluted basis).
Pre-Emptive Rights and Top-Up Rights Pursuant to the terms of the Investor Rights Agreement and provided the Altria Group continues to beneficially own at least 20% of Cronos’ issued and outstanding common shares, Altria has a right to purchase, directly or indirectly by another member of the Altria Group, upon the occurrence of certain issuances of common shares by Cronos (including issuances of common shares to Ginkgo under the Ginkgo Collaboration Agreement (each, a “Ginkgo Issuance”)) (each, a “Triggering Event”) and subject to obtaining the necessary approvals, up to such number of common shares issuable in connection with the Triggering Event which will, when added to Cronos’ common shares beneficially owned by the Altria Group immediately prior to the Triggering Event, result in the Altria Group beneficially owning the same percentage of Cronos’ issued and outstanding common shares that the Altria Group beneficially owned immediately prior to the Triggering Event (in each case, calculated on a non-diluted basis).
In addition to (and without duplication of) the aforementioned pre-emptive rights, the Investor Rights Agreement provides Altria with top-up rights, exercisable on a quarterly basis, whereby, subject to obtaining the necessary approvals and for so long as the Altria Group beneficially owns at least 20% of our issued and outstanding common shares, Altria has the right to subscribe for such number of common shares in connection with any Top-Up Securities (as defined below) that we may, from time to time, issue after the date of the Investor Rights Agreement, as will, when added to the common shares beneficially owned by the Altria Group prior to such issuance, result in the Altria Group beneficially owning the same percentage of our issued and outstanding common shares that the Altria Group beneficially owned immediately prior to such issuance.
In addition to (and without duplication of) the aforementioned pre-emptive rights, the Investor Rights Agreement provides Altria with top-up rights, exercisable on a quarterly basis, whereby, subject to obtaining the necessary approvals and for so long as the Altria Group beneficially owns at least 20% of Cronos’ issued and outstanding common shares, Altria has the right to subscribe for such number of common shares in connection with any Top-Up Securities (as defined below) that Cronos may, from time to time, issue after the date of the Investor Rights Agreement, as will, when added to the Cronos common shares beneficially owned by the Altria Group prior to such issuance, result in the Altria Group beneficially owning the same percentage of Cronos’ issued and outstanding common shares that the Altria Group beneficially owned immediately prior to such issuance.
The scope of this statutory review includes, among other things, consideration of (i) the administration and operation of the Cannabis Act, (ii) the impact of the Cannabis Act on public health, (iii) the health and consumption habits of young persons, (iv) the impact of cannabis on indigenous persons and communities and (v) the impact of the cultivation of cannabis plants in a dwelling-house.
The scope of this statutory review included, among other things, consideration of (i) the administration and operation of the Cannabis Act, (ii) the impact of the Cannabis Act on public health, (iii) the health and consumption habits of young persons, (iv) the impact of cannabis on indigenous persons and communities and (v) the impact of the cultivation of cannabis plants in a dwelling-house.
(ii) A strategic joint venture with Kibbutz Gan Shmuel (“Gan Shmuel”), an Israeli agricultural collective settlement, for the production, manufacturing and global distribution of medical cannabis, consisting of a cultivation company (Cronos Israel G.S. Cultivation Ltd.), a manufacturing company (Cronos Israel G.S. Manufacturing Ltd.), a distribution company (Cronos Israel G.S. Store Ltd.) and a pharmacy company (Cronos Israel G.S.
(ii) A strategic joint venture with Kibbutz Gan Shmuel, an Israeli agricultural collective settlement, for the production, manufacturing and global distribution of medical cannabis, consisting of a cultivation company (Cronos Israel G.S. Cultivation Ltd.), a manufacturing company (Cronos Israel G.S. Manufacturing Ltd.), a distribution company (Cronos Israel G.S. Store Ltd.) and a pharmacy company (Cronos Israel G.S.
At least one Altria Nominee must be independent as long as Atria has the right to designate at least three Altria Nominees and the Altria Group’s beneficial ownership of our issued and outstanding common shares does not exceed 50%.
At least one Altria Nominee must be independent as long as Atria has the right to designate at least three Altria Nominees and the Altria Group’s beneficial ownership of Cronos’ issued and outstanding common shares does not exceed 50%.
Commercial Arrangements In connection with the Altria Investment, we and Altria have entered into certain commercial arrangements (the “Commercial Arrangements”), pursuant to which Altria may provide us with consulting services on matters which may include R&D, marketing, advertising and brand management, government relations and regulatory affairs, finance, tax planning, logistics and other corporate administrative matters.
Commercial Arrangements In connection with the Altria Investment, Cronos and Altria have entered into certain commercial arrangements (the “Commercial Arrangements”), pursuant to which Altria may provide Cronos with consulting services on matters which may include R&D, marketing, advertising and brand management, government relations and regulatory affairs, finance, tax planning, logistics and other corporate administrative matters.
Exclusivity Covenant Pursuant to the terms of the Investor Rights Agreement, until the earlier of: • the six-month anniversary of the date on which the Altria Group beneficially owns less than 10% of our issued and outstanding common shares; and • the six-month anniversary of the termination of the Investor Rights Agreement, Altria has agreed to make us its exclusive partner for pursuing cannabis opportunities throughout the world (subject to certain limited exceptions).
Exclusivity Covenant Pursuant to the terms of the Investor Rights Agreement, until the earlier of: • the six-month anniversary of the date on which the Altria Group beneficially owns less than 10% of Cronos’ issued and outstanding common shares; and • the six-month anniversary of the termination of the Investor Rights Agreement, Altria has agreed to make Cronos its exclusive partner for pursuing cannabis opportunities throughout the world (subject to certain limited exceptions).
We have agreed that, among other things, we will not (and will use our commercially reasonable efforts to cause our affiliates not to), without the prior written consent of Altria: • consolidate or merge into or with another person or enter into any similar business combination; • acquire any shares or similar equity interests, instruments convertible into or exchangeable for shares or similar equity interests, assets, business or operations with an aggregate value of more than C$100,000,000, in a single transaction or a series of related transactions; • sell, transfer, cause to be transferred, exclusively license, lease, pledge or otherwise dispose of any of our or any of our significant subsidiaries’ assets, business or operations in the aggregate with a value of more than C$60,000,000; • except as required by applicable law, make any changes to our policy with respect to the declaration and payment of any dividends on our common shares; 10 T able of Contents • subject to certain exceptions, enter into any contract or other agreement, arrangement, or understanding with respect to, or consummate, any transaction or series of related transactions between us or any of our subsidiaries, on the one hand, and any related parties, on the other hand, involving consideration or any other transfer of value required to be disclosed pursuant to Item 404 of Regulation S-K promulgated pursuant to the Securities Act; or • engage in the production, cultivation, advertisement, marketing, promotion, sale or distribution of cannabis or any Related Products and Services (as defined in the Investor Rights Agreement) in any jurisdiction, including the U.S., where such activity is prohibited by applicable law as of the date of the Investor Rights Agreement (subject to certain limitations).
Cronos agreed that, among other things, it will not (and will use commercially reasonable efforts to cause its affiliates not to), without the prior written consent of Altria: • consolidate or merge into or with another person or enter into any similar business combination; • acquire any shares or similar equity interests, instruments convertible into or exchangeable for shares or similar equity interests, assets, business or operations with an aggregate value of more than C$100,000,000, in a single transaction or a series of related transactions; • sell, transfer, cause to be transferred, exclusively license, lease, pledge or otherwise dispose of any of the Company’s or its significant subsidiaries’ assets, business or operations in the aggregate with a value of more than C$60,000,000; • except as required by applicable law, make any changes to Cronos’ policy with respect to the declaration and payment of any dividends on its common shares; • subject to certain exceptions, enter into any contract or other agreement, arrangement, or understanding with respect to, or consummate, any transaction or series of related transactions between Cronos or any of its subsidiaries, on the one hand, and any related parties, on the other hand, involving consideration or any other transfer of value required to be disclosed pursuant to Item 404 of Regulation S-K promulgated pursuant to the Securities Act; or 10 Table of Contents • engage in the production, cultivation, advertisement, marketing, promotion, sale or distribution of cannabis or any Related Products and Services (as defined in the Investor Rights Agreement) in any jurisdiction, including the U.S., where such activity is prohibited by applicable law as of the date of the Investor Rights Agreement (subject to certain limitations).
In particular, the cannabis control authorities have in the past and may in the future choose to stop purchasing our products, may change the prices at which they purchase our products, may return our products to us and, in certain circumstances, may cancel purchase orders at any time including after products have been shipped.
In particular, the cannabis control authorities have in the past and may in the future choose to stop purchasing Cronos products, may change the prices at which they purchase products, may return products to Cronos and, in certain circumstances, may cancel purchase orders at any time including after products have been shipped.
Following the exercise of the PharmaCann Option, the Company and PharmaCann will enter into commercial agreements that would permit each party to offer its products through the other party’s distribution channels. As of December 31, 2023, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 5.9%.
Following the exercise of the PharmaCann Option, the Company and PharmaCann will enter into commercial agreements that would permit each party to offer its products through the other party’s distribution channels. As of December 31, 2024, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 5.8%.
Investor Rights Agreement In connection with the Altria Investment, we entered into the Investor Rights Agreement with Altria pursuant to which Altria received certain governance rights that are summarized below.
Investor Rights Agreement In connection with the Altria Investment, Cronos entered into the Investor Rights Agreement with Altria pursuant to which Altria received certain governance rights that are summarized below.
None of the information on our website or disclosed through these social media sites is incorporated by reference into this Annual Report.
None of the information on Cronos’ website or disclosed through these social media sites is incorporated by reference into this Annual Report.
From time to time, we use our website, as well as the following social media sites, as an additional means of disclosing public information to investors, the media and others interested in the Company. • Facebook ( https://www.facebook.com/The-Cronos-Group-419168411987225 ); • X (f.k.a. Twitter) ( https://twitter.com/cronosgroup ); and • LinkedIn ( https://www.linkedin.com/company/cronosgroupcron/ ).
From time to time, Cronos may use its website, as well as the following social media sites, as an additional means of disclosing public information to investors, the media and others interested in the Company. • Facebook ( https://www.facebook.com/The-Cronos-Group-419168411987225 ); • X (f.k.a. Twitter) ( https://x.com/cronosgroup ); and • LinkedIn ( https://www.linkedin.com/company/cronosgroupcron/ ).
The Investor Rights Agreement also provides that, subject to certain exceptions, for so long as Altria is entitled to designate one or more Altria Nominees, we agree to appoint to each committee established by the Board such number of Altria Nominees that represents Altria’s proportionate share of the number of directors comprising the applicable Board committee (rounded up to the next whole number) based on the percentage of our issued and outstanding common shares beneficially owned by the Altria Group at the relevant time.
The Investor Rights Agreement also provides that, subject to certain exceptions, for so long as Altria is entitled to designate one or more Altria Nominees, Cronos agrees to appoint to each committee established by the Board such number of Altria Nominees that represents Altria’s proportionate share of the number of directors comprising the applicable Board committee (rounded up to the next whole number) based on the percentage of Cronos’ issued and outstanding common shares beneficially owned by the Altria Group at the relevant time.
We also provide access without charge to all of our SEC filings, including copies of this Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as Section 16 reports on Forms 3, 4 or 5, as soon as reasonably practicable after filing or furnishing, on our website located at https://thecronosgroup.com.
Cronos also provides access without charge to all of its SEC filings, including copies of this Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as Section 16 reports on Forms 3, 4 or 5, as soon as reasonably practicable after filing or furnishing, on its website located at https://thecronosgroup.com.
However, a patchwork of regulatory frameworks and federal regulations in these various regions also affects our ability to compete in emerging markets as evolving regulations and federal frameworks have the potential to affect all areas of our business.
However, a patchwork of regulatory frameworks and regulations in these various regions also affects the Company’s ability to compete in emerging markets as evolving regulations and frameworks have the potential to affect all areas of the business.
We sell these products to the various cannabis control authorities under supply agreements that are subject to terms that allow for renegotiation of sale prices and termination at the election of the applicable cannabis control authority.
These products are sold to the various cannabis control authorities under supply agreements that are subject to terms that allow for renegotiation of sale prices and termination at the election of the applicable cannabis control authority.
The Cannabis Act requires the federal government to conduct a review of the Cannabis Act after three years, which commenced in September 2022 .
The Cannabis Act required the federal government to conduct a review of the Cannabis Act after three years, which commenced in September 2022.
The Petitioners claim that the procedure and requirements for other licenses (e.g., for cultivation or production), granted by the Yakar, are unreasonably more stringent than those of the Constructive License.
The Petitioners claim that the procedure and requirements for other licenses (e.g., for cultivation or production) granted by the Yakar are unreasonably more stringent than those required for Constructive Licenses.
Our strategic partners are responsible for compliance with import laws and local regulatory requirements (including laws related to distribution of medical products) in jurisdictions in which they operate.
The Company’s strategic partners are responsible for compliance with import laws and local regulatory requirements (including laws related to distribution of medical products) in jurisdictions in which they operate.
All references to our website are inactive references, are for informational purposes only and are not intended to incorporate any information from or referenced on our website into this Annual Report.
All references to Cronos’ website are inactive references, are for informational purposes only and are not intended to incorporate any information from or referenced on its website into this Annual Report.
Our compensation program is designed to attract, motivate and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our shareholders.
The Company’s compensation program is designed to attract, motivate and reward talented individuals who possess the skills necessary to support Cronos’ business objectives, assist in the achievement of the strategic goals and create long-term value for Cronos shareholders.
We plan to continue to develop a global supply chain, which will employ a combination of wholly-owned production facilities, third party suppliers and global production partnerships, all of which will support the manufacturing of cannabinoid-based consumer goods. Canadian Supply Chain • Peace Naturals Campus. The Peace Naturals Campus is licensed for cannabis production and the manufacturing of certain cannabis products.
The Company plans to continue to develop a global supply chain, which will employ a combination of wholly-owned production facilities, third party suppliers and global production partnerships, all of which will support the manufacturing of cannabinoid-based consumer goods. • Peace Naturals Campus. The Peace Naturals Campus is licensed for cannabis production and the manufacturing of certain cannabis products.
The services under the Commercial Arrangements are provided on customary terms and for a services fee payable by us that is equal to Altria’s reasonably allocated costs plus 5%. Protection of Intangible Assets The ownership and protection of our intellectual property rights is a significant aspect of our future success.
The services under the Commercial Arrangements are provided on customary terms and for a services fee payable by Cronos that is equal to Altria’s reasonably allocated costs plus 5%. Protection of Intangible Assets The ownership and protection of Cronos’ intellectual property rights is a significant aspect of its future success.
Copies of this Annual Report may be obtained on request without charge from our Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004.
Copies of this Annual Report may be obtained on request without charge from the Company’s Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004.
In addition, the Investor Rights Agreement provides Altria with the right to require us to include our common shares held by Altria in any proposed distribution of common shares in Canada and/or the U.S. by us for our own account.
In addition, the Investor Rights Agreement provides Altria with the right to require Cronos to include its common shares held by Altria in any proposed distribution of common shares in Canada and/or the U.S. by Cronos for its own account.
Board Representation The Investor Rights Agreement provides that, for so long as Altria and certain of its affiliates (the “Altria Group”) continue to beneficially own at least 40% of our issued and outstanding common shares and the size of our board of directors (the “Board”) is seven directors, we agree to nominate for election as directors to the Board four individuals designated by Altria (the “Altria Nominees”).
Board Representation The Investor Rights Agreement provides that, for so long as Altria and certain of its affiliates (the “Altria Group”) continue to beneficially own at least 40% of Cronos’ issued and outstanding common shares and the size of Cronos’ board of directors (the “Board”) is seven directors, Cronos agrees to nominate for election as directors to the Board four individuals designated by Altria (the “Altria Nominees”).
We seek to protect our intellectual property by strategically seeking and obtaining registered protection where appropriate, developing and implementing standard operating procedures to protect inventions, germplasm, trade secrets, technical know-how and proprietary information and entering into agreements with parties that have access to our inventions, germplasm, trade secrets, technical know-how and proprietary information, such as our partners, collaborators, employees and consultants, to protect confidentiality and ownership.
Cronos seeks to protect its intellectual property by strategically seeking and obtaining registered protection where appropriate, developing and implementing standard operating procedures to protect inventions, germplasm, trade secrets, technical know-how and proprietary information and entering into agreements with parties that have access to its inventions, germplasm, trade secrets, technical know-how and proprietary information, such as its partners, collaborators, employees and consultants, to protect confidentiality and ownership.
If a business activity in which we engage in any jurisdiction is determined to be illegal, we could be subject to fines, penalties, reputational harm, delisting from securities exchanges and material civil, criminal and regulatory litigation and proceedings or be enjoined from doing business in the applicable jurisdiction.
If a business activity in which Cronos engages in any jurisdiction is determined to be illegal, the Company could be subject to fines, penalties, reputational harm, delisting from securities exchanges and material civil, criminal and regulatory litigation and proceedings or be enjoined from doing business in the applicable jurisdiction.
Within the time period required by the SEC, we will post on our website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer.
Within the time period required by the SEC, the Company will post on its website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer.
Licenses to cultivate, produce, possess and use cannabis for medical or research purposes in Israel are granted by the Israel Medical Cannabis Agency within the Israeli Ministry of Health (the “Yakar” and the “Israeli MOH,” respectively).
Licenses to cultivate, produce, possess and use cannabis for medical or research purposes in Israel are granted by the Israel Medical Cannabis Agency (the “Yakar”) within the Israeli Ministry of Health (the “Israeli MOH”).
Pharmacy Ltd., collectively, “Cronos Israel”). We hold a 70% equity interest in the cultivation company and a 90% equity interest in each of the manufacturing, distribution and pharmacy companies. (iii) A strategic joint venture with a group of investors led by Bert Mucci (the “Greenhouse Partners”), a Canadian large-scale greenhouse operator.
Pharmacy Ltd.), collectively, “Cronos Israel.” The Company holds a 70% equity interest in the cultivation company and a 90% equity interest in each of the manufacturing, distribution and pharmacy companies. (iii) A strategic joint venture with a group of investors led by Bert Mucci (the “Greenhouse Partners”), a Canadian large-scale greenhouse operator.
In order to compete and succeed in our highly competitive and rapidly evolving industry, it is crucial that we continue to attract, develop, motivate and retain skilled, talented and passionate employees. The Company’s people strategy seeks to build a winning team and to foster a community where everyone feels included and empowered to do their best work.
In order to compete and succeed in a highly competitive and rapidly evolving industry, it is crucial that Cronos continue to attract, develop, motivate and retain skilled, talented and passionate employees. The Company’s people strategy seeks to build a winning team and to foster a community of mission-driven people, where everyone feels empowered to do their best work.
We provide our employees and their families with access to a variety of health and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health status.
Cronos provides employees and their families with access to a variety of health and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health status.
The public may obtain any document that we file with or furnish to the SEC from the SEC’s Electronic Document Gathering, Analysis, and Retrieval system, which can be accessed at www.sec.gov , or via the System for Electronic Document Analysis and Retrieval Plus, which can be accessed at www.sedarplus.com , as well as from commercial document retrieval services.
