What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 459 added, 277 removed, 489 unchanged (60% of the section changed)

Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) for the three months ended M arch 3 1 , 2021 and 2020 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three months ended March 3 1 , 202 1 and 20 20 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 3 0 , 2021 and 2020 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 3 0 , 2021 and 20 20 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

dollars, except share amounts) Table of Contents

As of March 31, 2021 As of December 31, 2020

As of June 30, 2021 As of December 31, 2020

Assets (Unaudited) (Audited)

2 unchanged sentences

Short-term investments 201,699 211,766

Accounts receivable, net (i)

Accounts receivable, net 11,299 8,928

Other receivables 2,468 10,033

Current portion of loans receivable, net (ii)

Current portion of loans receivable, net 5,028 7,083

Prepaids and other current assets 10,153 11,161

4 unchanged sentences

Investments in equity accounted investees, net 20,970 19,235

Loan receivable, net (ii)

90,953 87,191

Other investments 110,392 —

Loan receivable, net 94,113 87,191

Property, plant and equipment, net 193,920 187,599

11 unchanged sentences

Total liabilities 208,699 217,514

Commitments and contingencies (iii)

Commitments and contingencies (see Note 9)

Shareholders’ equity

Share capital (iv, v)

Share capital (i, ii)

572,858 569,260

6 unchanged sentences

Total liabilities and shareholders’ equity $ 1,838,611 $ 1,925,682

(i) Net of current expected credit loss allowance on accounts receivable of $ 66 and $ 74 as of March 31, 2021 and December 31, 2020, respectively.

(ii) Net of current expected credit loss allowance on loans receivable of $ 3,020 and $ 2,439 as of March 31, 2021 and December 31, 2020, respectively.

(iii) Refer to Note 9.

Commitments and Contingencies in the notes to condensed consolidated financial statements.

(iv) Authorized for issuance as of March 31, 2021:

(i) Authorized for issuance as of June 30, 2021:

unlimited and December 31, 2020:

(v) Shares issued as of March 31, 2021:

(ii) Shares issued as of June 30, 2021:

371,805,547 and December 31, 2020:

4 unchanged sentences

(In thousands of U.S dollars, except share and per share amounts, unaudited)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

Net revenue, before excise taxes $ 18,848 $ 11,432 $ 33,502 $ 20,776

3 unchanged sentences

Inventory write-down 11,961 3,062 11,961 11,024

Gross profit (loss) ( 2,963 ) ( 6,476 )

Gross loss ( 15,784 ) ( 2,922 ) ( 18,747 ) ( 9,398 )

Operating expenses

9 unchanged sentences

Gain (loss) on revaluation of derivative liabilities 115,248 ( 35,880 ) ( 1,626 ) 77,488

Impairment loss on property, plant and equipment and right-of-use assets ( 1,741 ) —

Other loss ( 1,859 ) ( 378 )

Impairment loss on long-lived assets — ( 40,000 ) ( 1,741 ) ( 40,000 )

Share of loss from equity accounted investments ( 1,115 ) ( 794 ) ( 2,758 ) ( 1,966 )

Other, net 1,127 ( 9 ) 911 785

Total other income (loss) 117,553 ( 72,949 ) ( 592 ) 47,792

2 unchanged sentences

Net income (loss) 56,775 ( 107,703 ) ( 104,850 ) ( 32,022 )

Net income (loss) attributable to:

Cronos Group $ ( 161,312 ) $ 76,040

Non-controlling interests ( 313 ) ( 359 )

$ ( 161,625 ) $ 75,681

Net loss attributable to non-controlling interest ( 279 ) ( 726 ) ( 592 ) ( 1,085 )

Net income (loss) attributable to Cronos Group $ 57,054 $ ( 106,977 ) $ ( 104,258 ) $ ( 30,937 )

Other comprehensive income (loss)

Net income (loss) $ 56,775 $ ( 107,703 ) $ ( 104,850 ) $ ( 32,022 )

Other comprehensive income (loss):

Foreign exchange gain (loss) on translation 13,470 51,871 29,754 ( 61,821 )

Total other comprehensive income (loss) 13,470 51,871 29,754 ( 61,821 )

Comprehensive loss $ ( 145,341 ) $ ( 38,011 )

Comprehensive income (loss) attributable to:

Cronos Group $ ( 146,167 ) $ ( 37,675 )

Non-controlling interests 826 ( 336 )

$ ( 145,341 ) $ ( 38,011 )

Net income (loss) per share (i)

Basic - continuing operations $ ( 0.44 ) $ 0.22

Diluted - continuing operations (ii)

( 0.44 ) 0.20

Comprehensive income (loss) 70,245 ( 55,832 ) ( 75,096 ) ( 93,843 )

comprehensive income (loss) attributable to non-controlling interests ( 394 ) ( 762 ) 432 ( 1,098 )

Comprehensive income (loss) attributable to Cronos Group $ 70,639 $ ( 55,070 ) $ ( 75,528 ) $ ( 92,745 )

Net income (loss) per share

Basic and diluted - continuing operations $ 0.15 $ ( 0.31 ) $ ( 0.28 ) $ ( 0.09 )

Weighted average number of outstanding shares

Basic 371,721,382 349,075,408 367,391,118 348,946,439

363,012,740 374,330,168

(i) For the three months ended March 31, 2021 and 2020, the Company reported a basic and diluted loss from discontinued operations of $ 0.00 per share and $ 0.00 per share and $ 0.00 per share and $ 0.00 per share, respectively.

Earnings (Loss) per Share.

(ii) In computing diluted earnings per share, incremental common shares are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive.

Earnings (Loss) per Share.

Diluted 375,349,856 349,075,408 367,391,118 348,946,439

See notes to condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Equity

For the three months ended June 30, 2021 and 2020

(In thousands of U.S.

dollars, except share amounts, unaudited) Table of Contents

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Non-controlling interests Total shareholders’ equity

Balance as of January 1, 2021 360,253,332 $ 569,260 $ 34,596 $ 1,064,509 $ 42,999 $ ( 3,196 ) $ 1,708,168

dollars, except share amounts, unaudited)

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income Non-controlling interests Total shareholders’ equity

Balance at April 1, 2021 371,656,590 $ 584,912 $ 32,090 $ 895,503 $ 58,144 $ ( 2,370 ) $ 1,568,279

Warrants exercised 10,000 4 ( 2 ) — — — 2

1 unchanged sentence

Options exercised 80,603 102 ( 102 ) — — — —

Vesting of restricted share units — — 435 — — — 435

Restricted share units settled 58,354 345 ( 345 ) — — — —

Withholding taxes paid on share-based awards — — ( 183 ) ( 63 ) — — ( 246 )

Vesting of restricted share units — — 701 — — — 701

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — 2,000 ( 1,655 ) — — — 345

Top-up rights exercised — 11,278 — — — — 11,278

Top-up rights out-of-period adjustment — ( 14,505 ) — 3,227 — — ( 11,278 )

Net income (loss) — — — 57,054 — ( 279 ) 56,775

Foreign exchange gain (loss) on translation — — — — 13,585 ( 115 ) 13,470

Balance as of March 31, 2021 371,656,590 $ 584,912 $ 32,090 $ 895,503 $ 58,144 $ ( 2,370 ) $ 1,568,279

Balance at June 30, 2021 371,805,547 $ 572,858 $ 32,368 $ 955,721 $ 71,729 $ ( 2,764 ) $ 1,629,912

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Non-controlling interests Total shareholders’ equity

Balance as of January 1, 2020 348,817,472 $ 561,165 $ 23,234 $ 1,137,646 $ 27,838 $ ( 853 ) $ 1,749,030

Balance at April 1, 2020 348,817,472 $ 563,165 $ 25,483 $ 1,213,686 $ ( 85,877 ) $ ( 1,189 ) $ 1,715,268

Vesting of options — — 1,770 — — — 1,770

Options exercised 1,068,930 1,329 ( 1,328 ) — — — 1

Vesting of restricted share units — — 776 — — — 776

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — — 345 — — — 345

Net income (loss) — — — 76,040 — ( 359 ) 75,681

Top-up rights exercised — 717 — — — — 717

Net loss — — — ( 106,977 ) — ( 726 ) ( 107,703 )

Foreign exchange gain (loss) on translation — — — — 51,907 ( 36 ) 51,871

Balance as of March 31, 2020 348,817,472 $ 563,165 $ 25,483 $ 1,213,686 $ ( 85,877 ) $ ( 1,189 ) $ 1,715,268

Balance at June 30, 2020 349,886,402 $ 565,211 $ 27,046 $ 1,106,709 $ ( 33,970 ) $ ( 1,951 ) $ 1,663,045

See notes to condensed consolidated financial statements.

Cronos Group Inc.

