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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-02-26 · 117 added, 104 removed, 99 unchanged (69% of the section changed)

1 unchanged sentence

(a) Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer performed an evaluation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act, is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2020 due to the material weakness described below.

(b)(i) Management’s Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on the Company’s assessment, management has concluded that its internal control over financial reporting was not effective as of December 31, 2020 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, due to the material weakness described below.

A material weakness is a deficiency, or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

2020 Material Weakness – Inventory Verification

Management failed to properly design and execute sufficient procedures to verify inventory quantities.

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of December 31, 2021.

Based on that evaluation, management has concluded that, as of December 31, 2021, due to the existence of material weaknesses in the Company’s internal control over financial reporting described below, the disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in reports we file or submit under the Exchange Act were recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act, is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Management’s Report on Internal Controls Over Financial Reporting

The Company’s management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon criteria established in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2021 because of the material weaknesses described below.

• Control Environment:

We did not maintain an effective control environment.

Specifically, our control environment (i) did not ensure that senior personnel in our accounting function engaged consistently in appropriate professional conduct and conduct consistent with our Code of Business Conduct and Ethics;

and (ii) lacked personnel in our accounting function with appropriate level of knowledge and experience in U.S.

GAAP sufficient to properly assess evidence and interpret accounting rules.

None of the personnel in the accounting function that engaged in misconduct were current or former executive officers of the Company.

The control environment material weakness contributed to the goodwill and indefinite-lived intangible asset material weakness described below.

• Goodwill and Indefinite-lived Intangible Asset Impairment Testing:

We identified the following material weakness with respect to goodwill and indefinite-lived intangible asset impairment testing.

We did not design and maintain effective controls to assess goodwill and indefinite-lived intangible assets for potential impairment as changes in the performance of and prospects for our U.S.

reporting unit occurred.

Specifically, we did not design and maintain effective controls to sufficiently assess the overall financial performance of and expectations for our U.S.

reporting unit and certain macroeconomic, industry and market conditions when evaluating goodwill associated with our U.S.

reporting unit and our Lord Jones ® brand indefinite-lived intangible asset for potential impairment.

The material weakness in the control environment contributed to material misstatements related to the impairment of goodwill and indefinite-lived intangible assets that led to the restatement of the Company’s interim condensed consolidated financial statements for the three and six months ended June 30, 2021.

The material weaknesses create a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

The lack of personnel in our accounting function with appropriate level of knowledge and experience in U.S.

GAAP sufficient to properly assess evidence and interpret accounting principles described above resulted in immaterial misstatements related to the accounting for derivatives, share-based compensation, earnings per share, and long-lived asset impairment.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report, issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Other than those material weaknesses identified above and measures described above below to remediate the material weaknesses identified in the prior and current year, there were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), that occurred during the year ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation Plan and Status Related to Material Weakness Identified in the Prior Year

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, we have identified the following material weakness:

• Inventory Verification

The Company failed to properly design and execute sufficient procedures to verify inventory quantities.

Specifically, while inventory counts were performed in the fourth quarter, (i) the aggregate value of items excluded from the count exceeded the Company’s materiality threshold, and (ii) human error in count execution, data transposition and reconciliation analysis resulted in inaccurate adjustments.

This deficiency did not result in errors that were quantitatively material.

Nevertheless, the deficiency creates a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis.

The effectiveness of internal control over financial reporting has been audited by KPMG LLP, an independent registered public accounting firm, who has issued an adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2020 as stated in their report which is included in the financial statements in Part II, Item 8 of this 10-K.

Internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(b)(ii) Remediation of 2020 Material Weakness

Contributing factors included restrictions in the ability to perform physical inventory counts at third party logistics and subcontract manufacturing locations, resource turnover and the organization’s experience in processing count results within their new ERP system implemented at the beginning of the third quarter of 2020.