The public may obtain any document filed with or furnish to the SEC from the SEC’s Electronic Document Gathering, Analysis, and Retrieval system, which can be accessed at www.sec.gov , or via the System for Electronic Data Analysis and Retrieval, which can be accessed at www.sedarplus.com , as well as from commercial document retrieval services.
If regulatory authorities are delayed in, or fail to, effectively restrict the sale and distribution of these non-compliant cannabis products, such regulatory non-compliance by our competitors may have adverse effects on our business and the perception of cannabis use. Competitive Conditions Outside of Canada We face competition when entering new markets.
If regulatory authorities are delayed in, or fail to, effectively restrict the sale and distribution of these non-compliant cannabis products, such regulatory non-compliance by our competitors may have adverse effects on Cronos’ business and the perception of cannabis use. 9 Table of Contents Competitive Conditions Outside of Canada Cronos faces competition when entering new markets.
Federal Regime The Cannabis Act provides a licensing and permitting scheme for, among other things, the cultivation, processing, testing, packaging, labeling, distribution, sale, possession and disposal of adult-use cannabis, implemented by regulations promulgated under the Cannabis Act.
Regulatory Framework in Canada Federal Regime The Cannabis Act provides a licensing and permitting scheme for, among other things, the cultivation, processing, testing, packaging, labeling, distribution, sale, possession and disposal of adult-use cannabis, implemented by regulations promulgated under the Cannabis Act (the “Cannabis Regulations”).
These regulations and licensing regimes vary by jurisdiction and we, our joint venture partners, strategic investments and strategic partners spend significant time, effort and money to comply with the applicable requirements. We seek to comply with export laws in connection with distributing our products in other jurisdictions by obtaining export permits from Health Canada.
These regulations and licensing regimes vary by jurisdiction and the Company, its joint venture partners, strategic investments and strategic partners spend significant time, effort and money to comply with the applicable requirements. The Company seeks to comply with export laws in connection with distributing Cronos products in other jurisdictions by obtaining export permits from Health Canada.
Joint Venture Jurisdiction Ownership Interest (i) Cronos Israel (ii) Israel 70%/90% Cronos GrowCo (iii) Canada 50% (i) We define ownership interest as the proportionate share of net income to which we are entitled; equity interest may differ from ownership interest shown above.
Joint Venture Jurisdiction Ownership Interest (i) Cronos Israel (ii) Israel 70%/90% Cronos GrowCo (iii) Canada 50% (i) The Company defines ownership interest as the proportionate share of net income to which the Company is entitled; equity interest may differ from ownership interest shown above.
We believe we are positioned to enter certain markets in Europe in a meaningful way while continuing to operate and penetrate the markets we currently serve, such as in Israel and Germany, due to our strong capitalization resulting from the Altria Investment, extensive experience and expertise in the highly regulated cannabis industry in Canada, which can be leveraged when entering new markets or growing existing operations, and strong partnerships with local distributors.
Cronos believes it is positioned to enter certain markets in Europe in a meaningful way while continuing to operate and penetrate the markets in which it currently participates, such as in Israel, Germany and the UK, due to the strong capitalization resulting from the Altria Investment, extensive experience and expertise in the highly regulated cannabis industry in Canada, which can be leveraged when entering new markets or growing existing operations, and strong partnerships with local distributors.
Schedule I Cannabis-Related Activities Though a number of states in the U.S. have authorized the cultivation, distribution or possession of U.S. Schedule I cannabis and U.S. Schedule I cannabis containing products to various degrees and subject to various requirements or conditions, U.S. Schedule I cannabis continues to be a Schedule I controlled substance under the U.S.
Schedule I Cannabis-Related Activities Although several states in the U.S. have authorized the cultivation, distribution or possession of U.S. Schedule I cannabis and U.S. Schedule I cannabis containing products to various degrees and subject to various requirements or conditions, U.S. Schedule I cannabis continues to be a Schedule I controlled substance under the U.S. Controlled Substances Act (the “CSA”).
Controlled Substances Act (the “CSA”). Therefore, the cultivation, manufacture, distribution and possession of U.S. Schedule I cannabis violates federal law in the U.S. unless a U.S. federal agency, such as the DEA, grants a registration for a specific activity, such as research, with U.S. Schedule I cannabis. We do not engage in any activities related to U.S.
Therefore, the cultivation, manufacture, distribution and possession of U.S. Schedule I cannabis violates federal law in the U.S. unless a U.S. federal agency, such as the DEA, grants a registration for a specific activity, such as research, with U.S. Schedule I cannabis. Cronos does not engage in any activities related to U.S. Schedule I cannabis in the U.S.
However, a rapidly evolving and stringent federal regulatory framework affects all areas of our business. See “ —Regulatory Framework in Canada ” for further information on the regulatory framework applicable to our Canadian business. We also face competition from illegal market participants that are unlicensed and unregulated.
However, an evolving and stringent federal regulatory framework affects all areas of the business. See “ Business—Regulatory Framework in Canada ” for further information on the regulatory framework applicable to the Canadian business. Cronos also faces competition from illegal market participants that are unlicensed and unregulated.
This guidance recommends that license holders apply the regulatory controls currently applicable to THC to all other cannabinoids that Health Canada defines as “intoxicating cannabinoids” in order to minimize the risks of accidental consumption, overconsumption and adverse effects.
Health Canada defines “intoxicating cannabinoids” as cannabinoids that bind to and activate the type 1 cannabinoid receptor (“CB1 receptor”). This guidance recommends that license holders apply the regulatory controls currently applicable to THC to all other cannabinoids that Health Canada defines as “intoxicating cannabinoids” in order to minimize the risks of accidental consumption, overconsumption and adverse effects.
For example, the Société Quebécoise du Cannabis (the “SQDC”), the exclusive distributor of cannabis in the province and the sole retail and online vendor in Québec, does not permit cannabis vaporizers or other high THC non-edible cannabis products to be sold through its channels.
For example, the Société Québécoise du Cannabis (the “SQDC”), the exclusive distributor of cannabis in the province of Québec and the sole retail and online vendor in Québec, does not permit non-edible cannabis products exceeding 30% THC to be sold through its channels.
See “ Risk Factors—Risks Relating to Operations in Israel ” for risks to the safety, health and well-being of our employees in Israel due to the Israel-Hamas War. Employee Engagement, Development and Training .
See “ Risk Factors—Risks Relating to Operations in Israel ” for risks to the safety, health and well-being of employees in Israel due to the Middle East Conflict. Employee Engagement, Development and Training .
Licenses and Regulatory Framework in Other Jurisdictions We and our joint venture partners, strategic investments and strategic partners are subject to comprehensive and evolving regulations in each jurisdiction in which we and they operate. All aspects of the production, manufacture and distribution of cannabis products are 15 T able of Contents regulated and subject to licensing regimes.
Licenses and Regulatory Framework in Other Jurisdictions Cronos and its joint venture partners, strategic investments and strategic partners are subject to comprehensive and evolving regulations in each jurisdiction in which they operate. All aspects of the production, manufacture and distribution of cannabis products 14 Table of Contents are regulated and subject to licensing regimes.
Altria Strategic Investment Altria Investment and Investor Rights Agreement As of December 31, 2023, Altria beneficially owned 41.1% of our common shares and had the right to acquire additional common shares under its pre-emptive and top-up rights as discussed under “ Pre-Emptive Rights and Top-Up Rights ” below.
Altria Strategic Investment Altria Investment and Investor Rights Agreement As of December 31, 2024, Altria beneficially owned 40.9% of Cronos’ common shares and had the right to acquire additional common shares under its pre-emptive and top-up rights as discussed under “ Pre-Emptive Rights and Top-Up Rights ” below.
We believe we offer competitive compensation and benefits in each of our locations, including long-term equity awards to eligible employees under our 2020 Omnibus Equity Incentive Plan to reward and retain talented individuals and align employee and shareholder interests. Safety, Health and Well-being . The safety, health and well-being of our employees are paramount to the Company.
The Company believes it offers competitive compensation and benefits in each of its locations, including long-term equity awards to eligible employees under its 2020 Omnibus Equity Incentive Plan to reward and retain talented individuals and align employee and shareholder interests. Safety, Health and Well-being . The safety, health and well-being of employees is paramount to the Company.
The principles in the Cronos Marketing Code apply to all marketing activities of all Cronos brands globally and are communicated to all business partners in any work they do on the Company’s behalf. The Marketing Code represents Cronos’ commitment to responsible marketing standards.
The principles in the Cronos Marketing Code apply to all marketing activities of all Cronos brands globally and the Company strives to communicate these principles to all business partners as part of any work they do on the Company’s behalf. The Marketing Code represents Cronos’ commitment to responsible marketing standards.
The price per common share to be paid by Altria pursuant to the exercise of its top-up rights will be, subject to certain limited exceptions, the volume-weighted average price of our common shares on the TSX for the 10 full trading days preceding such exercise by Altria; provided that the price per common share to be paid by Altria pursuant to the exercise of its top-up rights in connection with the issuance of common shares pursuant to the exercise of options or warrants that were outstanding on the date of closing of the Altria Investment will be C$16.25 per common share without any set off, counterclaim, deduction or withholding. 11 T able of Contents Open Market Purchases The Altria Group is permitted to acquire our common shares in the open market at any time and in any amount.
The price per common share to be paid by Altria pursuant to the exercise of its top-up rights will be, subject to certain limited exceptions, the volume-weighted average price of Cronos common shares on the TSX for the 10 full trading days preceding such exercise by Altria; provided that the price per common share to be paid by Altria pursuant to the exercise of its top-up rights in connection with the issuance of common shares pursuant to the exercise of options or warrants that were outstanding on the date of closing of the Altria Investment will be C$16.25 per common share without any set off, counterclaim, deduction or withholding.
We currently sell dried flower, pre-rolls, vaporizers and edibles through our core adult-use brands, Spinach ® and Lord Jones ® , to cannabis control authorities in all provinces of Canada and the Yukon territory, except Saskatchewan, where we sell to private-sector retailers, subject to the relevant province’s or territory’s product or other restrictions and requirements.
Cronos currently sells dried flower, pre-rolls, vaporizers edibles, and tinctures through its core adult-use brands, Spinach ® and Lord Jones ® , to cannabis control authorities in all provinces of Canada and the Yukon territory, except Saskatchewan, where the Company sells to private-sector retailers, subject to the relevant provincial or territorial product or other restrictions and requirements.
Business Segments Beginning in the second quarter of 2023, following the exit of our U.S. operations, Cronos is reporting through one consolidated segment, which includes operations in both Canada and Israel. In Canada, Cronos operates two wholly owned license holders under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc.
Organizational Realignments Beginning in the second quarter of 2023, following the exit of its U.S. operations, Cronos began reporting through one consolidated segment, which includes operations in both Canada and Israel. In Canada, Cronos operates one wholly owned license holder under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc.
Approval Rights The Investor Rights Agreement also grants Altria, until the Altria Group beneficially owns less than 10% of our issued and outstanding common shares, approval rights over certain transactions that may be undertaken by us.
Approval Rights The Investor Rights Agreement also grants Altria, until the Altria Group beneficially owns less than 10% of Cronos’ issued and outstanding common shares, approval rights over certain transactions that the Company may undertake.
We consolidate the financial results of Cronos Israel and account for our other joint ventures under the equity method of accounting. See Note 1 “ Background, Basis of Presentation, and Summary of Significant Accounting Policies” and Note 4 “ Investments ” to our consolidated financial statements in Item 8 of this Annual Report.
The Company consolidates the financial results of Cronos Israel and Cronos GrowCo and accounts for other joint ventures under the equity method of accounting. See Note 1 “ Background, Basis of Presentation, and Summary of Significant Accounting Policies” and Note 5 “ Investments ” to its consolidated financial statements in Item 8 of this Annual Report.
It is possible that certain information we post on our website or these social media sites could be deemed to be material information, and we encourage investors, the media and others interested in the Company to review the business and financial information we or our officers post on our website or these social media sites.
It is possible that certain information on Cronos’ website or these social media sites could be deemed to be material information. Investors, the media and others interested in the Company should review the business and financial information posted on the Company’s website or these social media sites.
In the ordinary course of our business, we enter into spot market purchase agreements and supply agreements with suppliers of dried flower and other cannabis products. Our supply agreements, for the most part, do not obligate us to purchase minimum quantities of products and generally contain provisions permitting cancellation of orders or termination on notice.
In the ordinary course of business, the Company enters into spot market purchase agreements and supply agreements with suppliers of dried flower and other cannabis products to supply its global markets. These supply agreements, for the most part, do not oblige Cronos to purchase minimum quantities of products and generally contain provisions permitting cancellation of orders or termination on notice.
On January 5, 2023, the District Court in Jerusalem ordered the Israeli MOH to stop the issuance of Constructive Licenses for 60 days, and to formulate a clear policy regarding the issuance of such Constructive Licenses. On February 12, 2023, the director general of the Yakar published a decision regarding the Constructive Licenses, in response to the District Court’s order.
On January 5, 2023, the District Court in Jerusalem ordered the Israeli MOH to stop the issuance of Constructive Licenses for 60 days, and to formulate a clear policy regarding the issuance of such Constructive Licenses.
As these illegal market participants do not comply with the regulations governing the cannabis industry, their operations may also have significantly lower costs.
As these illegal market participants do not comply with the regulations governing the cannabis industry, their operations may also have significantly lower costs and their products may be more easily accessible by consumers.
By leveraging operational, manufacturing and regulatory expertise, quality standards and procedures and intellectual property, we believe that we are well-positioned to effectively access these markets.
By leveraging operational, manufacturing and regulatory expertise, quality standards and procedures and intellectual property, the Company is well-positioned to effectively access these markets.
We seek to foster a culture of employee learning, innovation and a drive to succeed through a talent development strategy 12 T able of Contents that adapts to changing business needs. Management is an active enabler of our people strategy as we seek to recruit, retain and engage top talent that will maximize our business performance.
The Company seeks to foster a culture of employee learning, innovation and a drive to succeed through a talent development strategy that adapts to changing business needs. Management is an active enabler of the people strategy to recruit, retain and engage talent that will maximize business performance.
Employees are enabled to succeed through our communicated behaviors, development training opportunities, our performance management program and pay for performance philosophy, and using their voice in our employee engagement survey. Diversity, Equity and Inclusion and Ethical Business Practices .
Employees are enabled to succeed through the Company’s communicated behaviors, development training opportunities, performance management program and pay for performance philosophy, and using their voice in its employee engagement survey. 12 Table of Contents Inclusion, Belonging and Ethical Business Practices .
Currently, we rely on trademarks, patents, copyrights, trade secrets, technical know-how and proprietary information.
Currently, the Company relies on trademarks, patents, copyrights, trade secrets, technical know-how and proprietary information.
In Europe, trademarks cannot be obtained for products that are “contrary to public policy or accepted principles of morality.” Accordingly, our ability to obtain intellectual property rights and enforce intellectual property rights against third-party uses of similar trademarks may be limited in certain jurisdictions.
In the EU, trademarks cannot be obtained for products that are “contrary to public policy or accepted principles of morality.” Accordingly, the Company’s ability to obtain intellectual property rights and enforce intellectual property rights against third-party uses of similar trademarks may be limited in certain jurisdictions. Human Capital Resources Cronos employees are critical in achieving its mission.
Available Information We are subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance with the Exchange Act, we also file reports with and furnish other information to the SEC.
Available Information Cronos is subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance with the Exchange Act, the Company files reports with, and furnishes other information to, the SEC.
Registration Rights The Investor Rights Agreement provides Altria with the right, subject to certain limitations and to the extent permitted by applicable law, to require us to use reasonable commercial efforts to file a prospectus under applicable securities laws and/or a registration statement, qualifying our common shares held by Altria for distribution in Canada and/or the U.S.
Open Market Purchases The Altria Group is permitted to acquire Cronos common shares in the open market at any time and in any amount. 11 Table of Contents Registration Rights The Investor Rights Agreement provides Altria with the right, subject to certain limitations and to the extent permitted by applicable law, to require Cronos to use reasonable commercial efforts to file a prospectus under applicable securities laws and/or a registration statement, qualifying Cronos common shares held by Altria for distribution in Canada and/or the U.S.
In June 2022, 11 cannabis manufacturers (including Cronos Israel G.S Manufacturing Ltd.) (the “Petitioners”) filed an administrative petition to the District Court in Jerusalem regarding the Yakar’s decision to issue a constructive license (i.e., a license for dealing with medical cannabis, without a direct contact with the drug, such as brokering medical cannabis transactions) (the “Constructive License”).
Constructive Licenses In June 2022, 11 cannabis manufacturers (including a subsidiary of the Company) (the “Petitioners”) filed an administrative petition to the District Court in Jerusalem regarding the Yakar’s decision to issue constructive licenses (i.e., licenses for dealing with medical cannabis, without direct contact with the product, such as brokering medical cannabis transactions) (the “Constructive Licenses”).
The principal factors on which we compete are product quality, innovation, intellectual property, brand recognition, price and physician familiarity.
The principal factors on which the Company competes are product quality, cost of production, innovation, intellectual property, brand recognition, price and physician familiarity.
As of December 31, 2023 we had 356 full-time employees. Of our full-time employees, 231 were in Canada, 49 were in the U.S., and 76 were in Israel. None of our employees are represented by a labor union or covered by a collective bargaining agreement. Compensation and Benefits .
As of December 31, 2024 Cronos had 459 full-time employees. Of the full-time employees, 356 were in Canada, 45 were in the U.S., and 58 were in Israel. No employees are represented by a labor union or covered by a collective bargaining agreement. Compensation and Benefits .
In September 2023, Cronos established a strategic partnership with Cansativa, a leading German cannabis company, to distribute PEACE NATURALS ® branded products along with other white-labeled cannabis products in the German medical market • Australia. We distribute cannabis products in Australia through a distribution relationship with Vitura (formerly known as Cronos Australia Limited).
In September 2023, Cronos established a strategic partnership with Cansativa, a leading German cannabis company, to distribute PEACE NATURALS ® branded products along with other white-labeled cannabis products in the German medical market. • United Kingdom.
In the fourth quarter of 2023, Cronos announced that its wholly owned subsidiary entered into an agreement with Future Farmco, a vertical farming company, for the sale and leaseback of the Peace Naturals Campus, subject to the terms and conditions set forth therein.
In the fourth quarter of 2023, Cronos announced that its wholly owned subsidiary entered into an agreement for the sale and leaseback of the Peace Naturals Campus, subject to the terms and conditions set forth therein. That agreement was subsequently terminated pursuant to its terms during the second quarter of 2024.
Cronos believes that those below the legal age of consumption should not be targeted in an adult-use cannabis market. Cronos recognizes there is a clear need for standards.