Condensed Consolidated Statements of Changes in Equity

For the six months ended June 30, 2021 and 2020

(In thousands of U.S.

dollars, except share amounts, unaudited) Table of Contents

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income Non-controlling interests Total shareholders’ equity

Balance as of January 1, 2021 360,253,332 $ 569,260 $ 34,596 $ 1,064,509 $ 42,999 $ ( 3,196 ) $ 1,708,168

Warrants exercised 7,842,859 1,165 ( 1,163 ) — — — 2

Vesting of options — — 3,928 — — — 3,928

Options exercised 3,651,002 3,315 ( 3,305 ) — — — 10

Restricted share units settled 58,354 345 ( 345 ) — — — —

Withholding taxes paid on share-based awards — — ( 1,162 ) ( 7,757 ) — — ( 8,919 )

Vesting of restricted share units — — 1,136 — — — 1,136

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — 2,000 ( 1,317 ) — — — 683

Top-up rights out-of-period adjustment — ( 3,227 ) — 3,227 — — —

Net loss — — — ( 104,258 ) — ( 592 ) ( 104,850 )

Foreign exchange gain on translation — — — — 28,730 1,024 29,754

Balance at June 30, 2021 371,805,547 $ 572,858 $ 32,368 $ 955,721 $ 71,729 $ ( 2,764 ) $ 1,629,912

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Non-controlling interests Total shareholders’ equity

Balance as of January 1, 2020 348,817,472 $ 561,165 $ 23,234 $ 1,137,646 $ 27,838 $ ( 853 ) $ 1,749,030

Vesting of options — — 3,500 — — — 3,500

Options exercised 1,068,930 1,329 ( 1,328 ) — — — 1

Vesting of restricted share units — — 1,482 — — — 1,482

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — 2,000 158 — — — 2,158

Top-up rights exercised — 717 — — — — 717

Net loss — — — ( 30,937 ) — ( 1,085 ) ( 32,022 )

Foreign exchange loss on translation — — — — ( 61,808 ) ( 13 ) ( 61,821 )

Balance at June 30, 2020 349,886,402 $ 565,211 $ 27,046 $ 1,106,709 $ ( 33,970 ) $ ( 1,951 ) $ 1,663,045

See notes to condensed consolidated financial statements.

Cronos Group Inc.

Condensed Consolidated Statements of Cash Flows

1 unchanged sentence

dollars, except share amounts, unaudited) Table of Contents

Three months ended March 31,

Six months ended June 30,

Operating activities

Net income (loss) $ ( 161,625 ) $ 75,681

Items not affecting cash:

Inventory write-down — 7,962

Net loss $ ( 104,850 ) $ ( 32,022 )

Adjustments to reconcile net loss to cash provided by operating activities:

Share-based payments 5,064 4,982

Depreciation and amortization 5,083 2,879

Share of loss from investments in equity accounted investees 2,758 1,966

Gain (loss) on revaluation of derivative liabilities 1,626 ( 77,488 )

Impairment loss on property, plant and equipment and right-of-use assets 1,741 —

Expected credit losses on financial assets and non-cash charges to inventory 681 2,068

Impairment loss on long-lived assets 1,741 40,000

Expected credit losses on long-term financial assets — 1,357

Other non-cash operating activities, net ( 1,192 ) 599

Changes in non-cash working capital:

Changes in operating assets and liabilities:

Accounts receivable, net ( 2,194 ) 2,895

2 unchanged sentences

Inventory, net ( 1,010 ) ( 24,292 )

Inventory write-down 11,961 11,024

Accounts payable and other liabilities ( 13,412 ) ( 8,417 )

1 unchanged sentence

Investing activities

Proceeds from (purchase of) short-term investments, net — 80,333

Purchase of short-term investments ( 120,180 ) ( 200,173 )

Proceeds from short-term investments 136,204 279,275

Purchase of other investments ( 110,392 ) —

Purchase of property, plant and equipment ( 8,347 ) ( 13,344 )

Purchase of intangible assets ( 843 ) ( 2,754 )

Proceeds from sale of held-for-sale assets 2,059 —

Advances on loans receivable ( 5,064 ) ( 23,974 )

Other non-cash investing activities, net — 781

Proceeds from sale of other investments — 769

Cash flows provided by (used in) investing activities ( 106,563 ) 39,799

Financing activities

Repayment of lease obligations ( 613 ) ( 448 )

Withholding taxes paid on share-based awards ( 8,919 ) —

Other non-cash investing activities, net 10 —

Proceeds from exercise of warrants and options 12 1

Cash flows provided by (used in) financing activities ( 8,907 ) 1

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(In thousands of $, except share amounts) Table of Contents

Background, Basis of Presentation and Accounting Policies

10 unchanged sentences

Cronos Group has established strategic joint ventures in Canada, Israel, and Colombia.

Cronos Israel (as defined herein) is consolidated for financial reporting purposes.

“Cronos Israel” consists 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.

Pharmacy Ltd.) and is consolidated for financial reporting purposes.

The Company also holds approximately 31 % of the issued capital of Cronos Australia Limited (“Cronos Australia”) and accounts for its investment in Cronos Australia under the equity method of accounting.

For additional discussion regarding the joint ventures and strategic investment, see Note 3.

Investments in Equity Accounted Investees, net .

(b) Out-of-period adjustments

The Company identified an error in the accounting related to the withholding taxes on the net exercise of stock options, which resulted in an understatement of accounts payable and other liabilities of $ 966 and overstatements of other receivables, retained earnings and common stock of $ 3,202 , $ 3,838 and $ 330 , respectively, as of December 31, 2020.

The error was deemed immaterial, and thus the Company has recorded an out-of-period adjustment to the condensed consolidated balance sheet and the condensed consolidated statement of changes in equity as of March 31, 2021 to correct the error.

During the three months ended March 31, 2021, the Company identified an error in the accounting related to the withholding taxes on the net exercise of stock options, which resulted in an understatement of accounts payable and other liabilities of $ 966 and overstatements of other receivables, retained earnings and share capital of $ 3,202 , $ 3,838 and $ 330 , respectively, as of December 31, 2020.

This error had no impact to the condensed consolidated statement of net income (loss) and comprehensive income (loss).

The impact of the out-of-period adjustments are included within the changes in non-cash working capital and withholding taxes paid on share-based awards lines in the Company’s condensed consolidated statements of cash flows.

The impact of the out-of-period adjustments are included within the changes in operating assets and liabilities and withholding taxes paid on share-based awards lines in the Company’s condensed consolidated statements of cash flows.

During the three months ended June 30, 2021, the Company identified an error in the accounting related to the exercise of Top-up Rights (as defined herein), which resulted in an overstatement of share capital and an understatement of gain on revaluation of derivative liabilities of $ 3,227 as of December 31, 2020, and overstatements of share capital and loss on revaluation of derivative liabilities and an understatement of retained earnings of $ 14,505 , $ 11,278 and $ 3,227 , respectively, as of March 31, 2021.

The error was deemed immaterial, and thus the Company has recorded an out-of-period adjustment to the condensed consolidated balance sheet, the condensed consolidated statement of net income (loss) and comprehensive income (loss) and the condensed consolidated statement of changes in equity during the second quarter of 2021 to correct the error.

The impact of the out-of-period adjustments are included within the adjustments to net loss in the Company’s condensed consolidated statements of cash flows.

6 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for any other reporting period.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for any other reporting period.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Financial Statements”).

Certain prior year amounts have been reclassified to conform to the current year presentation of our condensed consolidated financial statements.

These reclassifications had no effect on the reported results of operations and ending shareholder’s equity.

These reclassifications had no effect on the reported results of operations and ending shareholders’ equity.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

(d) Adoption of new accounting pronouncements

1 unchanged sentence

2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU No.

2020-01 clarifies the interaction of accounting for the transition into and out of the equity method as well as measuring certain purchased options and forwards contracts to acquire investments.

2020-01 clarifies the interaction of accounting for the transition into and out of the equity method as well as measuring certain purchased options and forward contracts to acquire investments.

The adoption of ASU No.

6 unchanged sentences

2019-12 did not have an impact on the Company’s interim condensed consolidated financial statements.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(e) New accounting pronouncements not yet adopted

4 unchanged sentences

The Company is currently evaluating the impact ASU No.

2020-06 will have on its interim condensed consolidated financial statements.

2020-06 will have on its condensed consolidated financial statements.

Inventory, net

Inventory, net is comprised of the following items:

As of March 31, 2021 As of December 31, 2020

Raw materials, net $ 11,182 $ 11,489

Work-in-progress – dry cannabis, net 21,590 20,520

Work-in-progress – cannabis extracts, net 5,036 5,758

Finished goods – dry cannabis, net 5,677 4,894

Finished goods – cannabis extracts, net 2,141 1,011

As of June 30, 2021 As of December 31, 2020

Raw materials $ 7,471 $ 11,489

Work-in-progress 17,291 26,278

Finished goods 10,247 5,905

Supplies and consumables 596 330

1 unchanged sentence

Inventory is written down for any obsolescence such as slow-moving or non-marketable products, or when the net realizable value of inventory is less than the carrying value.