Management will (i) enhance their count procedures to ensure appropriate consideration and coverage of their total inventory balance, (ii) implement cycle counts as a redundant control to supplement the annual physical count, and (iii) provide training to inventory teams on count procedures and inventory management control expectations.

During the year, the Company implemented a new ERP system across the Canadian business.

The new ERP system is a meaningful component of our internal control over financial reporting and is expected to enable us to realize efficiencies throughout our finance, supply chain and operations processes.

In connection with the ERP implementation, we updated the processes and controls that constitute our internal control over financial reporting, as necessary, to accommodate related changes to our accounting procedures and business processes.

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The Company has implemented its processes and internal controls over financial reporting in the U.S.

segment for the year ended December 31, 2020.

Closure of 2019 Material Weakness

As disclosed in Part II Item 9A, Controls and Procedures, in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2019 (the “2019 Annual Report”), during the fourth quarter of 2019 we identified material weaknesses in internal controls related to risk assessment, segregation of duties, and non-routine transactions.

During 2020, management implemented our previously disclosed remediation plan that included:

(i) enhancement of our quarterly review of the risk assessment model and its risk control matrices, (ii) establishing a risk committee, which reviews the risk assessment for changes in the business on a quarterly basis, (iii) enhancement of our delegation of authority matrix, to further limit groups that may authorize sales or purchases of inventory, (iv) the establishment of a review process and internal database to identify entities that are both vendors and customers of the Company, in order to identify potential related transactions, (v) the implementation of revenue recognition training, (vi) the creation and implementation of a non-routine transaction policy, (vii) implementation of procedures for the preparation of business cases for all non-routine business-to-business unbranded sales and purchases, and (viii) expansion of the sub-certification processes to additional members of management to ensure that non routine transactions are identified.

During the fourth quarter of 2020, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective.

As a result, we have concluded the material weaknesses reported in the 2019 Annual Report have been remediated as of December 31, 2020.

The completed remediation to date is described below:

Nevertheless, the deficiency created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

The Company’s management, with oversight from the Audit Committee of the Board of Directors, initiated a plan to remediate the material weakness and the material weakness was remediated as of December 31, 2021.

The plan and progress is described below:

Material Weakness Control, Control Enhancement or Mitigant Implementation Status Management Testing Status Remediation Status

Risk Assessment • Enhance quarterly review of risk assessment model and risk control matrices

Implemented Tested Remediated

• Establish a risk committee which reviews the risk assessment for changes in the business on a quarterly basis

Implemented Tested Remediated

Segregation of Duties • Enhance Delegation of Authority matrix to further limit groups that may authorize sales or purchases of inventory

Implemented Tested Remediated

• Establish review process and internal database to identify entities that are both vendors and customers of the Company

Implemented Tested Remediated

• Create and implement revenue recognition training

Implemented Tested Remediated

Non-Routine Transactions • Create and implement a Non-Routine Transactions Policy to include:

Implemented Tested Remediated

◦ Definition of Non-Routine Transactions

◦ Accounting memorandum completion

◦ CEO/CFO approval

• Formalization of business cases for all non-routine business to business unbranded sales and purchases to be reviewed on a quarterly basis to ensure alignment with the objectives of the business

Implemented Tested Remediated

• Expand the sub-certification process to additional members of management to ensure that non routine transactions are identified

Implemented Tested Remediated

In the fourth quarter of 2020, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), other than noted above.

Inventory Verification • Enhance count procedures to ensure appropriate consideration and coverage of their total inventory balance

Completed Tested Remediated

• Implement cycle counts as a redundant control to supplement the annual physical count

Completed Tested Remediated

• Provide training to inventory teams on count procedures and inventory management control expectations

Completed Tested Remediated

Remediation Plan and Status Related to Material Weaknesses Identified in the Current Year

As discussed above, we have identified material weaknesses related to the control environment and goodwill and indefinite-lived intangible asset impairment testing.