Cronos Marketing Code In 2021, Cronos released its Marketing Code, which is designed to responsibly move the emerging cannabis industry forward. Cronos believes that those below the legal age of consumption should not be targeted in an adult-use cannabis market. Cronos recognizes there is a clear need for standards.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary • Certain of our subsidiaries and joint ventures have limited operating histories and our growth strategy may not be successful. • We may not be able to achieve or maintain profitability and may continue to incur losses in the future. • Our products are new; there is limited long-term data with respect to the effects and the safety of our products, which is subject to conflicting medical data; and our products have been and may be in the future subject to recalls. • The production and distribution of our products is subject to disruption, the risks of an agricultural business and the risk third-party suppliers and distributors may not perform their obligations to us. • Intellectual property is key to our growth strategy, and we may be unable to obtain or enforce our intellectual property rights. • Our entry into new markets is subject to risks normally associated with the conduct of business in foreign countries. • We are subject to extensive regulation and licensing and may not successfully comply with all applicable laws and regulations. • Our businesses face highly competitive conditions. • Altria has significant influence over us. • The price of our common shares has been and may continue to be highly volatile. 16 T able of Contents • We have had two restatements and seven material weaknesses in our internal control over financial reporting over the last five years. • We are subject to other risks generally applicable to our industry and the conduct of our businesses.
Biggest changeRisk Factor Summary • We and certain of our joint ventures have limited operating histories and our growth strategy may not be successful. • We may not be able to achieve or maintain profitability and may continue to incur losses in the future. • We may not be able to successfully manage our growth. • Our products are new; there is limited long-term data with respect to the effects and the safety of our products, which is subject to conflicting medical data; and our products have been and may be in the future subject to recalls. • The production and distribution of our products is subject to disruption, the risks of an agricultural business and the risk third-party suppliers and distributors may not perform their obligations to us. • We may be unable to obtain adequate supplies of raw materials in a timely manner and at commercially reasonable prices. • Intellectual property is key to our growth strategy, and we may be unable to obtain or enforce our intellectual property rights. • Our entry into new markets is subject to risks normally associated with the conduct of business in foreign countries. • We are subject to extensive regulation and licensing and may not successfully comply with all applicable laws and regulations. 15 Table of Contents • Our businesses face highly competitive conditions, including from the illegal cannabis market and licensed cannabis competitors that fail to comply with applicable regulations. • Altria has significant influence over us. • The price of our common shares has been and may continue to be highly volatile. • We have had two restatements and seven material weaknesses in our internal control over financial reporting over the last six years. • The adult-use cannabis market in Canada has in the past been and may in the future become oversupplied. • Our business may be negatively impacted by the Middle East Conflict or the imposition of an anti-dumping duty on our imports into Israel. • Any rescheduling of U.S.
Previously unknown adverse reactions resulting from human consumption of cannabis or U.S. hemp products alone or in combination with other medications or substances could occur as described above under “ — There is limited long-term data with respect to the efficacy and side effects of cannabis, U.S. hemp and cannabinoids and future clinical research studies on the effects of cannabis, U.S. hemp and cannabinoids may lead to conclusions that dispute or conflict with our understanding and belief regarding their benefits, viability, safety, efficacy, dosing and social acceptance. ” We have been, and may in the future be, subject to product liability claims that include, among others, our products caused injury or illness, incorrect labeling, inadequate instructions for use or inadequate warnings concerning possible side effects or interactions with other substances.
Previously unknown adverse reactions resulting from human consumption of cannabis or U.S. hemp products alone or in combination with other medications or substances could occur as described above under “ — There is limited long-term data with respect to the efficacy and side effects of cannabis, and cannabinoids and future clinical research studies on the effects of cannabis, and cannabinoids may lead to conclusions that dispute or conflict with our understanding and belief regarding their benefits, viability, safety, efficacy, dosing and social acceptance. ” We have been, and may in the future be, subject to product liability claims that include, among others, our products caused injury or illness, incorrect labeling, inadequate instructions for use or inadequate warnings concerning possible side effects or interactions with other substances.
A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our consumers generally, and could have a material adverse effect on our business, financial condition and results of operations.
A product liability claim or regulatory action against us could result in increased costs, adversely affect our reputation with our consumers generally, and have a material adverse effect on our business, financial condition and results of operations.
Any breach of the security measures and other facility requirements, including any failure to comply with recommendations or requirements arising from inspections by regulatory agencies, could also have an impact on our ability to continue operating under our licenses or the prospect of renewing our licenses or could result in a revocation of our licenses.
Any breach of the security measures and other facility requirements, including any failure to comply with recommendations or requirements arising from inspections by regulatory agencies, could also have an impact on our ability to continue operating under our licenses or the prospect of renewing our licenses or result in a revocation of our licenses.
Policing the unauthorized use of our current or future intellectual property rights is difficult, expensive, time-consuming and unpredictable, as is enforcing these rights against unauthorized use by others. Identifying unauthorized use of intellectual property rights is difficult.
Identifying and policing the unauthorized use of our current or future intellectual property rights is difficult, expensive, time-consuming and unpredictable, as is enforcing these rights against unauthorized use by others.
These events could result in physical damage to one or more of our or our joint ventures’ properties, increases in fuel or other energy prices, the temporary or permanent closure of one or more of our or our joint ventures’ facilities, the temporary lack of an adequate workforce in a market, the temporary or long-term disruption in the supply of products from suppliers, the temporary disruption in the transport of goods, delay in the delivery of goods to our or our joint ventures’ facilities, and disruption to our information systems.
These events could result in physical damage to one or more of our or our joint ventures’ properties, increases in fuel or other energy prices, the temporary or permanent closure of one or more of our or our joint ventures’ facilities, the temporary or long-term lack of an adequate workforce in a market, the temporary or long-term disruption in the supply of products from suppliers, the temporary disruption in the transport of goods, delay in the delivery of goods to our or our joint ventures’ facilities, and disruption to our information systems.
Although our current operational production facilities, and those of our joint venture partners and third-party suppliers, grow products indoors (including in greenhouses) under climate-controlled conditions and we and our joint venture partners and third-party suppliers carefully monitor the growing conditions with trained personnel, there can be no assurance that natural elements will not have a material adverse effect on the production of our products.
Although our current operational production facilities, and those of our joint venture partners and a majority of our third-party suppliers, grow products indoors (including in greenhouses) under climate-controlled conditions and we and our joint venture partners and third-party suppliers carefully monitor the growing conditions with trained personnel, there can be no assurance that natural elements will not have a material adverse effect on the production of our products.
Exchange rates for currencies of the countries in which we operate may fluctuate in relation to the U.S. dollar, and such fluctuations may have a material adverse effect on our earnings or assets when translating foreign currency into U.S. dollars. We do not hedge our exchange rate so any changes in exchange rates will directly affect our earnings.
Exchange rates for currencies of the countries in which we operate may fluctuate in relation to the U.S. dollar, and such fluctuations may have a material adverse effect on our earnings or assets when translating foreign currency into U.S. dollars. We do not hedge our exchange rate exposure so any changes in exchange rates will directly affect our earnings.
In accordance with applicable laws and regulations, our directors are required to act honestly, in good faith and in our best interests. Risks Relating to Our Common Shares It is not anticipated that any dividend will be paid to holders of our common shares for the foreseeable future. No dividends on our common shares have been paid to date.
In accordance with applicable laws and regulations, our directors are required to act honestly, in good faith and in our best interests. Risks Relating to Our Common Shares It is not anticipated that any dividend will be paid to holders of our common shares in the foreseeable future. No dividends on our common shares have been paid to date.
Further, from time to time we may reevaluate and discontinue our participation in such jurisdictions, which could result in write-offs, asset, intangible asset and goodwill impairments, and could otherwise adversely affect our business, financial condition and results of operations. We will also face new operational risks and challenges as we enter into new markets.
Further, from time to time we may reevaluate and discontinue our participation in such jurisdictions, which could result in write-offs and asset, intangible asset and goodwill impairments, and could otherwise adversely affect our business, financial condition and results of operations. We also face new operational risks and challenges as we enter into new markets.
For a discussion of previous write downs of indefinite-lived intangible assets and goodwill, see Note 7 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. Risks Relating to Operations in Israel Conditions in Israel could materially and adversely affect our business, financial condition, and results of operations.
For a discussion of previous write downs of indefinite-lived intangible assets and goodwill, see Note 8 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. Risks Relating to Operations in Israel Conditions in Israel could materially and adversely affect our business, financial condition, and results of operations.
Although we believe Peace Naturals, Cronos Fermentation and Cronos GrowCo will meet the requirements of the Cannabis Act for their licenses, there can be no guarantee that Health Canada will extend or renew the licenses or, if they are extended or renewed, that they will be extended or renewed on the same or similar terms or that Health Canada will not revoke the licenses.
Although we believe Peace Naturals and Cronos GrowCo will meet the requirements of the Cannabis Act for their licenses, there can be no guarantee that Health Canada will extend or renew the licenses or, if they are extended or renewed, that they will be extended or renewed on the same or similar terms or that Health Canada will not revoke the licenses.
Although our business has not been, to the date of this Annual Report, materially impacted by the ongoing military conflict in Ukraine, it is impossible to predict the extent to which our operations, or those of our suppliers and vendors, will be impacted in the short and long term, or the ways in which the conflict may impact our business.
Although our business has not been, to the date of this Annual Report, materially impacted by the ongoing military conflict in Ukraine, it is impossible to predict the extent to which our operations, or those of our suppliers and vendors, will be impacted in the long term, or the ways in which the conflict may impact our business.
If our sales forecasts and our expectations regarding market conditions, including prices, influence capital expenditure levels, inventory levels, production and supply chain capacity and operating expenses, prove to be inaccurate, this could have a material adverse effect on our business, financial condition and results of operations.
If our sales forecasts and our expectations regarding market conditions, including prices, capital expenditure levels, inventory levels, production and supply chain capacity and operating expenses, prove to be inaccurate, this could have a material adverse effect on our business, financial condition and results of operations.
We may be exposed to fluctuations of the U.S. dollar against certain other currencies, particularly the Canadian dollar and Israeli Shekel, because we publish our financial statements in U.S. dollars, while a significant portion of our assets, liabilities, revenues and costs are or will be denominated in other currencies.
We are exposed to fluctuations of the U.S. dollar against certain other currencies, particularly the Canadian dollar and Israeli Shekel, because we publish our financial statements in U.S. dollars, while a significant portion of our assets, liabilities, revenues and costs are or will be denominated in other currencies.
Furthermore, the applicable regulatory restrictions on sales and marketing activities are not always clear, may be subject to interpretation and have in the past, and may in the future, be interpreted or applied inconsistently by the applicable Canadian regulatory agencies, which have broad interpretative and enforcement discretion with respect to such activities.
Furthermore, the applicable regulatory restrictions on sales and marketing activities are not always clear, may be subject to interpretation and have in the past, and may in the future, be interpreted or applied inconsistently by the applicable regulatory agencies, which have broad interpretative and enforcement discretion with respect to such activities.
If we are unable to effectively market our products and compete for market share in Canada, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for our products, our sales and results of operations could be adversely affected.
If we are unable to effectively market our products and compete for market share in Canada and Israel, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for our products, our sales and results of operations could be adversely affected.
The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but may be substantial. In addition, the effects of the ongoing conflict could heighten any of our known risks described above. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
The extent and duration of the military conflict, sanctions and resulting market disruptions are impossible to predict, but may be substantial. In addition, the effects of the ongoing conflict could heighten any of our known risks described above. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
We also rely on third-party service providers, including cloud-based systems, for most of our information technology systems, and any data security breach at a third-party service provider could have similar effects.
We also rely on third-party service providers, including cloud-based and SaaS systems, for most of our information technology systems, and any data security breach at a third-party service provider could have similar effects.
In addition, the distribution and retail channels and applicable rules and regulations in the provinces continue to evolve, and our ability to distribute and retail cannabis products in Canada is dependent on the ability of the provinces and territories of Canada to establish licensed retail networks and outlets.
In addition, the distribution and retail channels and applicable rules and regulations in the provinces continue to evolve, and our ability to distribute and sell cannabis products in Canada is dependent on the ability of the provinces and territories of Canada to establish licensed retail networks and outlets.
Our ability to grow, process, store and sell cannabis in Canada is dependent on our licenses from Health Canada, and in particular the licenses currently held by Peace Naturals, Cronos Fermentation and Cronos GrowCo.
Our ability to grow, process, store and sell cannabis in Canada is dependent on our licenses from Health Canada, and in particular the licenses currently held by Peace Naturals and Cronos GrowCo.
The market price for our common shares has been volatile and subject to wide fluctuations and may continue to be volatile and subject to wide fluctuations in response to many factors, including: • actual or anticipated fluctuations in our results of operations; • changes in estimates of our future results of operations by us or securities research analysts; • changes in the economic performance or market valuations of other companies that investors deem comparable to us; • additions or departures of our executive officers and other key personnel; • our restating financial results twice in the last five years; • sales of additional common shares or the perception in the market that such sales might occur; • significant acquisitions or business combinations, strategic partnerships, investments, joint ventures or capital commitments by or involving us or our competitors; • increases in speculative trading activity by investors targeting publicly traded cannabis companies, which can further contribute to the volatility of the market price for our common shares if aggregate short exposure exceeds the number of our common shares available for purchase; • news reports relating to trends, concerns or competitive developments, regulatory changes or enforcement actions and other related issues in our industry or target markets; • the prospect of actual or perceived future changes to the legal and regulatory regimes that govern our products and our industries; • investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the SEC and Canadian securities regulators; • our failure to timely file our public filings with the SEC and Canadian securities regulators; • our failure to comply with the Nasdaq and TSX rules and potential trading halts or delisting notices; • reports by industry analysts, investor perceptions, and market rumors or speculation; and 44 T able of Contents • negative announcements by our customers, competitors or suppliers regarding their own performance.
The market price for our common shares has been volatile and subject to wide fluctuations and may continue to be volatile and subject to wide fluctuations in response to many factors, including: • actual or anticipated fluctuations in our results of operations; • changes in estimates of our future results of operations by us or securities research analysts; • changes in the economic performance or market valuations of other companies that investors deem comparable to us; • additions or departures of our executive officers and other key personnel; • our restating financial results twice in the last six years; • sales of additional common shares or the perception in the market that such sales might occur; • significant acquisitions or business combinations, strategic partnerships, investments, joint ventures or capital commitments by or involving us or our competitors; • increases in speculative trading activity by investors targeting publicly traded cannabis companies, which can further contribute to the volatility of the market price for our common shares if aggregate short exposure exceeds the number of our common shares available for purchase; • news reports relating to trends, concerns or competitive developments, regulatory changes or enforcement actions and other related issues in our industry or target markets; • the prospect of actual or perceived future changes to the legal and regulatory regimes that govern our products and our industries; • investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the SEC and Canadian securities regulators; • our failure to timely file our public filings with the SEC and Canadian securities regulators; • our failure to comply with the Nasdaq and TSX rules and potential trading halts or delisting notices; • reports by industry analysts, investor perceptions, and market rumors or speculation; and • negative announcements by our customers, competitors or suppliers regarding their own performance.
Litigation may also create a negative perception of our brands, which could have an adverse effect on our business, financial condition and results of operations. See Part II, Note 10(b) “ Contingencies ” to the consolidated financial statements under Item 8 of this Annual Report for a discussion of our legal proceedings. We may be subject to product liability claims.
Litigation may also create a negative perception of our brands, which could have an adverse effect on our business, financial condition and results of operations. See Part II, Note 12(b) “ Contingencies ” to the consolidated financial statements under Item 8 of this Annual Report for a discussion of our legal proceedings. We may be subject to product liability claims.
Accordingly, there are no assurances that these industries and markets will continue to exist or grow as currently estimated or anticipated, or function and evolve in a manner consistent with management’s expectations and assumptions, and a failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Accordingly, there are no assurances that these markets will continue to exist or grow as currently anticipated, or function and evolve in a manner consistent with management’s expectations and assumptions, and a failure to do so could have a material adverse effect on our business, financial condition and results of operations.
For example, Québec and Prince Edward Island do not currently permit sales of cannabis vaporizers, and Québec limits the sale of other high THC non-edible cannabis products. In April 2023, the Supreme Court of Canada affirmed the provinces’ power to enact regulations that are more restrictive than the federal regime.
For example, Prince Edward Island does not currently permit sales of cannabis vaporizers, and Québec limits the sale of other high THC non-edible cannabis products. In April 2023, the Supreme Court of Canada affirmed the provinces’ power to enact regulations that are more restrictive than the federal regime.
Until such time as we are able to deploy the cash available to us, we anticipate holding the net proceeds as cash balances in our bank accounts, investing in certificates of deposit and other instruments issued by banks or obligations of or guaranteed by the Government of Canada or any province thereof, or investing in U.S.
Until such time as we are able to deploy the cash available to us, we anticipate holding the net proceeds as cash balances in our bank accounts, investing in, among other things, certificates of deposit and other instruments issued by banks or obligations of or guaranteed by the Government of Canada or any province thereof, or investing in U.S.
Based on current business plans and financial expectations, an independent valuation analysis in respect of our assets, and the application of certain look-through rules (including to certain intercompany items and to our interests in our subsidiaries), we do not expect to be a PFIC for the taxable year ending December 31, 2024.
Based on current business plans and financial expectations, an independent valuation analysis in respect of our assets, and the application of certain look-through rules (including to certain intercompany items and to our interests in our subsidiaries), we do not expect to be a PFIC for the taxable year ending December 31, 2025.
In addition to being subject to general business risks, we need to continue to build brand awareness in these industries and markets through significant investments in our strategy, our production capacity, quality assurance and compliance with regulations. These activities may not promote our brand and products as effectively as intended, or at all.
In addition to being subject to general business risks, we need to continue to build brand awareness in these markets through significant investments in our strategy, our production capacity, quality assurance and compliance with regulations. These activities may not promote our brands and products as effectively as intended, or at all.
Some jurisdictions may never develop markets for cannabis and U.S. hemp. Many jurisdictions place restrictions on or prohibit commercial activities involving cannabis and U.S. hemp. Such restrictions or prohibitions may make it impossible or impractical for us to enter or expand our operations in such jurisdictions unless there is a change in law or regulation. For example, U.S.
Some jurisdictions may never develop markets for cannabis. Many jurisdictions place restrictions on or prohibit commercial activities involving cannabis. Such restrictions or prohibitions may make it impossible or impractical for us to enter or expand our operations in such jurisdictions unless there is a change in law or regulation. For example, U.S.
The interpretation and enforcement of such laws and regulations are uncertain and subject to change and may require substantial costs to monitor and implement compliance.
The interpretation and enforcement of such laws and regulations are uncertain and subject to change and may require substantial costs to monitor and implement compliance systems.
If our adult-use products do not achieve an adequate level of acceptance by the adult-use market, we may not generate sufficient revenue from these products, and our adult-use business may not become profitable. We are subject to liability arising from any fraudulent or illegal activity by our employees, contractors, manufacturers and consultants.
If our products do not achieve an adequate level of acceptance by the market, we may not generate sufficient revenue from these products, and our business may not become profitable. We are subject to liability arising from any fraudulent or illegal activity by our employees, contractors, manufacturers and consultants.
Additionally, our growth strategy continues to evolve as regulations governing the cannabis industry in the jurisdictions other than Canada and the U.S. in which we and our joint ventures operate become more fully developed. Interpretation of these laws, rules and regulations and their application to our operations and those of our joint ventures is ongoing.