For the three months ended March 31, 2021 and 2020, the Company recorded write-downs related to inventory of $ nil and $ 7,962 , respectively.

Investments in Equity Accounted Investees, net

During the three months ended June 30, 2021 and 2020, the Company recorded write-downs related to inventory of $ 11,961 and $ 3,062 , respectively.

During the six months ended June 30, 2021 and 2020, the Company recorded write-downs related to inventory of $ 11,961 and $ 11,024 , respectively.

(a) Variable interest entities and investments in equity accounted investees, net

The Company holds variable interests in Cronos Growing Company Inc.

1 unchanged sentence

(“MedMen Canada”) and Cannasoul Lab Services Ltd.

The Company’s investments in Cronos GrowCo, Natuera and MedMen Canada are exposed to economic variability from each entity’s performance;

however, the Company does not consolidate the entities as it does not have the power to direct the activities that most significantly impact each entity’s economic performance.

Thus, Cronos Group is not considered the primary beneficiary of each entity.

These investments are accounted for as equity method investments classified as “Investments in equity accounted investees, net” in the consolidated balance sheets.

Cronos GrowCo is a joint venture incorporated under the Canada Business Corporations Act (“CBCA”) on June 14, 2018 with the objective of cultivating and commercializing cannabis and cannabis products.

2 unchanged sentences

The joint venture partners mutually determine the quantity and strains of cannabis grown.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

MedMen Canada is a joint venture incorporated under the CBCA on March 13, 2018, with the objective of the retail sale and marketing of cannabis products in Canada.

MedMen Canada holds the exclusive license to the MedMen brand in Canada for a minimum term of 20 years.

Cronos holds variable interests in MedMen Canada through its ownership of 50 % of MedMen Canada’s common shares and other subordinated debt.

The Company holds variable interests in MedMen Canada through its ownership of 50 % of MedMen Canada’s common shares and other subordinated debt.

MedMen Canada’s economic performance is driven by the quantity and strains of cannabis sold.

1 unchanged sentence

Natuera is a joint venture registered in Luxembourg with the objective of cultivating and commercializing hemp and cannabis products.

Cronos holds variable interests in Natuera through its ownership of 50 % of Natuera’s common shares and other debt.

The Company holds variable interests in Natuera through its ownership of 50 % of Natuera’s common shares.

Natuera’s economic performance is driven by the quantity and strains of cannabis grown, which is mutually determined by the joint venture partners.

The Company’s investments in Cronos GrowCo, Natuera and MedMen Canada are exposed to economic variability from each entity’s performance;

however, the Company does not consolidate the entities as it does not have the power to direct the activities that most significantly impact each entity’s economic performance.

Thus, Cronos Group is not considered the primary beneficiary of each entity.

These investments are accounted for as equity method investments classified as “Investments in equity accounted investees, net” in the consolidated balance sheets.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

CLS is a wholly owned subsidiary of Cannasoul Analytics Ltd., incorporated with the purpose of establishing a commercial cannabis analytical testing laboratory located on the premises of Cronos Israel (the “Cannasoul Collaboration”).

Cronos Israel agreed to advance up to ILS 8,297 ($ 2,483 ) by a non-recourse loan to CLS over a period of two years from April 1, 2020 for the capital and operating expenditures of the laboratory.

Cronos Israel agreed to advance up to ILS 8,297 ($ 2,511 ) by a non-recourse loan (the “Cannasoul Collaboration Loan”) to CLS over a period of two years from April 1, 2020 for the capital and operating expenditures of the laboratory.

The loan bears interest at 3.5 % annually.

6 unchanged sentences

A reconciliation of the carrying amount of the investments in associates and joint ventures is as follows:

Ownership interest As of March 31, 2021 As of December 31, 2020

Ownership interest As of June 30, 2021 As of December 31, 2020

Cronos Australia 31 % $ — $ —

Cronos GrowCo 50 % 19,022 19,235

Natuera 50 % — —

$ 20,970 $ 19,235

The Company’s share of net earnings (losses) from equity investments accounted for under the equity method of accounting:

For the three months ended March 31,

Cronos GrowCo $ ( 299 ) $ ( 311 )

(i) On April 1, 2021, the Company and an affiliate of Agroidea (“AGI”), the other joint venture partner of Natuera, converted all advances made to Natuera under the master loan agreement entered into with Natuera on September 27, 2019 (the “Natuera Series A Loan”), plus accrued interest, into equity of Natuera.

Total aggregate gross advances to Natuera under the Natuera Series A Loan were $ 15,500 , of which the Company advanced 50 % and AGI advanced the remaining 50 %, or $ 7,750 each.

As a result, the Company transferred the carrying value of the Natuera Series A Loan of approximately $ 2,013 plus accrued interest of $ 540 , for a total investment value of $ 2,553 , which approximates fair value, to investments in equity accounted investees in respect of Natuera.

Loans Receivable, net.

The Company’s share of net losses from equity investments accounted for under the equity method of accounting:

For the three months ended June 30, For the six months ended June 30,

2021 2020 2021 2020

Cronos Australia $ — $ ( 235 ) $ — $ ( 235 )

Cronos GrowCo ( 459 ) ( 190 ) ( 758 ) ( 501 )

Natuera ( 656 ) ( 369 ) ( 2,000 ) ( 1,230 )

$ ( 1,115 ) $ ( 794 ) $ ( 2,758 ) $ ( 1,966 )

(i) The Company’s share of accumulated net losses in excess of its equity investment in Natuera has been applied as a loss allowance on the loan receivable.

Loans Receivable, net.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

The Company determined that the maximum exposure of loss on investments in non-consolidated investments is limited to the Company’s initial investment, advances and/or loans for each variable interest entity.

The following is a summary of the maximum exposure to loss as of March 31, 2021 and December 31, 2020:

Ownership interest As of March 31, 2021 As of December 31, 2020

The following is a summary of the maximum exposure to loss as of June 30, 2021 and December 31, 2020:

Ownership interest As of June 30, 2021 As of December 31, 2020

Cronos Australia 31 % $ 1,573 $ 1,530

3 unchanged sentences

Total $ 31,837 $ 31,276

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(b) Other investments

Other investments consist of investments in options of companies in the cannabis industry.

On June 14, 2021, the Company purchased an option to acquire 473,787 shares of Class A Common Stock of PharmaCann, Inc.

(“PharmaCann”), a vertically integrated cannabis company in the United States, at an exercise price of $ 0.0001 per share, representing approximately 10.5 % of PharmaCann’s issued and outstanding capital stock on a fully diluted basis, for an aggregate purchase price of approximately $ 110,392 .

The option exercise will be based upon various factors, including the status of U.S.

federal cannabis legalization, as well as regulatory approvals, including in the states where PharmaCann operates that may be required upon exercise.

This option is classified as an equity security without a readily determinable fair value.

The Company has elected to measure the fair value of the option at cost less impairment, if any, and subsequently adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The option is reported as other investments on the condensed consolidated balance sheet for the period ended June 30, 2021.

As of June 30, 2021 and December 31, 2020, the Company did not hold any additional other investments.

Loans Receivable, net

As of March 31, 2021 As of December 31, 2020

As of June 30, 2021 As of December 31, 2020

Natuera Series A Loan (i)

$ 2,013 $ 3,518

GrowCo Facility (ii)

9 unchanged sentences

Total loans receivable, net $ 99,141 $ 94,274

(i) As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $ 1,151 and $ 685 , respectively, was recorded against the master loan agreement entered into with Natuera on September 27, 2019 (the “Series A loan”).

As of March 31, 2021 and December 31, 2020, a loss allowance of $ 4,582 and $ 3,024 , respectively, was recorded against the Series A Loan related to the Company’s share of net loss from Natuera in excess of the carrying value of the equity method investment.

Refer to Note 3 and Note 14.

(ii) As of March 31, 2021 and December 31, 2020, Cronos GrowCo had drawn C$ 98,500 ($ 78,405 ) and C$ 95,150 ($ 74,626 ), respectively, from a credit agreement it entered into with the Company in August 2019 (the “GrowCo Facility”).

As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $ 1,569 and $ 1,470 , respectively, was recorded against the GrowCo Facility.

(iii) As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $ 274 and $ 259 , respectively, was recorded against the Mucci promissory note.

(iv) As of March 31, 2021 and December 31, 2020 CLS has received ILS 4,149 (approximately $ 1,241 ) from a non-recourse loan.

As of March 31, 2021 and December 31, 2020 a current expected credit loss allowance of $ 26 and $ 25 , respectively, was recorded against the Cannasoul collaboration loan.

(i) On April 1, 2021, the Company and AGI converted all advances made to Natuera under the Series A Loan, plus accrued interest, into equity of Natuera.

Total aggregate gross advances to Natuera under the Natuera Series A Loan were $ 15,500 , of which the Company advanced 50 % and AGI advanced the remaining 50 %, or $ 7,750 each.