As of the filing date, the Company has implemented or is in the process of implementing various initiatives intended to address the identified material weaknesses and strengthen our overall control environment.

In this regard, some of our key remedial initiatives include:

Material Weakness Control, Control Enhancement or Mitigant Implementation Status Management Testing Status Remediation Status

Control Environment • The Company’s Chief Executive Officer and Chief Financial Officer have reinforced and will continue to reinforce on an ongoing basis the importance of adherence to the Company’s policies, procedures and standards of conduct, including identifying misconduct and raising and communicating concerns;

In Progress Not Tested Not Remediated

• All accounting personnel that engaged in unprofessional conduct have been terminated or resigned from the Company and are in the process of being replaced with qualified personnel;

Completed Not Tested Not Remediated

• We have enhanced our existing sub-certification process to include additional certifications regarding certain complex accounting topics and to include additional employees to increase accountability amongst Company personnel;

Completed Not Tested Not Remediated

• We have expanded our compensation claw back provisions to incorporate all personnel who are subject to our enhanced sub-certification process;

Completed Not Tested Not Remediated

• We have identified and are in the process of implementing organizational enhancements including (i) evaluating the sufficiency, experience and training of personnel within our accounting function and (ii) hiring accounting personnel with appropriate knowledge and experience in U.S.

In Progress Not Tested Not Remediated

• We are in the process of developing and implementing a training program for accounting and finance personnel to enhance their knowledge of U.S.

GAAP outlined in our accounting policies, which are used in the preparation of the Company’s consolidated financial statements;

In Progress Not Tested Not Remediated

Asset Impairment Testing • We have evaluated and will continue to regularly evaluate our policies and procedures relating to certain complex accounting topics and have begun implementing improvements in those policies and procedures.

In Progress Not Tested Not Remediated

The Company will continue to review, optimize, and enhance its financial reporting controls and procedures.

As the Company continues to evaluate and work to improve its internal control over financial reporting, the Company may implement additional measures to address the material weaknesses or certain of the remediation measures described above may be enhanced or modified.

The material weaknesses will not be considered remediated until the applicable remediated controls operate for a sufficient period of time and management has concluded, through further testing, that these controls are operating effectively.

OTHER INFORMATION.

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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

8 unchanged sentences

The information required under this Item is incorporated herein by reference to our definitive proxy statement or to an amendment to this Annual Report on Form 10-K to be filed with the SEC no later than 120 days after the close of our fiscal year ended December 31, 2021.

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

17 unchanged sentences

2.1 Membership Interest Purchase Agreement, among Cronos Group Inc., Redwood Holdings Group, LLC and certain key persons, dated as of August 1, 2019 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report of Foreign Private Issuer, filed August 2, 2019).

2.2 Options Purchase Agreement, dated June 14, 2021, by and between Cronos USA Holdings Inc.

and PharmaCann Inc.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Cronos Group Inc.

filed June 15, 2021).

2.3 Option, dated June 14, 2021, issued by PharmaCann Inc.

to Cronos USA Holdings Inc.

(incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of Cronos Group Inc.

filed June 15, 2021).

3.1 Certificate of Continuance, Notice of Articles and Articles of Cronos Group Inc.

12 unchanged sentences

10.4 First Amendment to Collaboration and License Agreement, dated as of May 9, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.5 Amended and Restated Collaboration and License Agreement, dated as of June 3, 2021, by and between Ginkgo Bioworks, Inc.

and Cronos Group Inc.

(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cronos Group Inc.

filed June 4, 2021).

10.6† Cronos Group Inc.

2015 Amended and Restated Stock Option Plan, dated as of May 26, 2015 (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-8 of Cronos Group Inc., filed July 11, 2018).

10.6† Form of Option Certificate to 2015 Amended and Restated Stock Option Plan (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.7† Form of Option Certificate to 2015 Amended and Restated Stock Option Plan (incorporated by reference to E xhibit 10.6 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.8† First Amendment to the Cronos Group Inc.