Additionally, our growth strategy continues to evolve as regulations governing the cannabis industry in the jurisdictions other than Canada in which we and our joint ventures operate become more fully developed. Interpretation of these laws, rules and regulations and their application to our operations and those of our joint ventures is ongoing.
Under the Subscription Agreement, we have discretion in the use of net proceeds from the Altria Investment, subject to our obligation to consult with Altria, in certain circumstances, seek the approval of Altria (such approval not to be unreasonably conditioned, withheld or delayed) and certain other limitations regarding the use of net proceeds set forth in the Subscription Agreement.
Under the Subscription Agreement, we have discretion in the use of net proceeds from the Altria Investment, subject to our obligation to consult with Altria, in certain circumstances, seek the approval of Altria (such approval not to be unreasonably conditioned, withheld or delayed) and certain other limitations regarding the use of net proceeds set forth in the Subscription Agreement and the Investor Rights Agreement.
We had two restatements and seven material weaknesses in the last five years and have had significant turnover, both voluntary and involuntary, in our accounting and financial reporting functions as well as in our internal audit function. Moreover, we had a material weakness in our control environment existing as of December 31, 2022.
We had two restatements and seven material weaknesses in the last six years and have had significant turnover, both voluntary and involuntary, in our accounting and financial reporting functions as well as in our internal audit function. Moreover, we had a material weakness in our control environment existing as of December 31, 2022.
We are constrained by law in our ability to market and advertise our products. Our marketing and advertising are subject to regulation by various regulatory bodies in the jurisdictions we operate. In Canada, the development of our business and related results of operations may be hindered by applicable regulatory restrictions on sales and marketing activities.
We are constrained by law in our ability to market and advertise our products. Our marketing and advertising are subject to regulation by various regulatory bodies in the jurisdictions in which we operate. In Canada and Israel, the development of our business and related results of operations may be hindered by applicable regulatory restrictions on sales and marketing activities.
We also face competition in each jurisdiction outside Canada where we have subsidiaries, investments, joint ventures and strategic alliances with local companies that have more experience, more in-depth knowledge of local markets or applicable laws, regulations and guidelines or longer operating histories in such jurisdictions. 38 T able of Contents We are subject to certain restrictions of the TSX and Nasdaq, which may constrain our ability to expand our business internationally.
We also face competition in each jurisdiction outside Canada where we have subsidiaries, investments, joint ventures and strategic alliances with local companies that have more experience, more in-depth knowledge of local markets or applicable laws, regulations and guidelines or longer operating histories in such jurisdictions. 38 Table of Contents We are subject to certain restrictions of the TSX and Nasdaq, which may constrain our ability to expand our business internationally.
The scope of this statutory review includes, among other things, consideration of (i) the administration and operation of the Cannabis Act, (ii) the impact of the Cannabis Act on public health, (iii) the health and consumption habits of young persons, (iv) the impact of cannabis on Indigenous persons and communities and (v) the impact of cultivation of cannabis plants in a dwelling-house.
The scope of this statutory review included, among other things, consideration of (i) the administration and operation of the Cannabis Act, (ii) the impact of the Cannabis Act on public health, (iii) the health and consumption habits of young persons, (iv) the impact of cannabis on Indigenous persons and communities and (v) the impact of cultivation of cannabis plants in a dwelling-house.
We and such other cannabis producers have in the past produced and may in the future produce more cannabis than is needed to satisfy the collective demand of the Canadian medical and adult-use markets, and we may be unable to export that over-supply into other markets.
We and such other cannabis producers have in the past produced and may in the future produce more cannabis than is needed to satisfy aggregate demand of the Canadian medical and adult-use markets, and we have in the past, and may in the future, be unable to export that over-supply into other markets.
Provincial and territorial distributors may take different positions on the sale and distribution of products with various cannabinoids and may decide to ban, limit or implement new guidance on the types of cannabis products permitted for sale in each of their jurisdictions (including in response to Health Canada’s guidance on intoxicating cannabinoids) which may result in some or all of our products being viewed as non-compliant with law or non-binding policy guidance.
Provincial and territorial distributors have taken different positions on the sale and distribution of products with various cannabinoids and may decide to ban, limit or implement new guidance on the types of cannabis products permitted for sale in each of their jurisdictions (including in response to Health Canada’s guidance on intoxicating cannabinoids) which may result in some or all of our products being viewed as non-compliant with law or non-binding policy guidance.
While Nasdaq has not issued official rules specific to the cannabis or U.S. hemp industry, stock exchanges in the U.S., including Nasdaq, have historically refused to list certain U.S. Schedule I cannabis related businesses, including U.S. Schedule I cannabis retailers, that operate primarily in the U.S.
While Nasdaq has not issued official rules specific to the cannabis industry, stock exchanges in the U.S., including Nasdaq, have historically refused to list certain U.S. Schedule I cannabis related businesses, including U.S. Schedule I cannabis retailers, that operate primarily in the U.S.
Any of the foregoing could cause our products or treatments not to be commercially viable, which could have a material adverse effect on our business, financial condition and results of operations. The controversy surrounding vaporizers and vaporizer products may materially and adversely affect the market for vaporizer products and expose us to litigation and additional regulation.
Any of the foregoing could cause our products or treatments not to be commercially viable, which could have a material adverse effect on our business, financial condition and results of operations. 25 Table of Contents The controversy surrounding vaporizers and vaporizer products may materially and adversely affect the market for vaporizer products and expose us to litigation and additional regulation.
Clinical trials face many risks, including, among others: • lack of effectiveness of any formulation or delivery system during clinical trials; • discovery of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues; • slower than expected subject recruitment and enrollment rates in clinical trials; • delays or inability in manufacturing or in obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints; 24 T able of Contents • delays in obtaining regulatory authorization to commence a trial, including licenses required for obtaining and using cannabis, U.S. hemp or isolated cannabinoids for research, either before or after a trial is commenced; • unfavorable results from ongoing pre-clinical studies and clinical trials; • trial participants or investigators failing to comply with study protocols; • trial participants failing to return for post-treatment follow-up at the expected rate; • sites participating in an ongoing clinical study withdraw, requiring us to engage new sites; and • third-party clinical investigators declining to participate in our clinical studies, not performing the clinical studies on the anticipated schedule, or acting in ways inconsistent with the established investigator agreement, clinical study protocol or good clinical practices.
Clinical trials face many risks, including, among others: • lack of effectiveness of any formulation or delivery system during clinical trials; • discovery of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues; • slower than expected subject recruitment and enrollment rates in clinical trials; • delays or inability in manufacturing or in obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints; • delays in obtaining regulatory authorization to commence a trial, including licenses required for obtaining and using or isolated cannabinoids for research, either before or after a trial is commenced; • unfavorable results from ongoing pre-clinical studies and clinical trials; • trial participants or investigators failing to comply with study protocols; • trial participants failing to return for post-treatment follow-up at the expected rate; • sites participating in an ongoing clinical study withdraw, requiring us to engage new sites; and • third-party clinical investigators declining to participate in our clinical studies, not performing the clinical studies on the anticipated schedule, or acting in ways inconsistent with the established investigator agreement, clinical study protocol or good clinical practices.
Even if we are able to commercialize cultured cannabinoids, we may not be able to generate satisfactory returns on them or on the products that incorporate them, and there may not be demand for such cultured cannabinoid products.
Even if we are able to commercialize cultured cannabinoids in the future, we may not be able to generate satisfactory returns on them or on the products that incorporate them, and there may not be demand for such cultured cannabinoid products.
As a result, our products could have unexpected side effects or safety concerns, the discovery of which could lead to civil litigation, regulatory actions and even possibly criminal enforcement actions.
As a result, our products could have unexpected side effects or safety concerns, the discovery of which could lead to civil litigation, regulatory actions and even possible criminal enforcement actions.
Our supply arrangements with provincial and territorial purchasers do not contain any binding minimum purchase obligations on the part of the relevant provincial or territorial purchaser. We expect purchase orders to be primarily driven by end-consumer demand for our products and the relevant provincial, territorial or private purchaser supply at the relevant time.
Our supply arrangements with provincial and territorial purchasers do not contain any binding minimum purchase obligations on the part of the relevant provincial or territorial purchaser. 21 Table of Contents We expect purchase orders to be primarily driven by end-consumer demand for our products and the relevant provincial, territorial or private purchaser supply at the relevant time.
Furthermore, our insurers have in the past and may in the future deny us coverage, whether or not such denial is with merit, and we have in the past and may in the future need to commence litigation against such insurers, which could be time consuming and expensive and divert significant management resources, with no assurance that we will be successful in any resulting proceedings. 46 T able of Contents Tax and accounting requirements may be interpreted or changed in ways that are complex and not necessarily anticipated by us, and we may face difficulty or be unable to implement and/or comply with any such interpretations or changes.
Furthermore, our insurers have in the past and may in the future deny us coverage, whether or not such denial is with merit, and we have in the past and may in the future need to commence litigation against such insurers, which could be time consuming and expensive and divert significant management resources, with no assurance that we will be successful in any resulting proceedings. 45 Table of Contents Tax and accounting requirements may be interpreted or changed in ways that are complex and not necessarily anticipated by us, and we may face difficulty or be unable to implement and/or comply with any such interpretations or changes.
As such, the business is subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks that may create crop failures and supply interruptions for our customers.
As such, the business is subject to the risks inherent in the agricultural business, such as insects, plant diseases and other agricultural risks that may create crop failures and supply interruptions for our customers.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common shares could decrease, which might cause our trading price and trading volume to decline. General Risks We are dependent on our senior management.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common shares could decrease, which might cause our trading price and trading volume of our common shares to decline. General Risk Factors We are dependent on our senior management.
Our commercial opportunity in the adult-use market could be reduced or eliminated if our competitors produce and commercialize products for the adult-use market that, among other things, are safer, more effective, more convenient or less expensive than the products that we may produce, have greater sales, marketing and distribution support than our products, enjoy enhanced timing of market introduction and perceived effectiveness advantages over our products and receive more favorable publicity than our products.
Our commercial opportunity could be reduced or eliminated if our competitors produce and commercialize products that, among other things, are safer, more effective, more convenient or less expensive than the products that we may produce, have greater sales, marketing and distribution support than our products, enjoy enhanced timing of market introduction and perceived effectiveness advantages over our products and receive more favorable publicity than our products.
Accordingly, shareholders may not agree with the manner in which management chooses to allocate and spend the net proceeds. Our failure to apply the funds effectively could have a material adverse effect on our business, financial condition and results of operations. We have cash on hand, including short-term investments, of approximately $861 million as of December 31, 2023.
Accordingly, shareholders may not agree with the manner in which management chooses to allocate and spend the net proceeds. Our failure to apply the funds effectively could have a material adverse effect on our business, financial condition and results of operations. We have cash on hand, including short-term investments, of approximately $859 million as of December 31, 2024.
Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of U.S. hemp or cannabis in general, or our products specifically, or associating the consumption or use of U.S. hemp or cannabis with illness or other negative effects or events, could have such a material adverse effect.
Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of cannabis in general, or our products specifically, or associating the consumption or use of cannabis with illness or other negative effects or events, could have such a material adverse effect.
In addition, while statutory provisions exist in British Columbia for derivative actions to be brought in certain circumstances, the circumstances in which a derivative action may be brought, and the procedures and defenses that may be available in respect of any such action, may be different than those of shareholders of a company incorporated in the U.S. 45 T able of Contents If we are a passive foreign investment company for U.S. federal income tax purposes in any year, certain adverse tax rules could apply to U.S. holders of our common shares.
In addition, while statutory provisions exist in British Columbia for derivative actions to be brought in certain circumstances, the circumstances in which a derivative action may be brought, and the procedures and defenses that may be available in respect of any such action, may be different than those of shareholders of a company incorporated in the U.S. 44 Table of Contents If we are a passive foreign investment company for U.S. federal income tax purposes in any year, certain adverse tax rules could apply to U.S. holders of our common shares.
Furthermore, in connection with obtaining approvals from or otherwise satisfying the requests of the state regulators or applicable laws, we may be required to divest all or a portion of the PharmaCann Option, or if after the exercise of the PharmaCann Option, our shares of PharmaCann.
Furthermore, in connection 22 Table of Contents with obtaining approvals from or otherwise satisfying the requests of the state regulators or applicable laws, we may be required to divest all or a portion of the PharmaCann Option, or if after the exercise of the PharmaCann Option, our shares of PharmaCann.
In addition, if an individual with security 42 T able of Contents clearance leaves the service of the Company and we are unable to find a suitable replacement who has a security clearance required by the Cannabis Act in a timely manner, or at all, there could occur a material adverse effect on our business operations.
In addition, if an individual with security clearance leaves the service of the Company and we are unable to find a suitable replacement who has a security clearance required by the Cannabis Act in a timely manner, or at all, there could occur a material adverse effect on our business operations.
In the case of the Ginkgo Strategic Partnership, we have and will continue to obtain, pursuant to the Ginkgo Collaboration Agreement, the exclusive right to use and commercialize the key patented intellectual property related to the production of the target cannabinoids globally (referred to herein as the “Ginkgo exclusive licenses”).
In the case of the Ginkgo Strategic Partnership, we have, pursuant to the Ginkgo Collaboration Agreement, the exclusive right to use and commercialize the key patented intellectual property related to the production of the target cannabinoids globally (referred to herein as the “Ginkgo Exclusive Licenses”).
These initiatives and goals within the scope of ESG could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
These initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
Expansion into foreign jurisdictions subjects us to legal, regulatory, reputational and political risks that may be different from and additional to those that we face in jurisdictions in which we currently operate, and we may be at a disadvantage relative to competitors who are more familiar with local markets and local laws and regulations.
Expansion into foreign jurisdictions subjects us to legal, regulatory, reputational and political risks that may be different from and additional to those that we face in jurisdictions in 34 Table of Contents which we currently operate, and we may be at a disadvantage relative to competitors who are more familiar with local markets and local laws and regulations.
Furthermore, if our competitors fail to comply with applicable laws relating to sales and marketing activities with which we comply, and regulatory agencies delay or do not take enforcement action against such competitors, or take sporadic enforcement action, our ability to compete for market share and our sales and results of operations could be adversely affected.
Furthermore, if our competitors fail to comply with applicable laws relating to sales and marketing activities with which we comply, and regulatory agencies are delayed or do not take enforcement action against such competitors, or take sporadic or inconsistent enforcement action, our ability to compete for market share and our sales and results of operations could be adversely affected.
See Part II, Note 10(b) “ Contingencies ” to the consolidated financial statements under Item 8 of this Annual Report for a discussion on our legal proceedings. There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities.
See Part II, Note 12(b) “ Contingencies ” to the consolidated financial statements under Item 8 of this Annual Report for a discussion on our legal proceedings. 27 Table of Contents There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities.
Our success will depend, in part, on our ability to continue to enhance our existing technologies, develop new technology that addresses the increasing sophistication and varied views of the market, and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis.
Our success will depend, in part, on our ability to continue to grow products efficiently, enhance our existing technologies, develop new technology that addresses the increasing demands and sophistication and varied views of the market, and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis.
While our revenue has generally grown in recent years, our ability to manage and sustain revenue growth will depend on a number of factors, many of which are beyond our control, including, but not limited to, changes in laws and regulations respecting the production of U.S. hemp and cannabis products, competition from other license holders, the size of the illegal market and the adult-use market in Canada, and our ability to produce sufficient volumes of our products to meet customer demand.
While our revenue has generally grown in recent years, our ability to manage and sustain revenue growth will depend on a number of factors, many of which are beyond our control, including, but not limited to, changes in laws and regulations respecting the production of cannabis products, competition from other license holders, the size of the illegal market and the adult-use market in Canada and the other markets in which we sell, and our ability to produce sufficient volumes of our products to meet customer demand.
We try to protect our intellectual property by strategically seeking and obtaining registered protection where appropriate, developing and implementing standard operating procedures to protect trade secrets, technical know-how and proprietary information, and entering into agreements with parties that have access to our inventions, trade secrets, technical know-how and proprietary information, such as our partners, collaborators, employees and consultants, to protect confidentiality and ownership.
When we develop intellectual property that we believe is valuable, we try to protect our intellectual property by strategically seeking and obtaining registered protection where appropriate, developing and implementing standard operating procedures to protect trade secrets, technical know-how and proprietary information, and entering into agreements with parties that have access to our inventions, trade secrets, technical know-how and proprietary information, such as our partners, collaborators, employees and consultants, to protect confidentiality and ownership.
In particular, in the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of the transaction and may recuse himself or herself from any related discussion or deliberation.
In particular, in the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict is required to abstain from voting for or against the approval of the transaction and may recuse himself or herself from any related discussion or deliberation.
We may also communicate certain initiatives and goals, regarding environmental matters, diversity, responsible sourcing and social investments and other ESG related matters, in our SEC filings or in other public disclosures.
For example, we may communicate certain initiatives and goals, regarding environmental matters, diversity, responsible sourcing and social investments and other ESG-related matters, in our SEC filings or in other public disclosures.
Any or all of the Realignment, the U.S. exit, the planned sale of the Cronos Fermentation facility and the pending sale-leaseback transaction could lead to increased attrition amongst those employees who were not directly affected by the associated reductions in headcount, and we may not be successful at retaining such employees or attracting new employees, which may have a material adverse effect on our business, results of operations and financial condition.
Any or all of the Realignment, the U.S. exit, the cessation of operations and planned sale of the Cronos Fermentation Facility and the terminated sale-leaseback of the Peace Naturals Campus could lead to increased attrition amongst those employees who were not directly affected by the associated reductions in headcount, and we may not be successful at retaining such employees or attracting new employees, which may have a material adverse effect on our business, results of operations and financial condition.
We may not be able to successfully procure rare cannabinoids at commercially viable prices or in the quantities that we require. As a result of our decision to wind down Cronos Fermentation, we no longer have the internal capacity to produce rare cannabinoids through the fermentation process developed with Ginkgo.
We may not be able to successfully procure rare cannabinoids at commercially viable prices or in the quantities that we require. As a result of our decision to cease operations at the Cronos Fermentation Facility, we no longer have the internal capacity to produce rare cannabinoids through the fermentation process developed with Ginkgo.
Adverse changes or developments affecting our facilities and the facilities of our joint venture partners, including but not limited to a breach of security, an inability to successfully grow cannabis plants or produce finished goods, unanticipated cost overruns in growing or producing products, an outbreak of a communicable illness (such as COVID-19) or a force majeure event, could have a material and adverse effect on our business, financial condition and results of operations.
Adverse changes or developments affecting our facilities and the facilities of our joint venture partners or strategic partners, including the Cronos GrowCo Facility, such as a breach of security, an inability to successfully grow cannabis plants or produce finished goods, unanticipated cost overruns in growing or producing products, an outbreak of a communicable illness (such as COVID-19) or a force majeure event, could have a material and adverse effect on our business, financial condition and results of operations.
Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, market rumors or speculation and other publicity regarding the consumption or effects thereof of cannabis and U.S. hemp products.
Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, market rumors or speculation and other publicity regarding the consumption or effects of cannabis products.
To the extent such permits, and approvals are required and not obtained, we may be prevented from operating and/or expanding our business, which could have a material adverse effect on our business, financial condition and results of operations. 37 T able of Contents Changes in the laws, regulations and guidelines governing cannabis and U.S. hemp may adversely impact our business.
To the extent such permits, and approvals are required and not obtained, we may be prevented from operating and/or expanding our business, which could have a material adverse effect on our business, financial condition and results of operations. 37 Table of Contents Changes in the laws, regulations and guidelines governing cannabis may adversely impact our business.
We may not be successful in developing effective and safe new products, bringing such products to market in time to be effectively commercialized, or obtaining any required regulatory approvals, and, in the event we are successful, it is possible that there may be little or no demand for the products we develop (including products containing cannabinoids other than THC and CBD with which consumers may not be familiar or have significant reservations), which, together with any capital expenditures made in the course of such product development and regulatory approval processes, may have a material adverse effect on our business, financial condition and results of operations.
We may not be successful in developing effective and safe new products, bringing such products to market in time to be effectively commercialized, or obtaining any required regulatory approvals, and, in the event we are successful, it is possible that there may be little or no demand for the products we develop (including products containing cannabinoids other than THC and CBD with which consumers may not be familiar or have significant reservations), which, together with any capital expenditures made in the course of such product development and regulatory approval processes, may have a material adverse effect on our business, financial condition and results of operations. 28 Table of Contents The Canadian excise duty framework may adversely affect our profitability.
Lawsuits against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources. Securities markets continue to experience significant price and volume fluctuations that have, in some cases, been unrelated to the operating performance, underlying asset values or prospects of public companies.
Lawsuits against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources. 43 Table of Contents Securities markets have in the past experienced, and may continue to experience, significant price and volume fluctuations that have, in some cases, been unrelated to the operating performance, underlying asset values or prospects of public companies.
The dissemination of negative or inaccurate posts, comments or other user-generated content about us on social media (including those published by third-parties) could damage our brand, image and reputation or how the U.S. hemp or cannabis industries are perceived generally, which could have a detrimental impact on the market for our products and thus on our business, financial condition and results of operations.
The dissemination of negative or inaccurate posts, comments or other user-generated content about us on social media (including those published by third-parties) could damage our brand, image and reputation or how the cannabis industry is perceived generally, which could have a detrimental impact on the market for our products and thus on our business, financial condition and results of operations.
In addition, Altria has pre-emptive rights to subscribe for additional common shares in us following any issuances we make to Ginkgo pursuant to the Ginkgo Collaboration Agreement, and the issuance of such common shares, if any, would further dilute holders of our common shares. Holders of common shares will have no pre-emptive rights in connection with such further issuances.
In addition, Altria has pre-emptive rights to subscribe for additional common shares in us following any issuances we make to Ginkgo pursuant to the Ginkgo Collaboration Agreement, and the issuance of such common shares, if any, would further dilute holders of our common shares.
This may result in such restrictions on sales and marketing activities being interpreted unfavorably by a regulatory agency against some market participants, including us, but not others.
This has in the past, and may in the future, result in such restrictions on sales and marketing activities being interpreted unfavorably by a regulatory agency against some market participants, including us, but not others.
The Canadian excise duty framework may affect our profitability. Canada’s excise duty framework imposes an excise duty and various regulatory-like restrictions on certain cannabis products sold in Canada. We currently hold licenses issued by the Canada Revenue Agency (“CRA”) required to comply with this excise framework.
Canada’s excise duty framework imposes an excise duty and various regulatory-like restrictions on certain cannabis products sold in Canada. We currently hold licenses issued by the Canada Revenue Agency (“CRA”) required to comply with this excise framework.
The parties with which we do business, may perceive that they are exposed to reputational risk as a result of our cannabis or U.S. hemp business activities. Failure to establish or maintain business relationships could have a material adverse effect on our business, financial condition and results of operations.
The parties with which we do business, have perceived and may in the future perceive that they are exposed to reputational risk as a result of our cannabis business activities. Failure to establish or maintain business relationships could have a material adverse effect on our business, financial condition and results of operations.
Therefore, our performance in Israel is reliant on our ability to acquire such raw materials on a timely and cost-effective basis from Cronos GrowCo and to continue to import such raw materials and cannabis products to Israel from Cronos GrowCo’s production facilities.
Cronos GrowCo’s production facilities are our principal source of raw materials. Therefore, our performance in Israel is reliant on our ability to acquire sufficient raw materials on a timely and cost-effective basis from Cronos GrowCo and to continue to import such raw materials and cannabis products to Israel from Cronos GrowCo’s production facilities.
Further, there can be no assurance that the anti-dumping investigation initiated by the Israel Ministry of Economy and Industry will not result in the imposition of an anti-dumping duty on us or limit our imports into Israel, the impact of which could have a material adverse effect on our business in Israel.
Further, there can be no assurance that the Anti-Dumping Investigation will not result in the imposition of an anti-dumping duty on us or limit our imports into Israel, the impact of which could have a material adverse effect on our business in Israel.
In response to the Israel-Hamas War, a number of our employees have been called up to serve in the Israeli military. We cannot predict the full impact of these conditions on us in the future, particularly if emergency circumstances or an escalation in the political or military situation occurs.
In response to the Middle East Conflict, a number of our employees have been called up to serve in the Israeli military. We cannot predict the full impact of these conditions on us in the future, particularly if emergency circumstances or an escalation in the political or military situation occurs.
Our operations are subject to various laws, regulations and guidelines by governmental authorities (including, in Canada, Health Canada and other federal, provincial and local regulatory agencies and, in the U.S., the FDA, the USDA, CDPH, DEA, PTO and FTC and other federal and state agencies) relating to the cultivation, manufacture, processing, marketing, labeling, packaging, management, transportation, distribution, import, export, storage, sale, pricing and disposal of cannabis and U.S. hemp, and also including laws, regulations and guidelines relating to health and safety, insurance coverage, the conduct of operations and the protection of the environment (including relating to emissions and discharges to water, air and land, and the handling and disposal of hazardous and non-hazardous materials and wastes).
Our operations are subject to various laws, regulations and guidelines by governmental authorities (including, in Canada, Health Canada and other federal, provincial and local regulatory agencies relating to the cultivation, manufacture, processing, marketing, labeling, packaging, management, transportation, distribution, import, export, storage, sale, pricing and disposal of cannabis, and also including laws, regulations and guidelines relating to health and safety, insurance coverage, the conduct of operations and the protection of the environment (including relating to emissions and discharges to water, air and land, and the handling and disposal of hazardous and non-hazardous materials and wastes).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Information Systems department, in addition to managing our general information technology systems, is also responsible for managing our enterprise-wide cybersecurity processes. Personnel in our Information System department collectively have decades of experience in information security, information technology and cybersecurity operations. Our Information Systems department monitors, and receives notifications of, potential cybersecurity incidents detected through automated detection and monitoring tools.
Biggest changeThe MSSP monitors and receives notifications of potential cybersecurity incidents detected through automated detection and monitoring tools, which are communicated to personnel within our Information Systems department.
Where feasible, we also conduct periodic reviews (typically annual) of certain third-party service providers, particularly 48 T able of Contents service providers of financial, financial reporting and accounting systems, depending on our assessment of the level of risk to our business operations and our information technology and financial reporting systems.
Where feasible, we also conduct periodic reviews (typically annual) of certain third-party service providers, particularly service providers of financial, financial reporting and accounting systems, depending on our assessment of the level of risk to our business operations and our information technology and financial reporting systems.
Our cybersecurity processes include: • Basic security awareness online training for personnel with company email, on an annual basis; • Phishing tests for personnel with company email, on not less than an annual basis; • Reviews of certain third-party vendors’ information security programs (as discussed below); • Consultation with external advisors regarding opportunities and enhancements to strengthen our practices and policies, on an ad hoc basis; • Electronic monitoring of the majority of our technology environments to identify cybersecurity events; • Periodic assessments of existing technology hardware configurations, patches, security and lifecycle; • Periodic assessments, in consultation with software providers, of existing software versions, configurations, patches and updates; and • Periodic assessments of data management and handling, including data use and access reviews.
Our cybersecurity processes include: • Basic security awareness online training for personnel with company email, at least annually; • Phishing tests for personnel with company email on a periodic basis; • Reviews of certain third-party vendors’ information security programs (as discussed below); • Consultation with external advisors regarding opportunities and enhancements to strengthen our practices and policies, on an ad hoc basis; • Electronic monitoring of the majority of our technology environments to identify cybersecurity events, including the use of a security information and event management system; 47 Table of Contents • Periodic assessments of existing technology hardware configurations, patches, security and lifecycle; • Periodic assessments, in consultation with software providers, of existing software versions, configurations, patches and updates; and • Periodic assessments of data management and handling, including data use and access reviews.
Certain information technology general controls are reviewed and tested as part of our internal control over financial reporting. We use third-party services to assist with penetration testing, security incident monitoring, incident response preparation, end point protection, and security awareness online training.
Certain information technology general controls are reviewed and tested as part of our internal control over financial reporting. We rely on third-party services for penetration testing, security incident monitoring, managing our enterprise-wide cybersecurity processes, incident response preparation, end point protection, and security awareness online training.
In the event we discover a material cybersecurity incident, Information Systems personnel reports such incident to our Chief Financial Officer, who then reports to our Chief Executive Officer and the Audit Committee, as appropriate. We do not currently have a Chief Information Security Officer or other senior security officer of a similar title.
In the event we discover a material cybersecurity incident, Information Systems personnel reports such incident to our Chief Strategy Officer, who then reports to our Chief Executive Officer and the Audit Committee, as appropriate.
For more information regarding risks from cybersecurity threats, see the section entitled “ Risk Factors—Risks Relating to Our Products—Risks Relating to Production and Distribution of Products .” In fiscal year 2024, as part of our overall enterprise risk management process, our Board received a report on our program for assessing, monitoring and mitigating cybersecurity risks and has delegated oversight of such program to our Audit Committee.
For more information regarding risks from cybersecurity threats, see “ Risk Factors—Risks Relating to Our Products—Risks Relating to Production and Distribution of Products .” Our Board has delegated oversight of our program for assessing, monitoring and mitigating cybersecurity risks to our Audit Committee. Our Audit Committee receives periodic reports on our program for assessing, monitoring and mitigating cybersecurity risks.
Going forward, the Audit Committee will receive periodic reports on our program for assessing, monitoring and mitigating cybersecurity risks. In addition, as part of its overall responsibility for overseeing the adequacy of the Company’s internal control over financial reporting, our Audit Committee receives periodic reports about our financial reporting information system controls and security.
In addition, as part of its overall responsibility for overseeing the adequacy of the Company’s internal control over financial reporting, our Audit Committee receives periodic reports about our financial reporting information system controls and security. Our Information Systems department, in addition to managing our general information technology systems, is also responsible for managing our enterprise-wide cybersecurity processes.
Added
Our Information Systems department relies on a third-party managed security service provider (“MSSP”) to implement, manage and monitor our cybersecurity systems. Personnel in our Information Systems department, together with personnel at the MSSP, collectively have decades of experience in information security, information technology and cybersecurity operations.
Added
We do not currently have a permanent Chief Information Security Officer or other senior security officer of a similar title and rely significantly on the MSSP for management of enterprise-wide cybersecurity processes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee “ Operations and Investments. ” Management believes that our existing facilities and the anticipated changes described herein are adequate to meet our current requirements and, to the extent that our facilities are leased, comparable space is readily available.
Biggest changeManagement believes that our existing facilities and the anticipated changes described herein are adequate to meet our current requirements and, to the extent that our facilities are leased, comparable space is readily available.
Removed
ITEM 2. PROPERTIES. Our executive offices are located in Toronto, Ontario in Canada, where we lease office space. As of December 31, 2023, the Company owned various manufacturing facilities in Canada and in Hadera, Israel.
Added
ITEM 2. PROPERTIES. As of December 31, 2024, the Company owned various manufacturing facilities in Canada and in Gan Shmuel, Israel. The Company has ceased operations at the Cronos Fermentation Facility in Manitoba and has listed the property for sale. See Part I, Item 1 “Business – Operations and Investments ” for further information.
Removed
The Company has announced the pending sale and leaseback of the Peace Naturals Campus and is winding down its operations at the Cronos Fermentation facility in Manitoba and has listed the property for sale.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Part II, Note 10(b) “Contingencies,” to the consolidated financial statements under Item 8 of this Annual Report for a description of legal proceedings.
Biggest changeSee Part II, Note 12(b) “ Contingencies ,” to the consolidated financial statements under Item 8 of this Annual Report for a description of legal proceedings. ITEM 4. MINE SAFETY DISCLOSURE. Not applicable. 48 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeS&P 500 New Peer Group December 31, 2018 $ 100.00 $ 100.00 $ 100.00 March 31, 2019 $ 177.38 $ 113.65 $ 146.46 June 30, 2019 $ 153.80 $ 118.54 $ 126.09 September 30, 2019 $ 87.10 $ 120.55 $ 72.34 December 31, 2019 $ 73.82 $ 131.49 $ 59.86 March 31, 2020 $ 54.54 $ 105.72 $ 36.55 June 30, 2020 $ 57.84 $ 127.44 $ 44.14 September 30, 2020 $ 48.22 $ 138.81 $ 41.80 December 31, 2020 $ 66.79 $ 155.68 $ 73.30 March 31, 2021 $ 91.05 $ 165.29 $ 101.70 June 30, 2021 $ 82.77 $ 179.42 $ 87.65 September 30, 2021 $ 54.48 $ 180.47 $ 60.03 December 31, 2021 $ 37.73 $ 200.37 $ 44.44 March 31, 2022 $ 37.44 $ 191.15 $ 39.24 June 30, 2022 $ 27.14 $ 160.38 $ 17.24 September 30, 2022 $ 27.14 $ 152.55 $ 15.91 December 31, 2022 $ 24.45 $ 164.08 $ 14.41 March 31, 2023 $ 18.67 $ 176.38 $ 12.07 June 30, 2023 $ 18.96 $ 191.80 $ 8.24 September 30, 2023 $ 19.24 $ 185.52 $ 12.29 December 31, 2023 $ 20.12 $ 207.21 $ 11.41 *$100 invested on 12/31/2018 in stock or 12/31/2018 in index, including reinvestment of dividends.
Biggest changeS&P 500 Peer Group December 31, 2019 $ 100.00 $ 100.00 $ 100.00 March 31, 2020 $ 73.92 $ 80.40 $ 61.06 June 30, 2020 $ 78.36 $ 96.92 $ 73.73 September 30, 2020 $ 65.32 $ 105.57 $ 69.83 December 31, 2020 $ 90.48 $ 118.40 $ 122.46 March 31, 2021 $ 123.34 $ 125.71 $ 169.90 June 30, 2021 $ 112.13 $ 136.46 $ 146.42 September 30, 2021 $ 73.79 $ 137.25 $ 100.28 December 31, 2021 $ 51.11 $ 152.39 $ 74.25 March 31, 2022 $ 50.72 $ 145.38 $ 65.56 June 30, 2022 $ 36.77 $ 121.97 $ 28.80 September 30, 2022 $ 36.77 $ 116.02 $ 26.57 December 31, 2022 $ 33.12 $ 124.79 $ 24.07 March 31, 2023 $ 25.29 $ 134.14 $ 20.17 June 30, 2023 $ 25.68 $ 145.87 $ 13.76 September 30, 2023 $ 26.08 $ 141.10 $ 20.54 December 31, 2023 $ 27.25 $ 157.59 $ 19.06 March 31, 2024 $ 34.03 $ 174.23 $ 27.20 June 30, 2024 $ 30.38 $ 181.69 $ 20.84 September 30, 2024 $ 28.55 $ 192.39 $ 21.54 December 31, 2024 $ 26.34 $ 197.02 $ 13.91 Copyright© 2024 Standard & Poor’s, a division of S&P Global.
Securities Authorized for Issuance under Equity Compensation Plans Information concerning securities authorized for issuance under equity compensation plans will be set forth in the Company’s definitive proxy statement for its 2024 Annual Meeting of Shareholders or an amendment to this Annual Report to be filed within 120 days of our fiscal year end.
Securities Authorized for Issuance under Equity Compensation Plans Information concerning securities authorized for issuance under equity compensation plans will be set forth in the Company’s definitive proxy statement for its 2025 Annual Meeting of Shareholders or an amendment to this Annual Report to be filed within 120 days of our fiscal year end.
Performance Graph The following performance graph compares the cumulative total shareholder return of our common shares as listed on Nasdaq with the cumulative total return of the S&P 500 Index and a market-weighted index of publicly traded peers over the 60-month period beginning on December 31, 2018, and ending on December 31, 2023.
Performance Graph The following performance graph compares the cumulative total shareholder return of our common shares as listed on Nasdaq with the cumulative total return of the S&P 500 Index and a market-weighted index of publicly traded peers over the 60-month period beginning on December 31, 2019, and ending on December 31, 2024.
The new peer group includes Aurora Cannabis Inc., Canopy Growth Corporation, Green Thumb Industries, Inc., Organigram Holdings Inc., Tilray Inc., and Trulieve Cannabis Corp., (the “New Peer Group”).
The peer group includes Aurora Cannabis Inc., Canopy Growth Corporation, Green Thumb Industries, Inc., Organigram Holdings Inc., Tilray Inc., and Trulieve Cannabis Corp., (the “Peer Group”).
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common shares are traded on Nasdaq and the TSX under the symbol “CRON.” Holders As of February 23, 2024, there were approximately 131 holders of record of our common shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common shares are traded on Nasdaq and the TSX under the symbol “CRON.” Holders As of February 24, 2025, there were approximately 139 holders of record of our common shares.
The graph assumes that $100 is invested in each of our common shares, the S&P 500 Index, and the indices of publicly traded peers on December 31, 2018, and that all dividends, if applicable, were reinvested. Past performance may not be indicative of future performance.
The graph assumes that $100 is invested in each of our common shares, the S&P 500 Index, and the indices of publicly traded peers on December 31, 2019, and that all dividends, if applicable, were reinvested. Past performance may not be indicative of future performance. 49 Table of Contents Date Cronos Group Inc.
Removed
The old peer group included Aurora Cannabis Inc., Canopy Growth Corporation, Green Thumb Industries, Inc., HEXO Corporation, Organigram Holdings Inc., Tilray Inc., and Trulieve Cannabis Corp. (the “Old Peer Group”).
Added
All rights reserved. 50 Table of Contents ITEM 6. RESERVED Not applicable.
Removed
HEXO Corporation was removed from the New Peer Group after acquisition by Tilray Inc. in 2023, another member of the New Peer Group. 50 T able of Contents Date Cronos Group Inc.