(ii) As of June 30, 2021 and December 31, 2020, Cronos GrowCo had drawn C$ 100,000 ($ 80,678 ) and C$ 95,150 ($ 74,626 ), respectively, from a credit agreement it entered into with the Company in August 2019 (the “GrowCo Facility”).

As of June 30, 2021 and December 31, 2020, the Company had an allowance for credit losses of $ 1,590 and $ 1,470 , respectively, recorded against the GrowCo Facility.

(iii) As of June 30, 2021 and December 31, 2020, the Company had an allowance for credit losses of $ 278 and $ 259 , respectively, recorded against the promissory note receivable agreement entered into with Mucci on June 28, 2019 (the “Mucci Promissory Note”).

(iv) As of June 30, 2021 and December 31, 2020 CLS has received ILS 6,223 and ILS 4,149 (approximately $ 1,909 and $ 1,287 respectively) from the Cannasoul Collaboration Loan.

As of June 30, 2021 and December 31, 2020, the Company had an allowance for credit losses of $ 39 and $ 25 , respectively, recorded against the Cannasoul Collaboration Loan.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

Derivative Liabilities

4 unchanged sentences

As summarized in this note, if exercised in full on such date, the exercise of the Altria Warrant would have resulted in Altria holding a total ownership interest in the Company of approximately 55 % (calculated on a non-diluted basis).

As of June 30, 2021, Altria beneficially held an approximately 42 % ownership interest in the Company (calculated on a non-diluted basis).

Pursuant to the investor rights agreement between the Company and Altria, entered into in connection with the closing of the Altria Investment (the “Investor Rights Agreement”), the Company granted Altria certain rights, among others, summarized in this note.

The summaries below are qualified entirely by the terms and conditions fully set out in the Investor Rights Agreement and the Altria Warrant, as applicable.

The Altria Warrant entitles the holder, subject to certain qualifications and limitations, to subscribe for and purchase up to an additional 10 % of the common shares of Cronos (approximately 82.6 million common shares at March 31, 2021) at a per share exercise price of C$ 19.00 , which expires on March 8, 2023.

The Altria Warrant entitles the holder, subject to certain qualifications and limitations, to subscribe for and purchase up to an additional approximate 10 % of the common shares of Cronos (approximately 83 million common shares at June 30, 2021) at a per share exercise price of C$ 19.00 , which expires on March 8, 2023.

The Company granted to Altria, subject to certain qualifications and limitations, upon the occurrence of certain issuances of common shares of the Company executed by the Company (including issuances pursuant to the R&D partnership with Ginkgo Bioworks Inc.

2 unchanged sentences

These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20 %.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

In addition to (and without duplication of) the Pre-emptive Rights, the Company granted to Altria, subject to certain qualifications and limitations, the right to subscribe for common shares of the Company issuable in connection with the exercise, conversion or exchange of convertible securities of the Company issued prior to March 8, 2019 or thereafter (excluding any convertible securities of the Company owned by Altria or any of its subsidiaries), a share incentive plan of the Company, the exercise of any right granted by the Company pro rata to all shareholders of the Company to purchase additional common shares and/or securities of the Company, bona fide bank debt, equipment financing or non-equity interim financing transactions that contemplate an equity component or bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures involving the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any such transactions (“Top-up Rights”).

2 unchanged sentences

The Altria Warrant, Pre-emptive Rights, and fixed price Top-up Rights have been classified as derivative liabilities.

A reconciliation of the carrying amounts of the derivative liability for the three months ended March 31, 2021 and 2020:

As of January 1, 2021 Revaluation (gain)/loss Exercise of rights Foreign exchange effect As of March 31, 2021

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

A reconciliation of the carrying amounts of the derivative liability for the three months ended June 30, 2021 and 2020:

As of April 1, 2021 Revaluation gain Out-of-period adjustment Foreign exchange effect As of June 30, 2021

(a) Altria Warrant $ 234,656 $ ( 85,778 ) $ — $ 1,205 $ 150,083

2 unchanged sentences

$ 272,300 $ ( 115,248 ) $ 11,278 $ 1,233 $ 169,563

As of January 1, 2020 Revaluation (gain)/loss Exercise of rights Foreign exchange effect As of March 31, 2020

As of April 1, 2020 Revaluation loss Exercise of rights Foreign exchange effect As of June 30, 2020

(a) Altria Warrant $ 132,366 $ 30,052 $ — $ 3,540 $ 165,958

2 unchanged sentences

$ 165,449 $ 35,880 $ ( 727 ) $ 5,112 $ 205,714

A reconciliation of the carrying amounts of the derivative liability for the six months ended June 30, 2021 and 2020:

As of January 1, 2021 Revaluation loss/(gain) Exercise of rights Foreign exchange effect As of June 30, 2021

(a) Altria Warrant $ 138,858 $ 7,186 $ — $ 4,039 $ 150,083

(b) Pre-emptive Rights 12,095 1,473 — 358 13,926

$ 163,410 $ 1,626 $ — $ 4,527 $ 169,563

As of January 1, 2020 Revaluation loss/(gain) Exercise of rights Foreign exchange effect As of June 30, 2020

(a) Altria Warrant $ 234,428 $ ( 58,052 ) $ — $ ( 10,418 ) $ 165,958

(b) Pre-emptive Rights 12,787 3,925 — ( 532 ) 16,180

$ 297,160 $ ( 77,488 ) $ ( 727 ) $ ( 13,231 ) $ 205,714

Fluctuations in the Company’s share price are a primary driver for the changes in the derivative valuations during each reporting period.

1 unchanged sentence

Share price is one of the significant observable inputs used in the fair value measurement of each of the Company’s derivative instruments.

During the three months ended March 31, 2021, the Company’s share price increased from December 31, 2020 resulting in a loss on revaluation of $ 116,874 .

During the three months ended March 31, 2020, the Company’s share price decreased from December 31, 2019 resulting in a gain on revaluation of $ 113,368 .

During the three months ended June 30, 2021, the Company’s share price decreased from April 1, 2021 and we recorded an out-of-period adjustment of $ 11,278 .

Background, Basis of Presentation and Accounting Policies for more information on the out-of-period adjustment.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

The fair values of the derivative liabilities were determined using the Black-Scholes pricing model as of March 31, 2021 and December 31, 2020 applying the following inputs:

As of March 31, 2021 As of December 31, 2020

(In thousands of $, except share amounts) Table of Contents

The fair values of the derivative liabilities were determined using the Black-Scholes pricing model as of June 30, 2021 and December 31, 2020 applying the following inputs:

As of June 30, 2021 As of December 31, 2020

Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights

12 unchanged sentences

(ii) The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities.

As of March 31, 2021 and December 31, 2020, the risk-free interest rate uses a range of approximately 0.09 % to 0.86 % and 0.10 % to 0.39 %, respectively, for the Pre-emptive Rights and Top-up Rights.

As of June 30, 2021 and December 31, 2020, the risk-free interest rate uses a range of approximately 0.15 % to 0.85 % and 0.10 % to 0.39 %, respectively, for the Pre-emptive Rights and Top-up Rights.

(iii) The expected life represents the period of time, in years, that the derivative liabilities are expected to be outstanding.

The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked.

As of March 31, 2021 and December 31, 2020, the expected life uses a range of approximately 0.25 year to 4.50 years and 0.50 year to 5.00 years, respectively.

(iv) Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company as of March 31, 2021.

As of June 30, 2021 and December 31, 2020, the expected life uses a range of approximately 0.25 year to 4.25 years and 0.50 year to 5.00 years, respectively.

(iv) Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company as of June 30, 2021.

As of December 31, 2020, volatility was based on the blended historical volatility levels of the Company and peer companies.

1 unchanged sentence

The sensitivity analysis for each significant input is performed by assuming a 10% decrease in the input while other significant inputs remain constant at management’s best estimate as of the respective dates.

While a decrease in the inputs noted below would cause a decrease in the carrying value of the derivative liability, there would also be an equal but opposite impact on net income (loss) as of March 31, 2021.

Increase as of March 31, 2021

Altria Warrant Pre-emptive Rights Top-up Rights

While a decrease in the inputs noted below would cause a decrease in the carrying value of the derivative liability, there would also be an equal but opposite impact on net income (loss).

Decrease as of June 30, 2021 Decrease as of December 31, 2020

Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights

Share price $ 31,375 $ 3,146 $ 1,302 $ 25,819 $ 2,527 $ 2,989

2 unchanged sentences

These inputs are classified in Level 3 on the fair value hierarchy and are subject to volatility and several factors outside of the Company’s control, which could significantly affect the fair value of these derivative liabilities in future periods.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

Share-based Payments

2 unchanged sentences

The Company can no longer make grants under the Prior Option Plans.