2015 Amended and Restated Stock Option Plan, dated as of August 7, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

2015 Amended and Restated Stock Option Plan, dated as of August 7, 2019 (incorporated by reference to E xhibit 10.7 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.9† Cronos Group Inc.

Amended and Restated 2018 Stock Option Plan, dated as of November 11, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

Amended and Restated 2018 Stock Option Plan, dated as of November 11, 2019 (incorporated by reference to E xhibit 10.8 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.10† Cronos Group Inc.

Deferred Shared Unit Plan for Non-Executive Directors, dated as of August 7, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

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Deferred Shared Unit Plan for Non-Executive Directors, dated as of August 7, 2019 (incorporated by reference to th e E xhibit 10.9 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.11† Employment Agreement, by and between Cronos Group Inc.

(Employment Agreement, by and between Cronos Group Inc.

(f/k/a PharmaCan Capital Corporation) and Michael Gorenstein, effective as of August 10, 2016 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020) .

(f/k/a PharmaCann Capital Corporation) and Michael Gorenstein, effective as of August 10, 2016 (incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.12† Description of Oral Amendment, effective as of June 2019, to Employment Agreement, by and between Cronos Group Inc.

(f/k/a PharmaCan n Capital Corporation) and Michael Gorenstein, effective as of August 10, 2016 (incorporated by reference to E xhibit 10.1 1 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.13† Executive Employment Agreement, by and among Hortican Inc., Jerry Barbato and, solely for the purposes specified therein, Cronos Group Inc., effective as of April 15, 2019.

(incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

(incorporated by reference to E xhibit 10.1 2 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.14† Employment Agreement, by and between Hortican Inc.

and Xiuming Shum, effective as of August 21, 2017 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.14† Executive Employment Agreement, by and among Hortican Inc., Xiuming Shum and, solely for the purposes specified therein, Cronos Group Inc., effective as of May 21, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.15† Executive Employment Agreement, by and among Redwood Wellness, LLC, Robert Rosenheck and, solely for the purposes specified therein, Cronos Group Inc., dated as of September 5, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.16† Restricted Share Unit Agreement, by and between Cronos Group Inc.

and Robert Rosenheck, dated as of September 5, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.17† Executive Employment Agreement, by and between Hortican Inc.

and David Hsu, effective as of June 12, 2018 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.18† Executive Employment Agreement, by and among Hortican Inc., David Hsu and, solely for the purposes specified therein, Cronos Group Inc., effective as of May 13, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.19† Executive Employment Agreement, by and among Hortican Inc., William Lawrence Hilson and, solely for the purposes specified therein, Cronos Group Inc., effective as of May 15, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.20† Service Agreement, by and between The Peace Naturals Project Inc.

and Hillhurst Management Inc., entered into as of October 1, 2015 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

and Xiuming Shum, effective as of August 21, 2017 (incorporated by reference to E xhibit 10.13 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.15† Executive Employment Agreement, by and among Hortican Inc., Xiuming Shum and, solely for the purposes specified therein, Cronos Group Inc., effective as of May 21, 2019 (incorporated by reference to E xhibit 10.14 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.16† Cronos Group Inc.

Employment Inducement Award Plan #1 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.22† Termination and Release Agreement, by and among Cronos Group Inc.

and David Hsu, dated as of November 15, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.23† Termination and Release Agreement, by and among Cronos Group Inc.

and William Lawrence Hilson, dated as of November 15, 2019 (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.24† Form of Director and Officer Indemnity Agreement (incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.25† Separation Agreement, dated as of July 20, 2020, by and among Robert Rosenheck, Redwood Wellness, LLC and Cronos Group Inc.

(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cronos Group Inc., filed July 20, 2020).

Employment Inducement Award Plan #1 (incorporated by reference to E xhibit 10.