Removed
Fiscal year ending December 31. Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved. 51 T able of Contents ITEM 6. RESERVED Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+51 added−64 removed56 unchanged
Biggest changeAdjusted EBITDA is reconciled to net loss as follows: (in thousands of U.S. dollars) For the year ended December 31, 2023 Continuing Operations Discontinued Operations Total Net loss $ (70,439) $ (4,114) $ (74,553) Interest income, net (51,235) (10) (51,245) Income tax expense (benefit) (3,230) — (3,230) Depreciation and amortization 7,866 244 8,110 EBITDA (117,038) (3,880) (120,918) Share of (income) loss from equity method investments (1,583) — (1,583) Impairment loss on long-lived assets (ii) 3,366 205 3,571 Loss on revaluation of derivative liabilities (iii) 85 — 85 Loss on revaluation of financial instruments (iv) 12,042 — 12,042 Impairment loss on other investments (ix) 23,350 — 23,350 Foreign currency transaction loss 7,324 — 7,324 Other, net (vi) (1,114) 118 (996) Restructuring costs (x) 1,524 523 2,047 Share-based compensation (vii) 8,756 13 8,769 Financial statement review costs (viii) 919 — 919 Inventory write-down (xi) 805 839 1,644 Adjusted EBITDA $ (61,564) $ (2,182) $ (63,746) 63 T able of Contents (in thousands of U.S. dollars) For the year ended December 31, 2022 Continuing Operations Discontinued Operations Total Net loss $ (155,178) $ (13,556) $ (168,734) Interest income, net (22,514) (23) (22,537) Income tax expense (benefit) 34,175 — 34,175 Depreciation and amortization 11,924 1,198 13,122 EBITDA (131,593) (12,381) (143,974) Share of income from equity method investments (3,114) — (3,114) Impairment loss on long-lived assets (ii) 3,493 — 3,493 Gain on revaluation of derivative liabilities (iii) (14,060) — (14,060) Gain on revaluation of financial instruments (iv) (14,739) — (14,739) Impairment loss on other investments (ix) 61,392 — 61,392 Foreign currency transaction loss 2,286 — 2,286 Other, net (vi) 324 169 493 Restructuring costs (x) 3,545 1,788 5,333 Share-based compensation (vii) 15,008 107 15,115 Financial statement review costs (viii) 7,167 — 7,167 Adjusted EBITDA $ (70,291) $ (10,317) $ (80,608) (in thousands of U.S. dollars) For the year ended December 31, 2021 Continuing Operations Discontinued Operations Total Net loss $ (128,079) $ (269,125) $ (397,204) Interest income, net (9,068) (4) (9,072) Income tax expense (benefit) (431) — (431) Depreciation and amortization 15,236 166 15,402 EBITDA (122,342) (268,963) (391,305) Share of loss from equity method investments 6,313 — 6,313 Impairment loss on goodwill and indefinite-lived intangible assets (i) 37 236,019 236,056 Impairment loss on long-lived assets (ii) 126,405 1,214 127,619 Gain on revaluation of derivative liabilities (iii) (151,360) — (151,360) Gain on revaluation of financial instruments (iv) (8,611) — (8,611) Transaction costs (v) 3,801 — 3,801 Other, net (vi) (733) (101) (834) Share-based compensation (vii) 9,844 307 10,151 Financial statement review costs (viii) 7,102 — 7,102 Adjusted EBITDA $ (129,544) $ (31,524) $ (161,068) (i) For the year ended December 31, 2021, impairment loss on goodwill and indefinite-lived intangible assets relates primarily to impairment on goodwill and intangible assets related to our U.S. operations.
Biggest changeGAAP to Adjusted EBITDA for the periods indicated: (in thousands of U.S. dollars) For the year ended December 31, 2024 Continuing Operations Discontinued Operations Total Net income $ 40,022 $ — $ 40,022 Interest income, net (52,019) — (52,019) Income tax expense (benefit) (3,436) — (3,436) Depreciation and amortization 9,336 — 9,336 EBITDA (6,097) — (6,097) Share of income from equity method investments (2,365) — (2,365) Impairment loss on long-lived assets (i) 16,350 — 16,350 Revaluation gain on loan receivable (ii) (11,804) — (11,804) Gain on revaluation of equity method investment (iii) (32,469) — (32,469) Gain on revaluation of derivative liabilities (iv) (49) — (49) Loss on revaluation of financial instruments (v) 6,248 — 6,248 Impairment loss on other investments (vi) 25,650 — 25,650 Foreign currency transaction gain (57,859) — (57,859) Transaction costs (vii) 701 — 701 Loss on held-for-sale assets (viii) 11,202 — 11,202 Other, net (ix) 350 — 350 Restructuring costs (x) 630 — 630 Share-based compensation (xi) 8,700 — 8,700 Financial statement review costs (xii) (1) — (1) Inventory step-up recorded to cost of sales (xiv) 5,284 — 5,284 Israel Ministry of Economy and Industry dumping inquiry (xv) 587 — 587 Adjusted EBITDA $ (34,942) $ — $ (34,942) 58 Table of Contents (in thousands of U.S. dollars) For the year ended December 31, 2023 Continuing Operations Discontinued Operations Total Net loss $ (70,439) $ (4,114) $ (74,553) Interest income, net (51,235) (10) (51,245) Income tax expense (benefit) (3,230) — (3,230) Depreciation and amortization 7,866 244 8,110 EBITDA (117,038) (3,880) (120,918) Share of income from equity method investments (1,583) — (1,583) Impairment loss on long-lived assets (i) 3,366 205 3,571 Loss on revaluation of derivative liabilities (iv) 85 — 85 Loss on revaluation of financial instruments (v) 12,042 — 12,042 Impairment loss on other investments (vi) 23,350 — 23,350 Foreign currency transaction loss 7,324 — 7,324 Other, net (ix) (1,114) 118 (996) Restructuring costs (x) 1,524 523 2,047 Share-based compensation (xi) 8,756 13 8,769 Financial statement review costs (xii) 919 — 919 Inventory write-down (xiii) 805 839 1,644 Adjusted EBITDA $ (61,564) $ (2,182) $ (63,746) (in thousands of U.S. dollars) For the year ended December 31, 2022 Continuing Operations Discontinued Operations Total Net loss $ (155,178) $ (13,556) $ (168,734) Interest income, net (22,514) (23) (22,537) Income tax expense (benefit) 34,175 — 34,175 Depreciation and amortization 11,924 1,198 13,122 EBITDA (131,593) (12,381) (143,974) Share of income from equity method investments (3,114) — (3,114) Impairment loss on long-lived assets (i) 3,493 — 3,493 Gain on revaluation of derivative liabilities (iv) (14,060) — (14,060) Gain on revaluation of financial instruments (v) (14,739) — (14,739) Impairment loss on other investments (vi) 61,392 — 61,392 Foreign currency transaction loss 2,286 — 2,286 Other, net (ix) 324 169 493 Restructuring costs (x) 3,545 1,788 5,333 Share-based compensation (xi) 15,008 107 15,115 Financial statement review costs (xii) 7,167 — 7,167 Adjusted EBITDA $ (70,291) $ (10,317) $ (80,608) (i) For the year ended December 31, 2024, impairment loss on long-lived assets included $14,258 related to the write-down of our Ginkgo Exclusive Licenses and $1,631 related to the cessation of operations of Cronos Fermentation.
Excise taxes are recorded as a reduction of sales in net revenue in the consolidated statements of income (loss) and comprehensive income (loss) and are recognized as a current liability within accrued liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.
Excise taxes are recorded as a reduction of sales in net revenue in the consolidated statements of net income (loss) and comprehensive income (loss) and are recognized as a current liability within accrued liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.
To be classified as held-for-sale, management must have committed to a plan to sell, the asset (or asset group) must be available for immediate sale in its present condition, an active program to locate a buyer must have been initiated, the sale must be probable to close within one year, the asset (or asset group) must be marketed at a reasonable sales price, and it must be unlikely that significant changes to the plan will be made.
To be classified as held-for-sale, management must have committed to a plan to sell, the asset (or asset group) must be available for immediate sale in its present condition, an active program to locate a buyer must have been initiated, the sale must be probable to close within one year, the asset (or asset group) must be marketed at a reasonable sales price, and it must be unlikely that significant changes to the plan will be made.
Once an asset (or asset group) meets all of the above criteria, it is reclassified as assets held for sale on the consolidated balance sheet, and the asset(s) cease depreciation and are written down to their fair value, less costs to sell, if applicable.
Once an asset (or asset group) meets all of the above criteria, it is reclassified as assets held-for-sale on the consolidated balance sheet, and the asset(s) cease depreciation and are written down to their fair value, less costs to sell, if applicable.
Each cannabinoid exclusive license is subject to amortization. Refer to Note 7 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. Valuation of derivative liabilities Prior to December 16, 2022, derivative liabilities consisted of the warrant issued to Altria, as well as Altria’s pre-emptive rights, and certain top-up rights.
Each cannabinoid exclusive license is subject to amortization. Refer to Note 8 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. Valuation of derivative liabilities Prior to December 16, 2022, derivative liabilities consisted of the warrant issued to Altria, as well as Altria’s pre-emptive rights, and certain top-up rights.
We measure derivative liabilities at fair value at each reporting date until settlement with the re-measurement gain or loss being recognized immediately in net loss and comprehensive loss. We calculate fair value of the derivative liabilities using the Black-Scholes model. Significant assumptions are used in the valuation of derivative liabilities, including the expected term and our stock price.
We measure derivative liabilities at fair value at each reporting date until settlement with the re-measurement gain or loss being recognized immediately in net income (loss) and comprehensive income (loss). We calculate fair value of the derivative liabilities using the Black-Scholes model. Significant assumptions are used in the valuation of derivative liabilities, including the expected term and our stock price.
If these market conditions and resulting expected future cash flows for each reporting unit decline significantly, the actual results for each reporting unit could differ from our estimate, which would cause goodwill to be impaired.
If these market conditions and resulting expected future cash flows for each reporting unit decline significantly, the actual results for each reporting unit could differ from our estimate, which could cause goodwill to be impaired.
On December 16, 2022, Altria notified us that its wholly owned subsidiary, Altria Summit LLC, irrevocably relinquished its warrant and all rights that it may have held in the warrant or any common shares underlying the warrant for no consideration. As of December 31, 2023 , derivative liabilities consisted of pre-emptive rights and certain top-up rights.
On December 16, 2022, Altria notified us that its wholly owned subsidiary, Altria Summit LLC, irrevocably relinquished its warrant and all rights that it may have held in the warrant or any common shares underlying the warrant for no consideration. As of December 31, 2024 , derivative liabilities consisted of pre-emptive rights and certain top-up rights.
To present this information, current and prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the comparative period in 2022 rather than the actual average exchange rates in effect during 2023; constant currency current period balance sheet information is translated at the prior year-end spot rate rather than the current year-end spot rate.
To present this information, current and prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the comparative period in 2023 rather than the actual average exchange rates in effect during 2024; constant currency current period balance sheet information is translated at the prior year-end spot rate rather than the current year-end spot rate.
All growth comparisons relate to the corresponding period in 2022. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our business. The non-GAAP financial measures presented in this Annual Report should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.
All growth comparisons relate to the corresponding period in 2023. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our business. The non-GAAP financial measures presented in this Annual Report should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.
Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this Annual Report are reconciled to their closest reported U.S. GAAP measure. Reconciliations of historical adjusted financial measures to corresponding U.S. GAAP measures are provided below.
Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this Annual Report are reconciled to their closest reported U.S. GAAP measure. Reconciliations of historical adjusted financial measures to corresponding U.S.
GAAP, we have presented constant currency adjusted financial measures for net revenues, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for 2023, as well as cash and cash equivalents and short-term investment balances as of December 31, 2023 compared to December 31, 2022, which are considered non-GAAP financial measures.
GAAP, we have presented constant currency adjusted financial measures for net revenues, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for 2024, as well as cash and cash equivalents and short-term investment balances as of December 31, 2024 compared to December 31, 2023, which are considered non-GAAP financial measures.
Refer to Note 6 “ Property, plant and equipment, net ” to the consolidated financial statements in Item 8 of this Annual Report. We periodically evaluate our long-lived assets that we plan to dispose of through sale for held-for-sale classification.
Refer to Note 7 “ Property, Plant and Equipment, net ” to the consolidated financial statements in Item 8 of this Annual Report. We periodically evaluate our long-lived assets that we plan to dispose of through sale for held-for-sale classification.
Since 2019, we have been funded by the C$2.4 billion (approximately $1.8 billion) Altria investment in us as further discussed under “ Business—Altria Strategic Investment ” in Part I, Item 1 of this Annual Report.
Since 2019, we have been funded by the C$2.4 billion (approximately $1.7 billion) Altria investment in us as further discussed under “ Business—Altria Strategic Investment ” in Part I, Item 1 of this Annual Report.
The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of December 31, 2023 and December 31, 2022, as reported on Bloomberg. Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates.
The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of December 31, 2024 and December 31, 2023, as reported on Bloomberg. Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates.
For the year ended December 31, 2022, impairment loss on long-lived assets relates to the Company’s decision to seek a sublease for leased office space in Toronto, Ontario, Canada during the first quarter of 2022.
For the year ended December 31, 2022, impairment loss on long-lived assets related to the Company’s decision to seek a sublease for leased office space in Toronto, Ontario, Canada during the first quarter of 2022.
The consolidated statements of net loss and comprehensive loss and consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, as reported on Bloomberg.
The consolidated statements of net income (loss) and comprehensive income (loss) and consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, as reported on Bloomberg.
(x) For the years ended December 31, 2023 and 2022, restructuring costs related to the employee-related severance costs and other restructuring costs associated with the Realignment. See Note 16 “ Restructuring” to the consolidated financial statements in Item 8 of this Annual Report.
For the years ended December 31, 2023 and 2022 restructuring costs related to the employee-related severance costs and other restructuring costs associated with the Realignment. See Note 18 “ Restructuring” to the consolidated financial statements in Item 8 of this Annual Report.
The assumptions used in computing the fair value of derivative liabilities reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. Sensitivity is performed on various inputs, refer to Note 9 “ Derivative Liabilities ” to the consolidated financial statements in Item 8 of this Annual Report.
The assumptions used in computing the fair value of derivative liabilities reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. Sensitivity is performed on various inputs. See Note 10 “ Derivative Liabilities ” to the consolidated financial statements in Item 8 of this Annual Report.
The Company completed a review of its global supply chain and determined that it would wind down the Cronos Fermentation facility and list it for sale. This review involves significant complexities and judgments in making the accounting treatment determination.
The Company completed a review of its global supply chain in 2023 and determined that it would wind down the Cronos Fermentation facility and list it for sale. This review involved significant complexities and judgments in making the accounting treatment determination.
Our accounting for goodwill and indefinite-lived intangible assets represents our best estimate of future events. 68 T able of Contents Inventory valuation We value our inventory at lower of cost or net realizable value determined using weighted average cost. Inventory is reflected at the lower of cost or net realizable value considering future demand, market conditions and market prices.
Our accounting for goodwill and indefinite-lived intangible assets represents our best estimate of future events. 64 Table of Contents Inventory valuation We value our inventory at lower of cost or net realizable value determined using weighted average cost. Inventory is reflected at the lower of cost or net realizable value considering future demand, market conditions and market prices.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Overview 52 Recent Developments 53 Consolidated Results of Operations 55 Non-GAAP Measures 63 Liquidity and Capital Resources 67 Critical Accounting Estimates 68 Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes, which are included in Item 8 of this Annual Report on Form 10-K (this “Annual Report”), to enhance the understanding of our operations and our present business environment.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Overview 51 Recent Developments 52 Consolidated Results of Operations 54 Non-GAAP Measures 57 Liquidity and Capital Resources 63 Critical Accounting Estimates 64 Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes, which are included in Item 8 of this Annual Report on Form 10-K (this “Annual Report”), to enhance the understanding of our operations and our present business environment.
See Note 2 “ Discontinued Operations ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. 62 T able of Contents Non-GAAP Measures Cronos reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). This Annual Report refers to measures not recognized under U.S. GAAP (“non-GAAP measures”).
See Note 3 “ Discontinued Operations ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. Non-GAAP Measures Cronos reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). This Annual Report refers to measures not recognized under U.S. GAAP (“non-GAAP measures”).
(vii) For the years ended December 31, 2023, 2022 and 2021, share-based compensation relates to the vesting expenses of share-based compensation awarded to employees under our share-based award plans as described in Note 11 “ Share-based Compensation ” to the consolidated financial statements in Item 8 of this Annual Report.
(xi) For the years ended December 31, 2024, 2023 and 2022, share-based compensation related to the vesting expenses of share-based compensation awarded to employees under our share-based award plans, as described in Note 11 “ Share-based Compensation ” to the consolidated financial statements in Item 8 of this Annual Report.
Our material cash requirements include the following contractual and other obligations as of December 31, 2023: Leases We have operating leases for land, buildings and office space. As of December 31, 2023, the future minimum payments required under these leases totaled $3.0 million, with $1.1 million payable within 12 months.
Our material cash requirements include the following contractual and other obligations as of December 31, 2024: Leases We have operating leases for land, buildings and office and research space. As of December 31, 2024, the future minimum payments required under these leases totaled $2.4 million, with $1.1 million payable within 12 months.
(viii) For the years ended December 31, 2023, 2022 and 2021, financial statement review costs include costs related to the Restatement, costs related to the Company’s responses to requests for information from various regulatory authorities relating to the Restatements, the costs related to the Settlement Order and Settlement Agreement and legal costs defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.
(xii) For the years ended December 31, 2024, 2023 and 2022, financial statement review costs included costs related to the Restatement, costs related to the Company’s responses to requests for information from various regulatory authorities relating to the Restatements, the costs related to the Settlement Order and Settlement Agreement and legal costs defending shareholder class action complaints brought against the Company as a result of the 2019 restatement as well as related insurance reimbursements.
Financing activities During 2023, cash used in financing activities was $1.0 million, as compared to $2.9 million in 2022, representing a decrease in net cash used of $1.9 million. This change is primarily driven by a decrease in withholding taxes paid on share-based awards.
Financing activities During 2024, cash used in financing activities was $1.2 million, as compared to $1.0 million in 2023, representing an increase in net cash used of $0.2 million. This change is primarily driven by an increase in withholding taxes paid on share-based awards in 2024.
Management defines Adjusted EBITDA as net income (loss) before interest, tax expense (benefit), depreciation and amortization adjusted for: share of (income) loss from equity method investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; (gain) loss on revaluation of derivative liabilities; (gain) loss on revaluation of financial instruments; transaction costs related to strategic projects; impairment loss on other investments; foreign currency transaction loss; other, net; loss from discontinued operations; restructuring costs; inventory write-downs resulting from restructuring actions; share-based compensation; and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including the costs related to the settlement of the SEC’s and the OSC’s investigations of the Restatements and legal costs defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Note 10(b) “ Contingencies ,” to the consolidated financial statements under Item 8 of this Annual Report for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC’s and the OSC’s investigations of the Restatements).