The following table summarizes the total stock-based compensation expense associated with the Company’s stock options and RSUs for the three months ended March 31, 2021 and 2020:

For the three months ended March 31,

Vesting of stock options $ 2,064 $ 1,730

Vesting of RSUs 435 706

The following table summarizes the total share-based payments associated with the Company’s stock options and RSUs for the three and six months ended June 30, 2021 and 2020:

For the three months ended June 30, For the six months ended June 30,

2021 2020 2021 2020

Stock options $ 1,864 $ 1,770 $ 3,928 $ 3,500

RSUs 701 776 1,136 1,482

Total share-based payments $ 2,565 $ 2,546 $ 5,064 $ 4,982

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(b) Stock options

3 unchanged sentences

The Prior Option Plans did not, and the 2020 Omnibus Plan does not, authorize grants of options with an exercise price below fair market value.

The following is a summary of the changes during the three months ended March 31, 2021 and 2020:

The following is a summary of the changes in stock options during the six months ended June 30, 2021 and 2020:

Weighted average exercise price (C$) (i)

3 unchanged sentences

Cancellation, forfeiture and expiry of options 14.86 ( 33,699 )

Balance as of March 31, 2021 $ 7.38 8,498,827 2.82

Exercisable as of March 31, 2021 $ 5.75 4,896,820 1.46

Balance as of June 30, 2021 $ 7.45 8,371,631 2.66

Exercisable as of June 30, 2021 $ 6.49 4,679,240 1.43

(i) The weighted average exercise price reflects the conversion of foreign currency-denominated stock options translated into C$ using the average foreign exchange rate as of the date of issuance.

1 unchanged sentence

Balance as of January 1, 2020 $ 4.84 14,149,502 2.56

Exercise of options 2.05 ( 1,807,909 )

Cancellation, forfeiture and expiry of options 15.78 ( 127,045 )

Balance as of March 31, 2020 $ 4.80 14,106,613 2.06

Exercisable as of March 31, 2020 $ 3.11 9,783,544 1.66

Balance as of June 30, 2020 $ 5.13 12,214,548 2.05

Exercisable as of June 30, 2020 $ 3.42 8,688,645 1.78

No stock options were granted during the six months ended June 30, 2021 and 2020.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

The following table summarizes stock options outstanding for the 2020 Omnibus Plan, the 2018 Stock Option Plan, and the 2015 Stock Option Plan:

Stock options outstanding as of

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

2020 Omnibus Plan 2,000,000 2,000,000

3 unchanged sentences

The following is a summary of the changes in RSUs for the three months ended March 31, 2021 and 2020:

The following is a summary of the changes in RSUs for the six months ended June 30, 2021 and 2020:

Number of RSUs (i)

2 unchanged sentences

515,433 11.29

Balance as of March 31, 2021 1,214,261 $ 8.89

(i) RSUs issued in the period vest annually in equal installments over a three-year period following the grant date, subject to such holder’s continued employment through each vesting date.

Vested and issued ( 89,912 ) 7.52

Balance as of June 30, 2021 1,373,878 $ 9.03

Number of RSUs (i)

Weighted average grant date fair value (C$) (ii)

Balance as of January 1, 2020 732,972 $ 15.34

Balance as of June 30, 2020 1,012,249 $ 13.18

(i) RSUs granted in the period vest annually in equal installments over a three-year period following the grant date, subject to such holder’s continued employment through each vesting date.

The vesting of such RSUs is not subject to the achievement of any performance criteria.

(ii) The weighted average exercise price reflects the conversion of foreign currency-denominated RSUs translated into C$ using the foreign exchange rate as of the date of issuance.

Number of RSUs Weighted average grant date fair value (C$)

Balance as of January 1, 2020 and March 31, 2020 732,972 $ 15.34

All RSUs outstanding as of March 31, 2021 and December 31, 2020 were granted under the 2020 Omnibus Plan.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(ii) The weighted average grant date fair value reflects the conversion of foreign currency-denominated RSUs translated into C$ using the foreign exchange rate as of the date of issuance.

(d) Deferred share units

The following is a summary of the changes in DSUs during the three months ended March 31, 2021 and 2020:

The following is a summary of the changes in DSUs during the six months ended June 30, 2021 and 2020:

Number of DSUs Financial liability

Balance as of January 1, 2021 83,293 $ 577

Loss (gain) on revaluation — 211

Balance as of March 31, 2021 83,293 $ 788

Loss on revaluation — 141

Balance as of June 30, 2021 83,293 $ 718

Number of DSUs Financial liability

Balance as of January 1, 2020 33,397 $ 255

Loss (gain) on revaluation — ( 50 )

Balance as of March 31, 2020 33,937 $ 205

All DSUs outstanding as of March 31, 2021 and December 31, 2020 were granted under the DSU Plan.

The following is a summary of the changes in warrants during the three months ended March 31, 2021 and 2020:

DSU liabilities settled ( 8,484 ) ( 46 )

Gain on revaluation — ( 56 )

Balance as of June 30, 2020 24,913 $ 153

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

The following is a summary of the changes in warrants during the six months ended June 30, 2021 and 2020:

Weighted average exercise price (C$) Number of warrants

1 unchanged sentence

Exercise of warrants 0.25 ( 7,987,349 )

Balance as of March 31, 2021 (i)

$ 0.25 10,000

(i) The outstanding warrants were granted in the second quarter of 2016 and expire on May 27, 2021.

Balance as of June 30, 2021 $ — —

Weighted average exercise price (C$) Number of warrants

Balance as of January 1, 2020 and March 31, 2020 $ 0.26 18,066,662

Balance as of January 1, 2020 and June 30, 2020 $ 0.26 18,066,662

As of June 30, 2021, there are no warrants outstanding other than the Altria Warrant.

Derivative Liabilities for further description on the Altria Warrant.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(In thousands of $, except share amounts) Table of Contents

Earnings (Loss) per Share

Basic and diluted earnings (loss) per share from continuing operations are calculated using the following numerators and denominators:

For the three months ended March 31,

Basic earnings per share computation

Net income (loss) attributable to common shareholders of Cronos Group $ ( 161,312 ) $ 76,040

For the three months ended June 30, For the six months ended June 30,

2021 2020 2021 2020

Basic earnings (loss) per share computation

Net income (loss) from continuing operations attributable to the shareholders of Cronos Group $ 57,615 $ ( 106,931 ) $ ( 103,676 ) $ ( 30,891 )

Weighted average number of common shares outstanding 371,721,382 349,075,408 367,391,118 348,946,439

Basic earnings per share (i)

Basic earnings (loss) from continuing operations per share (i)

$ 0.15 $ ( 0.31 ) $ ( 0.28 ) $ ( 0.09 )

Diluted earnings per share computation

Net income (loss) used in the computation of basic earnings per share $ ( 161,312 ) $ 76,040

Loss from discontinued operations attributable to the shareholders of Cronos Group $ ( 561 ) $ ( 46 ) $ ( 582 ) $ ( 46 )

Weighted average number of common shares outstanding 371,721,382 349,075,408 367,391,118 348,946,439

Basic earnings from discontinued operations per share $ 0.00 $ 0.00 $ 0.00 $ 0.00

Diluted earnings (loss) per share computation

Net income (loss) used in the computation of basic earnings (loss) from continuing operations per share $ 57,615 $ ( 106,931 ) $ ( 103,676 ) $ ( 30,891 )

Adjustment for gain (loss) on revaluation of derivative liabilities — ( 729 ) — ( 729 )

Net income (loss) used in the computation of diluted income per share $ ( 161,312 ) $ 76,040

Weighted average number of common shares outstanding used in the computation of basic earnings per share 363,012,740 348,817,472

Net income (loss) used in the computation of diluted earnings (loss) from continuing operations per share $ 57,615 $ ( 107,660 ) $ ( 103,676 ) $ ( 31,620 )

Weighted average number of common shares outstanding used in the computation of basic earnings (loss) per share 371,721,382 349,075,408 367,391,118 348,946,439

Dilutive effect of warrants 5,577 — — —

Dilutive effect of stock options 3,027,518 — — —

Weighted average number of common shares for computation of diluted income (loss) per share 363,012,740 374,330,168

Diluted earnings per share (i)

Dilutive effect of RSUs 595,379 — — —

Weighted average number of common shares for computation of diluted earnings (loss) from continuing operations per share (i)

375,349,856 349,075,408 367,391,118 348,946,439

(i) Basic and dilutive earnings per share from discontinued operations were $ 0.00 and $ 0.00 for the three months ended March 31, 2021 and 2020, respectively.

(ii) In computing diluted earnings per share, incremental common shares are not considered in periods in which a net loss is reported as the inclusion of the common share equivalents would be anti-dilutive.

Diluted earnings (loss) from continuing operations per share $ 0.15 $ ( 0.31 ) $ ( 0.28 ) $ ( 0.09 )

Loss from discontinued operations attributable to the shareholders of Cronos Group $ ( 561 ) $ ( 46 ) $ ( 582 ) $ ( 46 )

Weighted average number of common shares for computation of diluted loss from discontinued operations per share 375,349,856 349,075,408 367,391,118 348,946,439

Diluted earnings from discontinued operations per share $ 0.00 $ 0.00 $ 0.00 $ 0.00

(i) In computing diluted earnings per share, incremental common shares are not considered in periods in which a net loss is reported as the inclusion of the common share equivalents would be anti-dilutive.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because conditions for contingently issuable shares were not satisfied at the end of the reporting periods.