21 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.17† Form of Director and Officer Indemnity Agreement (incorporated by reference to E xhibit 10.24 to the Annual Report on Form 10-K of Cronos Group Inc., filed on March 2, 2020).

10.18† Cronos Group Inc.

6 unchanged sentences

and Kurt Schmidt (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cronos Group Inc., filed September 9, 2020).

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10.30† Amended and Restated Employment Agreement, dated as of September 9, 2020, by and among Cronos USA Client Services LLC, Cronos Group Inc., and Michael Gorenstein (incorporated by reference to Exhibit 10.

2 to the Current Report on Form 8-K of Cronos Group Inc., filed September 9, 2020).

10.22† Amended and Restated Employment Agreement, dated as of September 9, 2020, by and among Cronos USA Client Services LLC, Cronos Group Inc., and Michael Gorenstein (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Cronos Group Inc., filed September 9, 2020).

10.23† Amended and Restated Executive Employment Agreement, dated as of June 3, 2021, by and among Cronos USA Client Services LLC, Cronos Group Inc.

and Todd Abraham (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Cronos Group Inc., filed August 6, 2021).

10.24† Executive Employment Agreement, dated as of August 6, 2021, between Cronos USA, Cronos Group and Robert Madore (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Cronos Group Inc., filed August 6, 2021).

10.25† Letter Agreement, dated as of August 6, 2021, between Hortican, Cronos Group and Jerry Barbato (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Cronos Group Inc., filed August 6, 2021).

10.26† Letter Agreement, dated as of November 26, 2021, between Hortican Inc., Cronos Group Inc.

and Xiuming Shum (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-k of Cronos Group Inc., filed November 30, 2021).

10.27†* Executive Employment Agreement, dated as of January 10, 2022, by and among Cronos USA Client Services LLC, Cronos Group Inc., Hortican Inc.

and John Griese.

10.28†* Letter Agreement, dated as of February 17, 2022, by and among Cronos USA Client Services LLC, Cronos Group Inc., and Anna Shlimak

14.1* Cronos Group Inc.

18 unchanged sentences

** Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

2 unchanged sentences

President and Chief Executive Officer

February 26, 2021

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Kurt Schmidt and Jerry Barbato, severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Kurt Schmidt and Robert Madore, severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Name Title Date

/s/ Kurt Schmidt

President and Chief Executive Officer

(Principal Executive Officer) February 26, 2021

/s/ Jerry Barbato Chief Financial Officer

(Principal Financial Officer) February 26, 2021

Jerry Barbato

/s/ Puneet Mathur Vice President, Controller

(Principal Accounting Officer) February 26, 2021

Puneet Mathur

/s/ Bronwen Evans Director February 26, 2021

Bronwen Evans

/s/ Heather Newman Director February 26, 2021

/s/ Kurt Schmidt President and Chief Executive Officer

(Principal Executive Officer) March 1, 2022

/s/ Robert Madore Chief Financial Officer

(Principal Financial Officer) March 1, 2022

Robert Madore

/s/ Carlos Cortez Vice President, Controller

(Principal Accounting Officer) March 1, 2022

Carlos Cortez

/s/ Kendrick Ashton, Jr.

Director March 1, 2022

Kendrick Ashton, Jr.

/s/ Heather Newman Director March 1, 2022

Heather Newman

/s/ James Rudyk Director February 26, 2021

/s/ Jody Begley Director February 26, 2021

/s/ Jason Adler Director February 26, 2021

/s/ James Rudyk Director March 1, 2022

/s/ Jody Begley Director March 1, 2022

/s/ Jason Adler Director March 1, 2022

/s/ Michael Gorenstein Director, Executive Chairman

February 26, 2021

March 1, 2022

Michael Gorenstein

/s/ Murray Garnick Director February 26, 2021

/s/ Murray Garnick Director March 1, 2022

Murray Garnick

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-K

Item 9A. Controls and Procedures