Management defines Adjusted EBITDA as net income (loss) before interest, tax expense (benefit), depreciation and amortization adjusted for: share of (income) loss from equity method investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; (gain) loss on revaluation of derivative liabilities; (gain) loss on revaluation of financial instruments; gain on revaluation of loan receivable; gain on revaluation of equity method investment; transaction costs related to strategic projects; loss on held-for-sale assets; impairment loss on other investments; foreign currency transaction loss; other, net; loss from discontinued operations; restructuring costs; inventory write-downs resulting from restructuring actions; share-based compensation; costs related to the Israel Ministry of Economy and Industry dumping inquiry; purchase accounting adjustment-related inventory step-up adjustments recorded through cost of sales; and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including the costs related to the settlement of the SEC’s and the OSC’s investigations of the Restatements and legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Note 12(b) “ Contingencies ,” to the consolidated financial statements under Item 8 of this Annual Report for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC’s and the OSC’s investigations of the Restatements).
Impairment loss on other investments For 2023, we recognized $23.4 million of impairment loss on other investments, driven by an impairment charge recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.
Impairment loss on other investments For 2024 and 2023, we recognized $25.7 million and $23.4 million, respectively, of impairment loss on other investments, driven by impairment charges recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.
The exchange rates used to translate from Canadian dollars (“C$”) to dollars are shown below: (Exchange rates are shown as C$ per $) Year ended December 31, 2023 2022 2021 Average rate 1.3494 1.3017 1.2541 Spot rate 1.3243 1.3554 1.2746 54 T able of Contents The exchange rates used to translate from New Israeli Shekels (“ILS”) to dollars are shown below: (Exchange rates are shown as ILS per $) Year ended December 31, 2023 2022 2021 Average rate 3.6819 3.3566 3.2297 Spot rate 3.6163 3.5178 3.1149 Consolidated Results of Operations - 2023 Compared to 2022 The tables below set forth our consolidated results of operations, expressed in thousands of U.S. dollars for the periods presented.
The exchange rates used to translate from Canadian dollars (“C$”) to dollars are shown below: (Exchange rates are shown as C$ per $) Year ended December 31, 2024 2023 2022 Average rate 1.3700 1.3494 1.3017 Spot rate 1.4351 1.3243 1.3554 53 Table of Contents The exchange rates used to translate from New Israeli Shekels (“ILS”) to dollars are shown below: (Exchange rates are shown as ILS per $) Year ended December 31, 2024 2023 2022 Average rate 3.6997 3.6819 3.3566 Spot rate 3.6526 3.6163 3.5178 Consolidated Results of Operations - 2024 Compared to 2023 The tables below set forth our consolidated results of operations, expressed in thousands of U.S. dollars for the periods presented.
(ix) For the years ended December 31, 2023 and 2022, impairment loss on other investments related to the PharmaCann Option for the difference between its fair value and carrying amount. See Note 4 “ Investments” to the consolidated financial statements in Item 8 of this Annual Report.
See Note 5 “ Investments ” and Note 11 “ Share-based Compensation ” to the consolidated financial statements in Item 8 of this Annual Report. (vi) For the years ended December 31, 2024, 2023 and 2022, impairment loss on other investments related to the PharmaCann Option for the difference between its fair value and carrying amount.
See Note 6 “ Property, plant and equipment, net ” to the consolidated financial statements in Item 8 of this Annual Report for discussion regarding our evaluation of the Peace Naturals Campus and the Cronos Fermentation facility for held-for-sale classification as of December 31, 2023. 70 T able of Contents
See Note 7 “ Property, plant and equipment, net” to the consolidated financial statements in Item 8 of this Annual Report for discussion regarding our evaluation of the Peace Naturals Campus and the Cronos Fermentation Facility for held-for-sale classification as of December 31, 2024. 66 Table of Contents
Adjusted EBITDA Management reviews Adjusted EBITDA, a non-GAAP measure, which excludes non-cash items and items that do not reflect management’s assessment of ongoing business performance.
GAAP measures are provided below. 57 Table of Contents Adjusted EBITDA Management reviews Adjusted EBITDA, a non-GAAP measure, which excludes non-cash items and items that do not reflect management’s assessment of ongoing business performance.
Refer to Note 5 “ Loans Receivable, net ” to the consolidated financial statement in Item 8 of this Annual Report for further information. 67 T able of Contents Purchase obligations Our purchase obligations primarily consist of contractual obligations to maintain the ordinary course of business through information technology and capital expenditures related to computer software, agricultural supply services and data analytics.
See Note 6 “ Loans Receivable, net ” to the consolidated financial statement in Item 8 of this Annual Report for further information. 63 Table of Contents Purchase obligations Our purchase obligations primarily consist of contractual obligations for capital expenditures related to the Cronos GrowCo Phase 2 Expansion, computer software, agricultural supply services and data analytics and to maintain the ordinary course of business through information technology.
As of December 31, 2023, the Company had purchase obligations of $13.0 million, with $10.1 million payable within 12 months. Other purchase obligations consist of noncancellable obligations related to maintenance, internet, and telecommunication service. As of December 31, 2023, we had other purchase obligations of $4.4 million, with $2.2 million payable within 12 months.
As of December 31, 2024, the Company had purchase obligations of $47.5 million, with $39.0 million payable within 12 months. Other purchase obligations consist of noncancellable obligations related to maintenance, internet, and telecommunication service. As of December 31, 2024, we had other purchase obligations of $0.5 million, with $0.4 million payable within 12 months.
See Note 6 “Property, plant and equipment, net” to the consolidated financial statements in Item 8 of this Annual Report for discussion regarding our evaluation of the Peace Naturals Campus and the Cronos Fermentation facility for held-for-sale classification as of December 31, 2023. 69 T able of Contents We account for the cannabinoid exclusive licenses originating from the Ginkgo Strategic Partnership as definite-lived intangible assets in accordance with the acquisition method of accounting.
See Note 7 “ Property, plant and equipment, net ” to the consolidated financial statements in Item 8 of this Annual Report for discussion regarding our evaluation of the Cronos Fermentation Facility for held-for-sale classification as of December 31, 2024. 65 Table of Contents We account for the cannabinoid exclusive licenses originating from the Ginkgo Strategic Partnership as definite-lived intangible assets in accordance with the acquisition method of accounting.
See Note 4 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. Foreign currency transaction loss For 2023, foreign currency transaction loss was $7.3 million, representing an increased loss of $5.0 million from 2022.
See Note 5 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. Foreign currency transaction gain (loss) For 2024, foreign currency transaction gain was $57.9 million, representing an increased gain of $65.2 million from 2023.
As of December 31, 2023, we had $669.3 million in cash and cash equivalents and $192.2 million in short term investments, compared to $764.6 million in cash and cash equivalents and $113.1 million in short term investments as of December 31, 2022. As of both December 31, 2023 and December 31, 2022, we had no external financing.
As of December 31, 2024, we had $858.8 million in cash and cash equivalents and no short term investments, compared to $669.3 million in cash and cash equivalents and $192.2 million in short term investments as of December 31, 2023. As of both December 31, 2024 and December 31, 2023, we had no external debt financing.
The increase was primarily due to higher advertising and marketing spend. Research and development For 2023, we reported research and development expenses of $5.8 million, representing a decrease of $7.3 million from 2022. This decrease was primarily due to lower costs associated with the collaboration and license agreement between Ginkgo Bioworks Holdings, Inc.
The decrease was primarily due to lower salaries and benefits and reduced advertising and marketing spend. Research and development For 2024, we reported research and development expenses of $4.2 million, representing a decrease of $1.6 million from 2023. This decrease was primarily due to lower costs associated with the collaboration and license agreement between Ginkgo Bioworks Holdings, Inc.
(xi) For the year ended December 31, 2023, inventory write-downs from discontinued operations relate to product destruction and obsolescence associated with the exit of our U.S. operations as described in Note 2 “ Discontinued Operations ” and inventory write-downs from continuing operations relate to product destruction and obsolescence associated with the planned exit of Cronos Fermentation as described in Note 16 “ Restructuring .” Constant Currency To supplement the consolidated financial statements presented in accordance with U.S.
(xiii) For the year ended December 31, 2023, inventory write-downs from discontinued operations related to product destruction and obsolescence associated with the exit of our U.S. operations as described in Note 3 “ Discontinued Operations ” to the consolidated financial statements in Item 8 of this Annual Report.and inventory write-downs from continuing operations related to product destruction and obsolescence associated with the planned exit of Cronos Fermentation as described in Note 18 “ Restructuring ” to the consolidated financial statements in Item 8 of this Annual Report.
Discontinued Operations In the second quarter of 2023, Cronos exited its U.S. hemp-derived cannabinoid product operations. The exit of the U.S. operations represented a strategic shift that has a major effect on Cronos’ operations and financial results, and as such, qualifies for reporting as discontinued operations in our consolidated statements of net loss and comprehensive loss.
The exit of the U.S. operations represented a strategic shift that had a major effect on Cronos’ operations and financial results, and as such, qualified for reporting as discontinued operations in our consolidated statements of net income (loss) and comprehensive income (loss).
Cash flows (In thousands of U.S. dollars) Year ended December 31, 2023 2022 2021 Net cash used in operating activities $ (42,835) $ (88,948) $ (153,616) Net cash used in investing activities (59,499) (1,842) (28,898) Net cash used in financing activities (1,030) (2,897) (13,442) Effect of foreign currency translation on cash and cash equivalents 8,011 (28,642) 4,906 Net change in cash $ (95,353) $ (122,329) $ (191,050) 2023 cash flows vs 2022 cash flows Operating activities During 2023, we used $42.8 million of cash in operating activities, compared to $88.9 million in 2022, representing a decrease in cash used of $46.1 million.
Cash flows (In thousands of U.S. dollars) Year ended December 31, 2024 2023 2022 Net cash provided by (used in) operating activities $ 18,843 $ (42,835) $ (88,948) Net cash provided by (used in) investing activities 175,149 (59,499) (1,842) Net cash used in financing activities (1,231) (1,030) (2,897) Effect of foreign currency translation on cash and cash equivalents (3,247) 8,011 (28,642) Net change in cash $ 189,514 $ (95,353) $ (122,329) 2024 cash flows vs 2023 cash flows Operating activities During 2024, we generated $18.8 million of cash from operating activities, compared to cash used of $42.8 million in 2023, representing a decrease in cash used of $61.7 million.
See Note 7 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements under Item 8 of this Annual Report. (ii) For the year ended December 31, 2023, impairment loss on long-lived assets related to certain leased properties associated with the Company’s former U.S. operations and impairment of the Ginkgo Collaboration Agreement’s CBCVA exclusive license.
For the year ended December 31, 2023, impairment loss on long-lived assets related to certain leased properties associated with the Company’s former U.S. operations and impairment of the Ginkgo Collaboration Agreement’s CBCVA exclusive license.
Refer to Note 8 “ Leases ” to the consolidated financial statements in Item 8 of this Annual Report for further information. Loans receivable with related parties We have entered into three loan agreements with affiliates.
See Note 9 “ Leases ” to the consolidated financial statements in Item 8 of this Annual Report for further information. Loans receivable with related parties We have entered into two loan agreements with affiliates. The Mucci Promissory Note and Cannasoul Collaboration Loan (each as defined below) have been fully drawn.
Cash and cash equivalents & short-term investments Cash and cash equivalents and short-term investments on a constant currency basis decreased 4% to $844.5 million as of December 31, 2023 from $877.7 million as of December 31, 2022.
Cash and cash equivalents & short-term investments Cash and cash equivalents and short-term investments on a constant currency basis increased 1% to $869.8 million as of December 31, 2024 from $861.5 million as of December 31, 2023.
(iv) For the years ended December 31, 2023, 2022 and 2021, (gain) loss on revaluation of financial instruments relates primarily to our unrealized holding gain on our mark-to-market investment in Vitura as well as revaluations of financial liabilities resulting from deferred share units (“DSUs”) granted to directors.
See Note 10 “ Derivative Liabilities ” to the consolidated financial statements in Item 8 of this Annual Report. 59 Table of Contents (v) For the years ended December 31, 2024, 2023 and 2022, (gain) loss on revaluation of financial instruments related primarily to our unrealized holding (gain) or loss (as applicable) on our mark-to-market investment in Vitura as well as revaluations of financial liabilities resulting from deferred share units (“DSUs”) granted to directors.
For the year ended December 31, 2021, other, net is primarily related to (gain) loss on reclassification of held-for-sale assets and (gain) loss on disposal of assets.
(ix) For the years ended December 31, 2024, 2023 and 2022, other, net primarily related to (gain) loss on disposal of assets.
The decrease in cash and cash equivalents and short-term investments is primarily due to cash flows used in operating activities in 2023. 66 T able of Contents Liquidity and Capital Resources We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our business operations and capital expenditures over the next twelve months.
The increase in cash and cash equivalents and short-term investments is primarily due to cash flows provided by operating activities in 2024. 62 Table of Contents Liquidity and Capital Resources We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our business operations and capital expenditures over the next twelve months, including continuing to fund the expansion of Cronos GrowCo’s cultivation and processing facilities (the “Cronos GrowCo Phase 2 Expansion”).
See Note 4 “ Investments ” and Note 11 “ Share-based Compensation ” to the consolidated financial statements in Item 8 of this Annual Report. 64 T able of Contents (v) For the year ended December 31, 2021, transaction costs represent legal, financial and other advisory fees and expenses incurred in connection with various strategic investments.
See Note 5 “ Investments” to the consolidated financial statements in Item 8 of this Annual Report. (vii) For the year ended December 31, 2024, transaction costs represented legal, financial and other advisory fees and expenses incurred in connection with the Cronos GrowCo Transaction.
For further information, see Note 11 “ Share-based Compensation ” to the consolidated financial statements in Item 8 of this Annual Report. Depreciation and amortization For 2023, depreciation and amortization expenses were $5.0 million, representing a decrease of $0.9 million from 2022.
Restructuring costs For 2024, we reported restructuring costs of $0.6 million, representing a decrease of $0.9 million from 2023. The restructuring costs in 2024 and 2023 were related to Realignment activities. See Note 18 “ Restructuring ” to the consolidated financial statements in Item 8 of this Annual Report for additional information.
Year ended December 31, 2023 2022 Net revenue before excise taxes $ 120,270 $ 109,301 Excise taxes (33,029) (22,552) Net revenue 87,241 86,749 Cost of sales 74,527 71,313 Inventory write-down 805 — Gross profit 11,909 15,436 Operating expenses: Sales and marketing 22,701 18,046 Research and development 5,843 13,131 General and administrative 49,475 67,674 Restructuring costs 1,524 3,545 Share-based compensation 8,756 15,008 Depreciation and amortization 5,044 5,967 Impairment loss on long-lived assets 3,366 3,493 Total operating expenses 96,709 126,864 Operating loss (84,800) (111,428) Other income (expense) 11,131 (9,575) Income tax benefit (expense) 3,230 (34,175) Loss from discontinued operations (4,114) (13,556) Net loss (74,553) (168,734) Net loss attributable to non-controlling interest (590) — Net loss attributable to Cronos Group $ (73,963) $ (168,734) Summary of select financial results Year ended December 31, Change 2023 2022 $ % Net revenue $ 87,241 $ 86,749 $ 492 1 % Cost of sales 74,527 71,313 3,214 5 % Inventory write-down 805 — 805 N/M Gross profit 11,909 15,436 (3,527) (23) % Gross margin (i) 14 % 18 % N/A (4) pp (i) Gross margin is defined as gross profit divided by net revenue. 55 T able of Contents Net revenue For 2023, we reported consolidated net revenue of $87.2 million, representing a $0.5 million increase from 2022.
Year ended December 31, 2024 2023 Net revenue before excise taxes $ 161,821 $ 120,270 Excise taxes (44,206) (33,029) Net revenue 117,615 87,241 Cost of sales 91,710 74,527 Inventory write-down 707 805 Gross profit 25,198 11,909 Operating expenses: Sales and marketing 21,603 22,701 Research and development 4,229 5,843 General and administrative 46,514 49,475 Restructuring costs 630 1,524 Share-based compensation 8,700 8,756 Depreciation and amortization 3,701 5,044 Impairment loss on long-lived assets 16,350 3,366 Total operating expenses 101,727 96,709 Operating loss (76,529) (84,800) Other income 113,115 11,131 Income tax expense (benefit) (3,436) (3,230) Loss from discontinued operations — (4,114) Net income (loss) 40,022 (74,553) Net loss attributable to non-controlling interest (1,058) (590) Net income (loss) attributable to Cronos Group $ 41,080 $ (73,963) Summary of select financial results Year ended December 31, Change 2024 2023 $ % Net revenue $ 117,615 $ 87,241 $ 30,374 35 % Cost of sales 91,710 74,527 17,183 23 % Inventory write-down 707 805 (98) (12) % Gross profit 25,198 11,909 13,289 112 % Gross margin (i) 21 % 14 % N/A 7 pp (i) Gross margin is defined as gross profit divided by net revenue.
In Canada, Cronos operates two wholly owned license holder under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc. (“Peace Naturals”), which has production facilities near Stayner, Ontario (the “Peace Naturals Campus”) and Thanos Holdings Ltd., known as Cronos Fermentation (“Cronos Fermentation”), which has a production facility in Winnipeg, Manitoba.
Business Segment Cronos reports through one consolidated segment, which includes operations in both Canada and Israel. In Canada, Cronos operates one wholly-owned license holder under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc. (“Peace Naturals”), which has production facilities near Stayner, Ontario (the “Peace Naturals Campus”).
The change was primarily due to certain foreign currency-denominated cash equivalents and short-term investments and certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future. Other, net For 2023, other, net was income of $1.1 million, compared to a loss of $0.3 million in 2022. The change was primarily driven by gains on the disposal of assets.
The change was primarily due to certain foreign currency-denominated cash equivalents and short-term investments and certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future.
Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets.
Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. The following tables set forth a reconciliation of Net income (loss) as determined in accordance with U.S.
For further information, see Note 7 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report.
For 2023, we recorded $3.4 million of impairment charges related to one of our Ginkgo Exclusive Licenses. See Note 8 “ Goodwill and Intangible Assets, net ” and Note 18 “ Restructuring ” to the consolidated financial statements in Item 8 of this Annual Report for additional information.
See Note 6 “ Property, plant and equipment, net ” and Note 7 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. (iii) For the years ended December 31, 2023, 2022 and 2021, the (gain) loss on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities.
See Note 7 “ Property, Plant and Equipment, net ” and Note 8 “ Goodwill and Intangible Assets, net ” to the consolidated financial statements in Item 8 of this Annual Report. (ii) For the year ended December 31, 2024, a revaluation gain on loan receivable was recognized as a result of the Cronos GrowCo Transaction on July 1, 2024.
These costs are included in general and administrative expenses on the consolidated statements of net loss and comprehensive loss. (vi) For the years ended December 31, 2023 and 2022, other, net primarily related to related to (gain) loss on disposal of assets.
These costs are included in general and administrative expenses on the consolidated statements of net income (loss) and comprehensive income (loss).
Operating expenses Year ended December 31, Change 2023 2022 $ % Sales and marketing $ 22,701 $ 18,046 $ 4,655 26 % Research and development 5,843 13,131 (7,288) (56) % General and administrative 49,475 67,674 (18,199) (27) % Restructuring costs 1,524 3,545 (2,021) (57) % Share-based compensation 8,756 15,008 (6,252) (42) % Depreciation and amortization 5,044 5,967 (923) (15) % Impairment loss on long-lived assets 3,366 3,493 (127) (4) % Operating expenses $ 96,709 $ 126,864 $ (30,155) (24) % Sales and marketing For 2023, we reported sales and marketing expenses of $22.7 million, representing an increase of $4.7 million from 2022.
Operating expenses Year ended December 31, Change 2024 2023 $ % Sales and marketing $ 21,603 $ 22,701 $ (1,098) (5) % Research and development 4,229 5,843 (1,614) (28) % General and administrative 46,514 49,475 (2,961) (6) % Restructuring costs 630 1,524 (894) (59) % Share-based compensation 8,700 8,756 (56) (1) % Depreciation and amortization 3,701 5,044 (1,343) (27) % Impairment loss on long-lived assets 16,350 3,366 12,984 386 % Operating expenses $ 101,727 $ 96,709 $ 5,018 5 % Sales and marketing For 2024, we reported sales and marketing expenses of $21.6 million, representing a decrease of $1.1 million from 2023.
For more information, see Note 4 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report. 57 T able of Contents Share of income from equity method investments For 2023, we reported share of income from equity method investments of $1.6 million, representing a decrease of $1.5 million from 2022.
See Note 6 “ Loans Receivable, net ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. Gain on revaluation of equity method investment For 2024, we reported a gain on revaluation of equity method investment of $32.5 million.
For further information, see Note 16 “ Restructuring ” to the consolidated financial statements in Item 8 of this Annual Report. 56 T able of Contents Share-based compensation For 2023, we reported share-based compensation expenses of $8.8 million, representing a decrease of $6.3 million from 2022.
See Note 5 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. 56 Table of Contents Loss on revaluation of financial instruments For 2024, we reported a loss on revaluation of financial instruments of $6.2 million, compared to a loss of $12.0 million in 2023.
Interest income, net For 2022, we reported interest income, net of $22.5 million, representing an increase of $13.4 million from 2021 primarily due to higher short-term investment balances and higher interest rates in 2022 when compared to 2021.
Interest income, net For 2024, we reported interest income, net of $52.0 million, representing an increase of $0.8 million from 2023, primarily due to higher interest rates in the current period compared to the prior period.
See Note 9 “ Derivative Liabilities ” to the consolidated financial statements in Item 8 of this Annual Report.
The change was primarily due to the change in fair value of our investment in Vitura. See Note 5 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report for additional information.
The lease will have an initial term of five years with one five-year renewal option that may be exercised by the Company. 2022 Compared to 2021 Cash Flows For a discussion of our 2022 cash flows compared to 2021, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2022.
During the third quarter of 2024, Cronos adjusted its sales strategy for the assets to market them to a broader buyer pool, resulting in the recognition of a loss on held-for-sale assets. 2023 Compared to 2022 Results of Operations and Cash Flows For a discussion of our 2023 results of operations and cash flows compared to 2022, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2023.
(“Ginkgo”) and the Company (the “Ginkgo Collaboration Agreement”). General and administrative For 2023, we reported general and administrative expenses of $49.5 million, representing a decrease of $18.2 million from 2022. The decrease was primarily due to lower professional fees, largely related to lower financial statement review costs, and lower bonus, payroll and insurance costs.
(“Ginkgo”) and the Company (the “Ginkgo Collaboration Agreement”). General and administrative For 2024, we reported general and administrative expenses of $46.5 million, representing a decrease of $3.0 million from 2023.
Total other income, income tax benefit (expense) and loss from discontinued operations Year ended December 31, Change (i) 2023 2022 $ % Interest income, net $ 51,235 $ 22,514 $ 28,721 128 % Gain (loss) on revaluation of derivative liabilities (85) 14,060 (14,145) N/M Impairment loss on other investments (23,350) (61,392) 38,042 62 % Share of income from equity method investments 1,583 3,114 (1,531) (49) % Gain (loss) on revaluation of financial instruments (12,042) 14,739 (26,781) N/M Foreign currency transaction loss (7,324) (2,286) (5,038) (220) % Other, net 1,114 (324) 1,438 N/M Total other income 11,131 (9,575) 20,706 N/M Income tax benefit (expense) 3,230 (34,175) 37,405 N/M Loss from discontinued operations (4,114) (13,556) 9,442 70 % Net loss $ (74,553) $ (168,734) $ 94,181 56 % (i) “N/M” is defined as not meaningful.
Total other income, income tax expense (benefit) and loss from discontinued operations Year ended December 31, Change (i) 2024 2023 $ % Interest income, net $ 52,019 $ 51,235 $ 784 2 % Gain (loss) on revaluation of derivative liabilities 49 (85) 134 N/M Share of income from equity method investments 2,365 1,583 782 49 % Gain on revaluation of loan receivable 11,804 — 11,804 N/A Gain on revaluation of equity method investment 32,469 — 32,469 N/A Loss on revaluation of financial instruments (6,248) (12,042) 5,794 48 % Impairment loss on other investments (25,650) (23,350) (2,300) (10) % Foreign currency transaction gain (loss) 57,859 (7,324) 65,183 N/M Loss on held-for-sale assets (11,202) — (11,202) N/A Other, net (350) 1,114 (1,464) N/M Total other income 113,115 11,131 101,984 916 % Income tax expense (benefit) (3,436) (3,230) (206) (6) % Loss from discontinued operations — (4,114) 4,114 N/A Net income (loss) $ 40,022 $ (74,553) $ 114,575 N/M (i) “N/M” is defined as not meaningful.
See Note 7 “ Goodwill and Intangible Assets, net ”, Note 6 “ Property, plant and equipment, net ” and Note 8 “ Leases ” to the consolidated financial statements in Item 8 of this Annual Report for additional information.
See Note 18 “ Restructuring ” to the consolidated financial statements in Item 8 of this Annual Report for additional information. Other, net For 2024, other, net was a loss of $0.4 million, compared to income of $1.1 million in 2023.
Income tax benefit (expense) For 2023, we reported an income tax benefit of $3.2 million, compared to an income tax expense of $34.2 million in 2022.
The activity for both the current and prior period relates primarily to gains and losses on the disposal of assets. Income tax benefit For 2024, we reported an income tax benefit of $3.4 million, compared to an income tax benefit of $3.2 million in 2023.
Net loss For 2023, net loss on a constant currency basis was $73.2 million, representing a 53% improvement from 2022. Adjusted EBITDA For 2023, Adjusted EBITDA on a constant currency basis was $64.5 million, representing an 8% improvement from 2022.
Net income (loss) from continuing operations For 2024, net income (loss) from continuing operations on a constant currency basis was $42.0 million, compared to a loss of $70.4 million for 2023. Adjusted EBITDA For 2024, Adjusted EBITDA on a constant currency basis was $(35.9) million, representing a 42% improvement from 2023.
The table below sets forth certain measures of consolidated results from continuing operations on an as-reported and constant currency basis for 2023 compared to 2022, as well as cash and cash equivalents and short-term investments as of December 31, 2023, compared to December 31, 2022, on an as-reported and constant currency basis (in thousands): As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Net revenue $ 87,241 $ 86,749 $ 492 1 % $ 91,711 $ 4,962 6 % Gross profit 11,909 15,436 (3,527) (23) % 12,662 (2,774) (18) % Gross margin 14 % 18 % N/A (4) pp 14 % N/A (4) pp Operating expenses 96,709 126,864 (30,155) (24) % 101,142 (25,722) (20) % Net loss from continuing operations (70,439) (155,178) 84,739 55 % (73,193) 81,985 53 % Adjusted EBITDA (61,564) (70,291) 8,727 12 % (64,507) 5,784 8 % As of December 31, As Reported Change As of December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Cash and cash equivalents $ 669,291 $ 764,644 $ (95,353) (12) % $ 656,647 $ (107,997) (14) % Short-term investments 192,237 113,077 79,160 70 % 187,826 74,749 66 % Total cash and cash equivalents and short-term investments $ 861,528 $ 877,721 $ (16,193) (2) % $ 844,473 $ (33,248) (4) % 65 T able of Contents Net revenue As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Cannabis flower $ 62,071 $ 63,593 $ (1,522) (2) % $ 65,573 $ 1,980 3 % Cannabis extracts 24,569 22,522 2,047 9 % 25,502 2,980 13 % Other 601 634 (33) (5) % 636 2 — % Net revenue $ 87,241 $ 86,749 $ 492 1 % $ 91,711 $ 4,962 6 % As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Canada $ 64,702 $ 56,233 $ 8,469 15 % $ 67,073 $ 10,840 19 % Israel 21,134 30,516 (9,382) (31) % 23,182 (7,334) (24) % Other countries 1,405 — 1,405 N/M 1,456 1,456 N/M Net revenue $ 87,241 $ 86,749 $ 492 1 % $ 91,711 $ 4,962 6 % Net Revenue For 2023, net revenue on a constant currency basis was $91.7 million, representing a 6% increase from 2022.
The table below sets forth certain measures of consolidated results from continuing operations on an as-reported and constant currency basis for 2024 compared to 2023, as well as cash and cash equivalents and short-term investments as of December 31, 2024, compared to December 31, 2023, on an as-reported and constant currency basis (in thousands): As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2024 2023 $ % 2024 $ % Net revenue $ 117,615 $ 87,241 $ 30,374 35 % $ 118,983 $ 31,742 36 % Gross profit 25,198 11,909 13,289 112 % 25,505 13,596 114 % Gross margin 21 % 14 % N/A 7 pp 21 % N/A 7 pp Operating expenses 101,727 96,709 5,018 5 % 102,972 6,263 6 % Net income (loss) from continuing operations 40,022 (70,439) 110,461 N/M 42,007 112,446 N/M Adjusted EBITDA (34,942) (61,564) 26,622 43 % (35,891) 25,673 42 % As of December 31, As Reported Change As of December 31, Constant Currency Change 2024 2023 $ % 2024 $ % Cash and cash equivalents $ 858,805 $ 669,291 $ 189,514 28 % $ 869,761 $ 200,470 30 % Short-term investments — 192,237 (192,237) (100) % — (192,237) (100) % Total cash and cash equivalents and short-term investments $ 858,805 $ 861,528 $ (2,723) — % $ 869,761 $ 8,233 1 % 61 Table of Contents Net revenue As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2024 2023 $ % 2024 $ % Cannabis flower $ 87,912 $ 62,070 $ 25,842 42 % $ 88,904 $ 26,834 43 % Cannabis extracts 29,168 24,569 4,599 19 % 29,552 4,983 20 % Other 535 602 (67) (11) % 527 (75) (12) % Net revenue $ 117,615 $ 87,241 $ 30,374 35 % $ 118,983 $ 31,742 36 % As Reported As Adjusted for Constant Currency Year ended December 31, As Reported Change Year ended December 31, Constant Currency Change 2024 2023 $ % 2024 $ % Canada $ 82,437 $ 64,702 $ 17,735 27 % $ 83,709 $ 19,007 29 % Israel 28,368 21,134 7,234 34 % 28,454 7,320 35 % Other countries 6,810 1,405 5,405 385 % 6,820 5,415 385 % Net revenue $ 117,615 $ 87,241 $ 30,374 35 % $ 118,983 $ 31,742 36 % For 2024, net revenue on a constant currency basis was $119.0 million, representing a 36% increase from 2023.
Cost of sales For 2023, we reported consolidated cost of sales of $74.5 million, representing a $3.2 million increase from 2022.
No such sales were recognized for the year ended December 31, 2023. 54 Table of Contents Cost of sales For 2024, we reported consolidated cost of sales of $91.7 million, representing a $17.2 million increase from 2023.
This was primarily due to higher cannabis flower and extract sales in the Canadian adult-use market, partially offset by lower cannabis flower sales in the Israeli medical market, lower inventory reserves, lower cannabis biomass costs and the impact of the weakened Canadian dollar and New Israeli Shekel against the U.S. dollar during the period.
This increase was primarily due to the impact of the inventory step-up from the Cronos GrowCo Transaction, higher cannabis flower and extract sales in the Canadian market, and higher cannabis flower sales in Israel and other countries, partially offset by production cost improvements.
The change was primarily due to improved results from our equity method investment in Cronos GrowCo. Gain (loss) on revaluation of financial instruments For 2022, we reported a gain on revaluation of financial instruments of $14.7 million, representing an increase of $6.1 million from 2021. The increase was due to the change in fair value of our investment in Vitura.
Share of income from equity method investments For 2024, we reported share of income from equity method investments of $2.4 million, representing an increase of $0.8 million from 2023. The increase was primarily due to income pick-ups from our equity method investment in Cronos GrowCo.
Prior period amounts have been reclassified to reflect the discontinued operations classification of the U.S. operations.
Prior period amounts 51 Table of Contents have been reclassified to reflect the discontinued operations classification of the U.S. operations. For further detail on the discontinuation of the U.S. operations, see Note 3 “ Discontinued Operations” to the consolidated financial statements under Item 8 of this Annual Report.
This change was primarily due to higher cannabis flower sales in the Israeli medical market and higher cannabis extract sales in the Canadian adult-use market, partially offset by lower cannabis flower sales in the Canadian adult-use market driven by an unfavorable price/mix shift and the impact of the weakening Canadian dollar against the U.S. dollar during 2022. 59 T able of Contents Cost of sales For 2022, we reported consolidated cost of sales of $71.3 million, representing a $1.1 million increase from 2021, despite a 34% increase in net revenue.
Net revenue For 2024, we reported consolidated net revenue of $117.6 million, representing a $30.4 million increase from 2023. This change was primarily due to higher cannabis flower and extract sales in the Canadian market and higher cannabis flower sales in Israel and other countries.
Gross profit decreased on a constant currency basis primarily due to lower cannabis flower sales in the Israeli medical market, an adverse price/mix on cannabis flower sales in Canada resulting in higher excise taxes as a percentage of revenue and the inventory write-down recognized as a result of the decision to wind down operations at Cronos Fermentation, partially offset by higher cannabis flower and extract sales in the Canadian adult-use market.
Gross profit increased on a constant currency basis primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and other countries, and production cost improvements, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.
In Israel, the Company operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production and marketing of dried flower, pre-rolls and oils in the Israeli medical market.
Cronos maintains its 50% equity interest in Cronos GrowCo. In Israel, the Company operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel. Discontinued Operations In the second quarter of 2023, Cronos exited its U.S. hemp-derived cannabinoid product operations.
For more information, see Note 4 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report. 61 T able of Contents Share of income (loss) from equity method investments For 2022, we reported share of income from equity method investments of $3.1 million, representing an increase of $9.4 million from 2021.
As a result of the Cronos GrowCo Transaction on July 1, 2024, we now consolidate Cronos GrowCo and no longer account for our investment in Cronos GrowCo as an equity method investment. See Note 5 “ Investments ” to the consolidated financial statements in Item 8 of this Annual Report for additional information.
Gross profit For 2023, gross profit on a constant currency basis was $12.7 million, representing an 18% decrease from 2022.
No such sales were recognized for the year ended December 31, 2023. Gross profit For 2024, gross profit on a constant currency basis was $25.5 million, representing a 114% increase from 2023.
The decrease in gross profit was primarily due to lower cannabis flower sales in the Israeli medical market, an adverse price/mix on cannabis flower sales in Canada resulting in higher excise taxes as a percentage of revenue and the inventory write-down recognized as a result of the decision to wind down operations at Cronos Fermentation, partially offset by higher cannabis flower and extract sales in the Canadian adult-use market.
The increase in gross profit was primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and other countries, and production cost improvements, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.
Investing activities During 2023, we used $59.5 million of cash in investing activities, compared to $1.8 million during 2022, representing an increase of $57.7 million in net cash used. This change is primarily driven by higher net purchases of short-term investments, partially offset by higher net repayments on loan receivables and lower purchases of property, plant and equipment.
This change is primarily driven by the maturity of certain short-term investments, which were reinvested as cash equivalents upon maturity, as well as cash obtained from the Cronos GrowCo Transaction, partially offset by higher advances of loans receivable, lower loan repayments, and higher purchases of property, plant and equipment in 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−2 removed4 unchanged
Biggest changeA 10% change in the interest rate in effect for 2023 would have an effect of $5.4 million on interest income, net earned on our cash equivalents, short-term investments.
Biggest changeA 10% change in the interest rate in effect for 2024 would have an effect of $5.2 million on interest income, net earned on our cash equivalents, short-term investments. Foreign currency risk Our consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report are expressed in U.S. dollars.
A 10% change in the interest rate in effect on December 31, 2023 would not have a material effect on the fair value of our cash equivalents and short-term investments as the majority of the portfolio had a maturity date of three months or less.
A 10% change in the interest rate in effect on December 31, 2024 would not have a material effect on the fair value of our cash equivalents and short-term investments as the majority of the portfolio had a maturity date of three months or less.
Appreciating foreign currencies relative to the U.S. dollar will adversely impact operating income and net earnings, while depreciating foreign currencies relative to the U.S. dollar will have a positive impact. For the years ended December 31, 2023 and December 31, 2022, we had foreign currency gain (loss) on translation of $21.5 million and $(50.6) million, respectively.
Appreciating foreign currencies relative to the U.S. dollar will adversely impact operating income and net earnings, while depreciating foreign currencies relative to the U.S. dollar will have a positive impact. For the years ended December 31, 2024 and December 31, 2023, we had foreign currency gain (loss) on translation of $(86.3) million and $21.5 million, respectively.
As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains and losses could have a significant, and potentially adverse, effect on our results of operations. 71 T able of Contents
As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains and losses could have a significant, and potentially adverse, effect on our results of operations. 67 Table of Contents
A 10% change in the exchange rates for the Canadian dollar would affect the carrying amount of the net assets by approximately $97.7 million and $77.4 million as of December 31, 2023 and December 31, 2022, respectively. The corresponding impact would be recorded in accumulated other comprehensive income.
A 10% change in the exchange rates for the Canadian dollar would affect the carrying amount of the net assets by approximately $40.1 million and $97.7 million as of December 31, 2024 and December 31, 2023, respectively. The corresponding impact would be recorded in accumulated other comprehensive income.
During the years ended December 31, 2023 and December 31, 2022, we had interest income, net of $51.2 million and $22.5 million, respectively.
During the years ended December 31, 2024 and December 31, 2023, we had interest income, net of $52.0 million and $51.2 million, respectively.
Foreign currency risk Our consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report are expressed in U.S. dollars. In addition, we have net assets, liabilities, and revenues denominated in foreign currencies, including Canadian dollars and Israeli new shekels. As a result, we are exposed to foreign currency translation gains and losses.
In addition, we have net assets, liabilities, and revenues denominated in foreign currencies, including Canadian dollars and Israeli new shekels. As a result, we are exposed to foreign currency translation gains and losses.
Removed
A 10% change in the interest rate in effect on December 31, 2022, would not have a material effect on (i) fair value of the cash equivalents and short-term investments as the majority of the portfolio had a maturity date of three months or less, or (ii) interest income, net.
Removed
Management continues to monitor external interest rates and revise our investment strategy as a result. During the year ended December 31, 2023, our average variable interest rate increased by approximately 1.45%. During the year ended December 31, 2022, our average variable interest rate did not materially change.

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