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

Ginkgo equity milestones 14,674,904 14,674,904 14,674,904 14,674,904

7 unchanged sentences

Total anti-dilutive securities 116,862,709 162,091,326 128,373,444 162,158,002

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

Segment Information

8 unchanged sentences

Adjusted EBITDA is defined as earnings before interest, tax, depreciation, non-cash items and items that do not reflect management’s assessment of on-going business performance.

Segment data was as follows for the three months ended March 31, 2021 and 2020:

Three months ended March 31, 2021

The tables below set forth our condensed consolidated results of operations, expressed in thousands of U.S.

dollars for the periods presented.

Our condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods .

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

Segment data was as follows for the three and six months ended June 30, 2021 and 2020:

Three months ended June 30, 2021

United States Rest of World Corporate Expenses Total

3 unchanged sentences

Net revenue $ 2,227 $ 13,395 $ — $ 15,622

Share of loss from investments in equity accounted investees $ — $ 1,643 $ — $ 1,643

Share of loss from equity accounted investments $ — $ 1,115 $ — $ 1,115

Interest income $ 20 $ 2,280 $ — $ 2,300

1 unchanged sentence

Interest income, net $ 20 $ 2,273 $ — $ 2,293

Total assets $ 709,956 $ 386,805 $ 741,850 $ 1,838,611

Depreciation and amortization 68 975 — 1,043

Impairment loss on property, plant and equipment and right-of-use assets 1,741 — — 1,741

Loss from discontinued operations — 21 — 21

Adjusted EBITDA ( 10,711 ) ( 32,605 ) ( 6,443 ) ( 49,759 )

Purchase of property, plant and equipment, net 239 1,428 — 1,667

Three months ended June 30, 2020

United States Rest of World Corporate Expenses Total

Cannabis flower $ — $ 5,674 $ — $ 5,674

Cannabis extracts 2,174 1,917 — 4,091

Other — 118 — 118

Net revenue $ 2,174 $ 7,709 $ — $ 9,883

Share of loss from equity accounted investments $ — $ 794 $ — $ 794

Interest income 9 3,808 — 3,817

Interest expense — ( 83 ) — ( 83 )

Interest income, net $ 9 $ 3,725 $ — $ 3,734

Total assets $ 250,470 $ 348,569 $ 1,311,248 $ 1,910,287

Investments in equity accounted investees — 19,221 — 19,221

Goodwill 178,416 1,115 — 179,531

Depreciation and amortization 36 643 — 679

Impairment loss on long-lived assets 40,000 — — 40,000

Adjusted EBITDA ( 4,785 ) ( 18,618 ) ( 3,583 ) ( 26,986 )

Purchase of property, plant and equipment, net 39 6,894 — 6,933

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

Three months ended March 31, 2020

(In thousands of $, except share amounts) Table of Contents

Six months ended June 30, 2021

United States Rest of World Corporate Expenses Total

3 unchanged sentences

Net revenue $ 4,668 $ 23,565 $ — $ 28,233

Share of loss from investments in equity accounted investees $ — $ 1,172 $ — $ 1,172

Share of loss from equity accounted investments $ — $ 2,758 $ — $ 2,758

Interest income $ 23 $ 4,612 $ — $ 4,635

1 unchanged sentence

Interest income, net $ 23 $ 4,599 $ — $ 4,622

Total assets $ 709,956 $ 386,805 $ 741,850 $ 1,838,611

Depreciation and amortization $ 139 $ 1,639 $ — $ 1,778

Impairment loss on long-lived assets 1,741 — — 1,741

Adjusted EBITDA ( 20,221 ) ( 54,789 ) ( 11,323 ) ( 86,333 )

Adjusted EBITDA is reconciled to net income (loss) as follows for the three months ended March 31, 2021 and 2020:

(In thousands of U.S.

dollars) Three months ended March 31, 2021

US ROW Corporate

Expenses Total

Net income (loss) $ ( 12,092 ) $ ( 142,147 ) $ ( 7,386 ) $ ( 161,625 )

Purchase of property, plant and equipment, net 319 8,028 — 8,347

Six months ended June 30, 2020

United States Rest of World Corporate Expenses Total

Cannabis flower $ — $ 8,415 $ — $ 8,415

Cannabis extracts 4,350 5,317 — 9,667

Other — 233 — 233

Net revenue $ 4,350 $ 13,965 $ — $ 18,315

Share of loss from equity accounted investments $ — $ 1,966 $ — $ 1,966

Interest income 16 11,559 — 11,575

Interest expense — ( 90 ) — ( 90 )

Interest income, net $ 16 $ 11,469 $ — $ 11,485

Impairment loss on property, plant and equipment and right-of-use assets 1,741 — — 1,741

Loss on revaluation of derivative liabilities — 116,874 — 116,874

Other loss — 1,859 — 1,859

Loss from discontinued operations — 21 — 21

Share-based payments 745 1,754 — 2,499

Review costs related to restatement of 2019 interim financial statements — — 2,005 2,005

Adjusted EBIT ( 9,609 ) ( 23,965 ) ( 5,381 ) ( 38,955 )

Total assets $ 250,470 $ 348,569 $ 1,311,248 $ 1,910,287

Depreciation and amortization 69 1,297 — 1,366

Impairment loss on long-lived assets 40,000 — — 40,000

Adjusted EBITDA ( 10,567 ) ( 47,628 ) ( 5,846 ) ( 64,041 )

Purchase of property, plant and equipment, net 219 13,125 — 13,344

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(In thousands of U.S.

dollars) Three months ended March 31, 2020

US ROW Corporate

(In thousands of $, except share amounts) Table of Contents

The following tables set forth a reconciliation of net income (loss) as determined in accordance with U.S.

GAAP to Adjusted EBITDA for the periods indicated:

Three months ended June 30, 2021

United States Rest of World Corporate Expenses Total

Net income (loss) $ ( 11,719 ) $ 79,627 $ ( 11,133 ) $ 56,775

Interest income, net ( 20 ) ( 2,273 ) — ( 2,293 )

Share of loss from equity accounted investments — 1,115 — 1,115

Gain on revaluation of derivative liabilities (ii)

— ( 115,248 ) — ( 115,248 )

Transaction costs (iii)

— — 2,758 2,758

Other, net (iv)

— ( 1,127 ) — ( 1,127 )

Loss from discontinued operations (v)

Share-based payments (vi)

822 1,743 — 2,565

Review costs related to restatement of 2019 interim financial statements (vii)

— — 1,932 1,932

Depreciation and amortization 206 2,997 — 3,203

Adjusted EBITDA $ ( 10,711 ) $ ( 32,605 ) $ ( 6,443 ) $ ( 49,759 )

Three months ended June 30, 2020

United States Rest of World Corporate

Expenses Total

Net loss $ ( 45,566 ) $ ( 55,095 ) $ ( 7,042 ) $ ( 107,703 )

Interest income, net ( 9 ) ( 3,725 ) — ( 3,734 )

Share of loss from equity accounted investments — 794 — 794

Impairment loss on long-lived assets (i)

40,000 — — 40,000

Loss on revaluation of derivative liabilities (ii)

— 35,880 — 35,880

Other, net (iv)

Loss from discontinued operations (v)

Share-based payments (vi)

756 1,790 — 2,546

Review costs related to restatement of 2019 interim financial statements (vii)

— — 3,459 3,459

Depreciation and amortization 34 1,683 — 1,717

Adjusted EBITDA $ ( 4,785 ) $ ( 18,618 ) $ ( 3,583 ) $ ( 26,986 )

Six months ended June 30, 2021

United States Rest of World Corporate Expenses Total

Net loss $ ( 23,811 ) $ ( 62,520 ) $ ( 18,519 ) $ ( 104,850 )

Interest income, net ( 23 ) ( 4,599 ) — ( 4,622 )

Share of loss from equity accounted investments — 2,758 — 2,758

Impairment loss on long-lived assets (i)

1,741 — — 1,741

Loss on revaluation of derivative liabilities (ii)

— 1,626 — 1,626

Transaction costs (iii)

— — 3,259 3,259

Other, net (iv)

— ( 911 ) — ( 911 )

Loss from discontinued operations (v)

Share-based payments (vi)

1,567 3,497 — 5,064

Review costs related to restatement of 2019 interim financial statements (vii)

— — 3,937 3,937

Depreciation and amortization 305 4,778 — 5,083

Adjusted EBITDA $ ( 20,221 ) $ ( 54,789 ) $ ( 11,323 ) $ ( 86,333 )

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

Six months ended June 30, 2020

United States Rest of World Corporate Expenses Total

Net income (loss) $ ( 52,082 ) $ 33,772 $ ( 13,712 ) $ ( 32,022 )

Interest income, net ( 16 ) ( 11,469 ) — ( 11,485 )

Gain on revaluation of derivative liabilities — ( 113,368 ) — ( 113,368 )

Other loss — 378 — 378

Share-based payments 706 1,730 — 2,436

Review costs related to restatement of 2019 interim financial statements — — 4,407 4,407

Adjusted EBIT ( 5,817 ) ( 30,137 ) ( 2,263 ) ( 38,217 )

Share of loss from equity accounted investments — 1,966 — 1,966

Impairment loss on long-lived assets (i)

40,000 — — 40,000

Loss on revaluation of derivative liabilities (ii)

— ( 77,488 ) — ( 77,488 )

Other, net (iv)

— ( 785 ) — ( 785 )

Loss from discontinued operations (v)

Share-based payments (vi)

1,462 3,520 — 4,982

Review costs related to restatement of 2019 interim financial statements (vii)

— — 7,866 7,866

Depreciation and amortization 69 2,810 — 2,879

Adjusted EBITDA $ ( 10,567 ) $ ( 47,628 ) $ ( 5,846 ) $ ( 64,041 )

Sources of net revenue for the three months ended March 31, 2021 and 2020 were as follows:

Three months ended March 31,

Cannabis flower $ 9,434 $ 2,741

Cannabis extracts 3,144 5,576

Net revenue $ 12,611 $ 8,432

(i) For the six months ended June 30, 2021, impairment loss on long-lived assets relates to impairment on a leased premise in the U.S.

segment, and for the three and six months ended June 30, 2020, impairment loss on long-lived assets relates to impairment on goodwill and intangibles related to our U.S.

segment in 2020.

Impairment Loss on Long-Lived Assets.

(ii) For the three and six months ended June 30, 2021 and 2020, gain/loss on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities.

Derivative Liabilities.

(iii) For the three and six months ended June 30, 2021, transaction costs represents legal, financial and other advisory fees and expenses incurred in connection with various strategic investments.

These costs are included in general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

(iv) For the three and six months ended June 30, 2021, other, net is related to gain recorded on sale of the Company’s Winnipeg facility previously designated as held-for-sale in the first quarter of 2021, For the three and six months ended June 30, 2020, other, net is primarily comprised of the gain recorded related to the sale of common shares of Aurora Cannabis, Inc.

(“Aurora”), which were received in connection with the achievement of a milestone related to Aurora’s acquisition of Whistler Medical Marijuana Corporation.

(v) For the three and six months ended June 30, 2020, loss from discontinued operations relates to the discontinuance of Original B.C.

Held-For-Sale Assets and Discontinued Operations.

(vi) For the three and six months ended June 30, 2021 and 2020, share-based payments relates to the vesting expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 6.

Share-based Payments.

(vii) For the three and six months ended June 30, 2021 and 2020, the financial statement review costs include costs related to the restatement of the Company’s 2019 interim financial statements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to such restatement and legal costs defending shareholder class action complaints brought against the Company as a result of the restatement.

Net revenue attributed to a geographic region based on the location of the customer were as follows:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

Canada $ 10,664 $ 7,416 $ 18,246 $ 13,507

4 unchanged sentences

Property, plant and equipment assets were physically located in the following geographic regions:

As of March 31, 2021 As of December 31, 2020

As of June 30, 2021 As of December 31, 2020

Canada $ 168,462 $ 162,163

3 unchanged sentences

The Company sells products through a limited number of major customers.

Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenues and greater than 10% of accounts receivable.

United States

During the three months ended March 31, 2021 and 2020, the U.S.

segment had no major customers.

As of March 31, 2021 and December 31, 2020, the Company had $ 36 and $ 65 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenues.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(In thousands of $, except share amounts) Table of Contents

United States

During the three and six months ended June 30, 2021 and 2020, the U.S.

segment had no major customers.

As of June 30, 2021 and December 31, 2020, the Company had $ 106 and $ 65 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

There was no loss from discontinued operations from the U.S.

Segment for the three and six months ended June 30, 2021 and 2020.

Rest of World

During the three months ended March 31, 2021, the Rest of World segment earned a total net revenue before excise taxes of $ 8,963 from four major customers, Société Québécoise du Cannabis, Novolog Group, Alberta Gaming, Liquor and Cannabis Commission and Ontario Cannabis Retail Corporation, accounting for 18 %, 17 %, 13 % and 13 %, respectively, of the Company’s total net revenue before excise taxes.

During the three months ended March 31, 2020, the Rest of World segment earned a total net revenue before excise taxes of $ 4,121 from 3 major customers, together accounting for 49 % of the Company’s total net revenues before excise taxes.

As of March 31, 2021 and December 31, 2020, the Company had $ 30 and $ 9 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

The loss from discontinued operations from the Rest of World segment for the three months ended March 31, 2021 and 2020 was $ 21 and $ nil , respectively.

During the three months ended June 30, 2021, the Rest of World segment earned a total net revenue before excise taxes of $ 8,497 from three major customers, Ontario Cannabis Retail Corporation, Alberta Gaming, Liquor and Cannabis Commission and Société Québécoise du Cannabis, accounting for 19 %, 14 % and 12 %, respectively, of the Company’s total net revenue before excise taxes.

During the three months ended June 30, 2020, the Rest of World segment earned a total net revenue before excise taxes of $ 7,040 from four major customers, together accounting for 71 % of the Company’s total net revenues before excise taxes.

During the six months ended June 30, 2021, the Rest of World segment earned a total net revenue before excise taxes of $ 18,250 from four major customers, Ontario Cannabis Retail Corporation, Novolog Group, Société Québécoise du Cannabis and Alberta Gaming, Liquor and Cannabis Commission, accounting for 15 %, 14 %, 13 %, and 12 % respectively, of the Company’s total net revenue before excise taxes.

During the six months ended June 30, 2020, the Rest of World segment earned a total net revenue before excise taxes of $ 11,819 from four major customers, together accounting for 65 % of the Company’s total net revenues before excise taxes.

As of June 30, 2021 and December 31, 2020, the Company had $ 158 and $ 9 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

The loss from discontinued operations from the Rest of World segment for the three months ended June 30, 2021 and 2020 was $ 561 and $ 46 , respectively.

The loss from discontinued operations from the Rest of World segment for the six months ended June 30, 2021 and 2020 was $ 582 and $ 46 , respectively.

Commitments and Contingencies

(a) Commitments

There has been no material change in the information regarding commitments as disclosed in the Company’s Annual Financial Statements.

There have been no material changes in the information regarding commitments as disclosed in the Company’s Annual Financial Statements.

(b) Contingencies

9 unchanged sentences

Defendants moved to dismiss on February 8, 2021.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

On June 3, 2020, an alleged shareholder filed a Statement of Claim, as amended on August 12, 2020, in the Ontario Superior Court of Justice in Toronto, Ontario, Canada, seeking, among other things, an order certifying the action as a class action on behalf of a putative class of shareholders and damages of an unspecified amount.

2 unchanged sentences

The Amended Statement of Claim does not quantify a damage request.

On June 28, 2021, the Ontario Court dismissed motions brought by the plaintiff for leave to commence a claim for misrepresentation under the Ontario Securities Act and for certification of the action as a class action.

The plaintiff appealed the Court’s dismissal of the motions, except with respect to the former Chief Financial Officer and Chief Commercial Officer, who agreed not to seek costs from plaintiff in connection with the dismissal of the motions

(ii) Regulatory reviews relating to restatement

2 unchanged sentences

The Company cannot predict the outcome of any such regulatory review or investigation and it is possible that additional investigations or one or more formal proceedings may be commenced against the Company and its current and former officers and directors in connection with these regulatory reviews and investigations.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(iii) Litigation relating to marketing, distribution and sale of products

23 unchanged sentences

• Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

March 31, 2021

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

June 30, 2021

Level 1 Level 2 Level 3 Total

8 unchanged sentences

There were no transfers between categories during the periods presented.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

(b) Financial risks

2 unchanged sentences

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, short-term investments, loan receivable, and advances to joint ventures.

The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 1,348,325 and $ 1,403,491 as of March 31, 2021 and December 31, 2020, respectively.

The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 1,210,287 and $ 1,403,491 as of June 30, 2021 and December 31, 2020, respectively.

(a) C ash and cash equivalents, short-term investments, and other receivables

The Company held cash and cash equivalents of $ 1,024,450 and $ 1,078,023 as of March 31, 2021 and December 31, 2020, respectively.

The short-term investments and related interest receivable of $ 214,925 and $ 211,766 , as of March 31, 2021 and December 31, 2020 respectively, represents short-term investments with a maturity of less than a year and accrued interest as of period end.

The Company held cash and cash equivalents and short-term investments and related interest receivable.

Short-term investments and related interest receivable represents short-term investments with a maturity of less than a year and accrued interest as of period end.

The cash and cash equivalents and short-term investments, including guaranteed investment certificates and bankers’ acceptances, are held with central banks and financial institutions that are highly rated.

7 unchanged sentences

Indicators that there is no reasonable expectation of recovery include, among others, the failure of a debtor to engage in a repayment plan and a failure to make contractual payments for a period of greater than 120 days past due.

As of March 31, 2021 and December 31, 2020, the Company recorded a current expected credit loss allowance of $ 66 and $ 74 , respectively.

As of March 31, 2021, the Company has assessed that there is a concentration of credit risk, as 63 % of the Company’s accounts receivable were due from three customers with an established credit history with the Company.

As of June 30, 2021 and December 31, 2020, the Company had an allowance for credit losses of $ 264 and $ 74 , respectively.

As of June 30, 2021, the Company has assessed that there is a concentration of credit risk, as 74 % of the Company’s accounts receivable were due from four customers with an established credit history with the Company.

As of December 31, 2020, 78 % of the Company’s accounts receivable were due from four customers with an established credit history with the Company.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

(ii) Market risk

7 unchanged sentences

Fluctuations in interest rates may impact the level of income and expense recorded on the cash equivalents and short-term investments, and the market value of all interest-earning assets, other than those which possess a short-term to maturity.

A 10% change in the interest rate in effect on March 31, 2021 and December 31, 2020 would not have a material effect on (i) fair value of the cash equivalents and short-term investments as the majority of the portfolio has a maturity date of three months or less or (ii) interest income.

A 10% change in the interest rate in effect on June 30, 2021 and December 31, 2020 would not have a material effect on (i) fair value of the cash equivalents and short-term investments as the majority of the portfolio has a maturity date of three months or less or (ii) interest income.

Management continues to monitor external interest rates and revise the Company’s investment strategy as a result.

During the three months ended March 31, 2021 and 2020, the Company had net interest income of $ 2,329 and $ 7,751 , respectively.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

During the three months ended June 30, 2021 and 2020, the Company recorded net interest income of $ 2,293 and $ 3,734 , respectively.

During the six months ended June 30, 2021 and 2020, the Company recorded net interest income of $ 4,622 and $ 11,485 , respectively.

(iv) Liquidity risk

3 unchanged sentences

The Company’s funding was primarily provided in the form of capital raised through the issuance of common shares and warrants.

As of March 31, 2021, the Company had assessed a concentration risk of vendors as 26 % of accounts payables were due to two vendors.

As of June 30, 2021, the Company had assessed a concentration risk of vendors as 32 % of accounts payables were due to one vendor.

As of December 31, 2020, the Company had assessed a concentration risk of vendors as 64 % due to four vendors.

6 unchanged sentences

As such, the Company’s financial position and financial results may be adversely affected by the unfavorable fluctuations in currency exchange rates.

During the three months ended March 31, 2021 and 2020, the Company had foreign currency gain (loss) on translation of $ 16,284 and $( 113,692 ), respectively.

During the three months ended June 30, 2021 and 2020, the Company had foreign currency gain on translation of $ 13,470 and $ 51,871 , respectively.

During the six months ended June 30, 2021 and 2020, the Company had foreign currency gain (loss) on translation of $ 29,754 and $( 61,821 ), respectively.

A 10% change in the exchange rates for the U.S.

dollar would affect the carrying value of net assets by approximately $ 156,828 and $ 170,817 as of March 31, 2021 and December 31, 2020, respectively.

dollar would affect the carrying value of net assets by approximately $ 162,991 and $ 170,817 as of June 30, 2021 and December 31, 2020, respectively.

Held-For-Sale Assets and Discontinued Operations

During the year ended December 31, 2020, the Company advanced its plans for the sale and disposal of substantially all of the assets of Original B.C.

(“OGBC”) and as a result, OGBC’s results of operations were reclassified as discontinued operations in the accompanying condensed consolidated financial statements.

As of March 31, 2021, the assets and liabilities of OGBC continue to meet the definition of discontinued operations and are included as “held-for-sale” assets on the condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020, and loss from discontinued operations on the condensed consolidated statements of net income and comprehensive income for the three months ended March 31, 2021 and 2020.

During the three months ended March 31, 2021, the Company advanced its plans for the sale of land and office premises (approximately 80,173 combined square feet) located in Winnipeg, Manitoba, Canada and accounted for in the Rest of World segment.

The sale is expected to be made within the next twelve months and the criteria for the land and office premises to be classified as “held-for-sale” were met during the three months ended March 31, 2021.

As a result, the assets are classified as “held-for-sale” assets as of March 31, 2021.

During the year ended December 31, 2020, the Company advanced its plans for the sale and disposal of substantially all of the assets of OGBC and as a result, OGBC’s results of operations were reclassified as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented.

During the quarter ended June 30, 2021, the Company determined that the fair value of OGBC was lower than the carrying value of the assets.

As such, a write-down to these held-for-sale assets of $ 561 was recorded in the second quarter of 2021.

As of June 30, 2021, the assets and liabilities of OGBC continue to meet the definition of discontinued operations and are included as “held-for-sale” assets on the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020, and loss from discontinued operations on the condensed consolidated statements of net income and comprehensive income for the three and six months ended June 30, 2021 and 2020.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except share amounts) Table of Contents

On June 10, 2021, the land and office building located in Winnipeg, Manitoba Canada, previously designated as held-for-sale in the first quarter of 2021, was sold for $ 2,059 , net of costs to sell.

As a result, the Company recorded a gain on the sale of $ 1,279 in other, net in its condensed consolidated income statement for the three and six months ended June 30, 2021.

The following table summarizes the financial information for discontinued operations:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

Loss from discontinued operations, net of income taxes $ ( 561 ) $ ( 46 ) $ ( 582 ) $ ( 46 )

March 31, 2021 December 31, 2020

As of June 30, 2021 As of December 31, 2020

OGBC assets classified as held-for-sale $ 645 $ 1,176

Other property, plant and equipment classified as held-for-sale 774 —

Held-for-sale assets $ 1,969 $ 1,176

Related Party Transactions and Balances

There have been no material related party transactions during the three months ended March 31, 2021 and 2020.

As of March 31, 2021 and December 31, 2020 there were no material related party receivables or payables.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of $, except gram and share amounts) Table of Contents

Impairment Loss on Property, Plant and Equipment and Right-of-Use Assets

During the three months ended March 31, 2021, the Company recognized an impairment charge of $ 1,019 related to leasehold improvements located within leased premises, encompassing approximately 6,000 square feet, in Los Angeles, California, which the Company determined it no longer had plans to use.

Impairment Loss on Long-Lived Assets

(a) Property, plant, and equipment, net and right-of-use assets

During the six months ended June 30, 2021, the Company recognized an impairment charge of $ 1,039 related to leasehold improvements located within leased premises, encompassing approximately 6,000 square feet, in Los Angeles, California, which the Company determined it no longer had plans to use.

The significant change in the extent and manner in which the leasehold improvements are being used and the expectation that, more likely than not, the leasehold improvements will be disposed of before the end of their useful life triggered an impairment.

The right-of-use lease asset associated with the leasehold improvements was also written down as a result of our decision to no longer use the leased premises.

The Company recognized an impairment charge on the de-recognition of the right-of-use asset of $ 702 during the three months ended March 31, 2021.

Both the impairment charges are recognized in the statement of net income (loss) as an impairment loss on property, plant and equipment and right-of-use assets.

Subsequent Events

On April 1, 2021, the Company and an affiliate of Agroidea (“AGI”), the other joint venture partner of Natuera, agreed to convert all advances made to Natuera under the Series A Loan, plus accrued interest, into equity.

Total aggregate gross advances to Natuera under the Series A Loan were $ 15,500 , of which the Company advanced 50 % and AGI advanced the remaining 50 %, for an amount of $ 7,750 each.

As a result, the Company transferred the carrying value of the loan of $ 2,013 plus accrued interest, which approximates fair value, to investments in equity accounted investees in respect of Natuera.

The Company recognized an impairment charge on the de-recognition of the right-of-use asset of $ 702 during the six months ended June 30, 2021.

Both of the impairment charges are recognized in the statement of net income (loss) as impairment loss on property, plant and equipment and right-of-use assets.

No impairment charges were recorded during the three months ended June 30, 2021 and the three and six months ended June 30, 2020 on property, plant and equipment and right-of-use assets.

(b) Intangible assets, net and goodwill

Goodwill and indefinite life intangible assets are reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value.

During the three months ended June 30, 2020, the Company concluded that the projected impact of the COVID-19 pandemic on its sales and revenues in the near term, together with the volatility in the market conditions during the quarter, represented potential indicators of impairment for the Company’s U.S.

reporting unit as well as its Lord Jones brand acquired in September 2019.

Accordingly, the Company performed an interim impairment analysis during the second quarter of 2020.

As a result of this analysis, the Company recorded impairment charges of $ 35,000 on its U.S.

reporting unit and $ 5,000 on its Lord Jones™ brand for the three and six months ended June 30, 2020, when the carrying value of these assets exceeded their fair value.

No triggering events were identified or impairment charges recorded during the three and six months ended June 30, 2021 on intangible assets and goodwill.

Tab l e of Contents

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements