What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2022-02-18 · 378 added, 859 removed, 369 unchanged (77% of the section changed)

Financial Statements

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

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

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

Condensed Consolidated Balance Sheets as of March 31 , 202 2 (Unaudited) and December 31, 202 1

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) for the three months ended March 31 , 202 2 and 202 1 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three months ended March 3 1 , 202 2 and 202 1 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 31 , 202 2 and 202 1 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

dollars, except share amounts) Table of Contents

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

As of March 31, 2022 As of December 31, 2021

Assets (Unaudited) (Audited)

5 unchanged sentences

Current portion of loans receivable, net 6,235 5,460

Prepaids and other current assets 10,196 11,161

Inventory, net 37,054 32,802

Held-for-sale assets — 1,176

Prepaids and other current assets 9,537 8,967

Total current assets 1,063,405 1,079,718

1 unchanged sentence

Other investments 111,761 118,392

Loan receivable, net 81,464 87,191

Non-current portion of loans receivable, net 81,529 80,635

Property, plant and equipment, net 71,828 74,070

Right-of-use assets 6,325 8,882

Intangible assets, net 20,471 69,720

Goodwill 1,119 1,098

Intangible assets, net 17,880 18,079

Other assets 70 100

1 unchanged sentence

Current liabilities

Accounts payable and other liabilities $ 32,115 $ 42,102

Accounts payable $ 10,904 $ 11,218

Accrued liabilities 23,076 26,069

Current portion of lease obligation 2,173 2,711

2 unchanged sentences

Due to non-controlling interests 1,888 1,913

Lease obligation 7,343 8,492

Non-current portion of lease obligation 7,094 7,095

Deferred income tax liability 396 81

Total liabilities 49,630 63,462

Commitments and contingencies (see Note 10)

Shareholders’ equity

Share capital (Shares authorized for issuance as of September 30, 2021 and December 31, 2020:

Shares issued and outstanding as of September 30, 2021 and December 31, 2020:

Share capital (authorized for issue as of March 31, 2022 and December 31, 2021:

shares outstanding as of March 31, 2022 and December 31, 2021:

375,299,980 and 374,952,693 , respectively)

11 unchanged sentences

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

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

Net revenue, before excise taxes $ 29,406 $ 14,654

2 unchanged sentences

Cost of sales 18,107 15,574

Inventory write-down — — 11,961 11,024

Gross profit 6,926 ( 2,963 )

3 unchanged sentences

General and administrative 22,368 21,906

Share-based payments 2,667 7,916 7,731 12,898

Restructuring costs 3,084 —

Share-based compensation 3,686 2,499

Depreciation and amortization 1,293 735

Impairment loss on goodwill and indefinite-lived intangible assets 142 — 235,056 40,000

Impairment loss on long-lived assets 3,493 1,741

3 unchanged sentences

Interest income, net 2,046 2,329

Gain on revaluation of derivative liabilities 132,916 105,307 131,290 182,795

Gain (loss) on revaluation of derivative liabilities 10,419 ( 116,874 )

Share of loss from equity accounted investments — ( 1,643 )

Gain on disposal of other investments — 3,974 — 4,743

Gain (loss) on revaluation of financial instruments 4,268 ( 200 )

Impairment loss on other investments ( 11,238 ) —

Foreign currency transaction loss ( 1,872 ) —

Other, net 135 ( 16 )

Total other income 133,839 111,094 134,988 198,886

Income (loss) before income taxes 77,425 69,925 ( 262,971 ) 37,949

Income tax expense (benefit) ( 159 ) 988 ( 159 ) 988

Income (loss) from continuing operations 77,584 68,937 ( 262,812 ) 36,961

Income (loss) from discontinued operations 82 ( 473 ) ( 500 ) ( 519 )

Net income (loss) 77,666 68,464 ( 263,312 ) 36,442

Total other income (expense) 3,758 ( 116,404 )

Loss before income taxes ( 32,291 ) ( 161,604 )

Income tax expense 362 —

Loss from continuing operations ( 32,653 ) ( 161,604 )

Loss from discontinued operations — ( 21 )

Net loss ( 32,653 ) ( 161,625 )

Net loss attributable to non-controlling interest ( 15 ) ( 313 )

Net income (loss) attributable to Cronos Group $ 77,916 $ 69,033 $ ( 262,470 ) $ 38,096

Other comprehensive income (loss)

Net income (loss) $ 77,666 $ 68,464 $ ( 263,312 ) $ 36,442

Other comprehensive income (loss):

Foreign exchange gain (loss) on translation ( 22,818 ) 26,167 6,936 ( 35,654 )

Total other comprehensive income (loss) ( 22,818 ) 26,167 6,936 ( 35,654 )

Comprehensive income (loss) 54,848 94,631 ( 256,376 ) 788

Net loss attributable to Cronos Group $ ( 32,638 ) $ ( 161,312 )

Comprehensive loss

Net loss $ ( 32,653 ) $ ( 161,625 )

Other comprehensive income

Foreign exchange gain on translation 15,977 16,284

Comprehensive loss ( 16,676 ) ( 145,341 )

Comprehensive income (loss) attributable to non-controlling interests ( 261 ) 826

Comprehensive income (loss) attributable to Cronos Group $ 55,113 $ 95,183 $ ( 256,543 ) $ 2,438

Net income (loss) per share

Comprehensive loss attributable to Cronos Group $ ( 16,415 ) $ ( 146,167 )

Net loss from continuing operations per share

Basic - continuing operations $ ( 0.09 ) $ ( 0.44 )

3 unchanged sentences

Condensed Consolidated Statements of Changes in Equity

For the three months ended September 30, 2021 and 2020

(In thousands of U.S.

dollars, except share amounts, unaudited)

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

Balance at July 1, 2021 371,805,547 $ 572,858 $ 32,368 $ 719,593 $ 71,729 $ ( 2,764 ) $ 1,393,784

Vesting of options — — 1,886 — — — 1,886

Options exercised 6,674 14 ( 10 ) — — — 4

Restricted share units settled 23,150 162 ( 162 ) — — — —

Share issuance pursuant to research and development milestones 1,467,490 9,042 — — — — 9,042

Withholding taxes on share-based awards — — ( 31 ) ( 4,232 ) — — ( 4,263 )

Vesting of restricted share units — — 781 — — — 781

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — — 343 — — — 343

Accelerated restricted share units vesting out-of-period adjustment — 4,802 ( 4,802 ) — — — —

Net income (loss) — — — 77,916 — ( 250 ) 77,666

Foreign exchange loss on translation — — — — ( 22,803 ) ( 15 ) ( 22,818 )

Balance at September 30, 2021 373,302,861 $ 586,878 $ 30,373 $ 793,277 $ 48,926 $ ( 3,029 ) $ 1,456,425

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

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

Warrants exercised 5,407,890 619 ( 619 ) — — — —

Vesting of options — — 1,551 — — — 1,551

Options exercised 25,534 57 ( 53 ) — — — 4

Withholding taxes on share-based awards — — ( 2,148 ) — — — ( 2,148 )

Vesting of restricted share units 414,088 — 6,365 — — — 6,365

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — — 349 — — — 349

Top-up Rights exercised — 690 — — — — 690

Net income (loss) — — — 69,033 — ( 569 ) 68,464

Foreign exchange gain on translation — — — — 26,150 17 26,167

Balance at September 30, 2020 355,733,914 $ 566,577 $ 32,491 $ 1,175,742 $ ( 7,820 ) $ ( 2,503 ) $ 1,764,487

See notes to condensed consolidated interim financial statements.

Cronos Group Inc.

Condensed Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

(In thousands of U.S.

2 unchanged sentences

Balance as of January 1, 2022 374,952,693 $ 595,497 $ 32,465 $ 659,416 $ 49,865 $ ( 2,967 ) $ 1,334,276

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

Vesting of options — — 5,814 — — — 5,814

Options exercised 3,657,676 3,329 ( 3,315 ) — — — 14

Restricted share units settled 81,504 507 ( 507 ) — — — —

Share issuance pursuant to research and development milestones 1,467,490 9,042 — — — — 9,042

Withholding taxes on share-based awards — — ( 1,193 ) ( 11,989 ) — — ( 13,182 )

Vesting of restricted share units — — 1,917 — — — 1,917

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — 2,000 ( 974 ) — — — 1,026

Accelerated restricted share units vesting out-of-period adjustment — 4,802 ( 4,802 ) — — — —

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

Activities relating to share-based compensation 347,287 871 2,900 — — — 3,771

Net loss — — — ( 32,638 ) — ( 15 ) ( 32,653 )

Foreign exchange gain on translation — — — — 5,927 1,009 6,936

Balance at September 30, 2021 373,302,861 $ 586,878 $ 30,373 $ 793,277 $ 48,926 $ ( 3,029 ) $ 1,456,425

Foreign exchange gain (loss) on translation — — — — 16,223 ( 246 ) 15,977

Balance as of March 31, 2022 375,299,980 $ 596,368 $ 35,365 $ 626,778 $ 66,088 $ ( 3,228 ) $ 1,321,371

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

Warrants exercised 5,407,890 619 ( 619 ) — — — —

Vesting of options — — 5,051 — — — 5,051

Options exercised 1,094,464 1,386 ( 1,381 ) — — — 5

Withholding taxes on share-based awards — — ( 2,148 ) — — — ( 2,148 )

Vesting of restricted share units 414,088 — 7,847 — — — 7,847

Vesting of common shares issued in connection with the use of certain publicity rights in brand development — 2,000 507 — — — 2,507

Top-up Rights exercised — 1,407 — — — — 1,407

Net income (loss) — — — 38,096 — ( 1,654 ) 36,442

Foreign exchange gain (loss) on translation — — — — ( 35,658 ) 4 ( 35,654 )

Balance at September 30, 2020 355,733,914 $ 566,577 $ 32,491 $ 1,175,742 $ ( 7,820 ) $ ( 2,503 ) $ 1,764,487

Activities relating to share-based compensation 11,403,258 15,652 ( 2,506 ) ( 7,694 ) — — 5,452

Net loss — — — ( 161,312 ) — ( 313 ) ( 161,625 )

Foreign exchange gain on translation — — — — 15,145 1,139 16,284

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

See notes to condensed consolidated interim financial statements.

3 unchanged sentences

dollars, except share amounts, unaudited) Table of Contents

Nine months ended September 30,

Three months ended March 31,

Operating activities

Net income (loss) $ ( 263,312 ) $ 36,442

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Share-based payments 7,731 12,898

Net loss $ ( 32,653 ) $ ( 161,625 )

Adjustments to reconcile net loss to cash used in operating activities:

Share-based compensation 3,686 2,499

Depreciation and amortization 2,824 1,880

Impairment loss on goodwill and indefinite-lived intangible assets 235,056 40,000

Impairment loss on long-lived assets 3,493 1,741

Impairment loss on other investments 11,238 —

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

Gain on revaluation of derivative liabilities ( 131,290 ) ( 182,795 )

Gain on disposal of other investments — ( 4,743 )

Gain (loss) on revaluation of derivative liabilities ( 10,419 ) 116,874

Expected credit losses on long-term financial assets — 416

Foreign currency transaction loss 1,872 —

Other non-cash operating activities, net ( 4,467 ) 106

4 unchanged sentences

Inventory ( 3,867 ) ( 742 )

Accounts payable and other liabilities ( 11,089 ) 1,333

Accounts payable ( 178 ) ( 3,119 )

Accrued liabilities ( 3,150 ) ( 10,169 )

Cash flows used in operating activities ( 33,911 ) ( 46,615 )

Investing activities

Purchase of short-term investments ( 119,820 ) ( 125,562 )

Proceeds from short-term investments 135,801 220,058

Purchase of other investments ( 110,392 ) —

Proceeds from sale of other investments — 4,743

Proceeds from dissolution of joint venture 44 —

Proceeds from repayment of loans receivable 790 —

Purchase of property, plant and equipment ( 711 ) ( 6,680 )

Purchase of intangible assets ( 23 ) ( 392 )

Proceeds from sale of held-for-sale assets 2,775 —

Advances on loans receivable — ( 2,645 )

9 unchanged sentences

Supplemental cash flow information

Interest paid $ — $ 156

Interest received 822 1,157

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Background, Basis of Presentation and Accounting Policies

1 unchanged sentence

Cronos Group Inc.

(“Cronos Group” or the “Company”) is incorporated in the Province of British Columbia and under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter Street, Suite 300, Toronto, Ontario, M5V 2H1.

(“Cronos Group” or the “Company”) is incorporated in the province of British Columbia and under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter St., Suite 300, Toronto, Ontario, M5V 2H1.

The Company’s common shares are currently listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.”

Cronos Group is an innovative global cannabinoid company, with international production and distribution across four continents.

The Company is committed to building disruptive intellectual property by advancing cannabis research, technology and product development and is seeking to build an iconic brand portfolio.

Cronos Group is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development and is seeking to build an iconic brand portfolio.

Cronos Group’s diverse international brand portfolio includes Spinach ® , PEACE NATURALS ® , Lord Jones ® , Happy Dance ® and PEACE+™.

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

“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.

As of September 30, 2021, the Company also held approximately 31% of the issued capital of Cronos Australia Limited (“Cronos Australia”) and accounted 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.

(b) Out-of-period adjustments

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.

During the three months ended September 30, 2021, the Company identified an error in the accounting related to the withholding taxes on the net exercise of stock options, which resulted in overstatements of retained earnings, other comprehensive income and accumulated other comprehensive income of $ 4,167 , $ 34 , and $ 34 , respectively, and understatements of accounts payables and other liabilities and general and administrative expenses of $ 4,201 , and $ 268 , respectively, as of March 31, 2021, as well as overstatements of retained earnings, share capital, other comprehensive income, and accumulated other comprehensive income of $ 3,881 , $ 315 , $ 62 , and $ 96 , respectively, as well as an understatement of accounts payables and other liabilities of $ 4,258 , as of June 30, 2021.

These errors were deemed immaterial, and thus the Company has recorded out-of-period adjustments to the condensed consolidated balance sheet and the condensed consolidated statement of changes in equity during the first and third quarters of 2021 to correct the errors.

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 statement 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.

During the three months ended September 30, 2021, the Company identified an error in the accounting related to shares issued pursuant to the accelerated vesting of RSUs in the third quarter of 2020, which resulted in an understatement of share capital of $ 4,802 and an overstatement of additional paid-in-capital of $ 4,802 , as of September 30, 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 statements of changes in equity during the third quarter of 2021 to correct the error.

The impact of the out-of-period adjustments had no impact on the condensed consolidated statements of net income (loss) and comprehensive income (loss) or the condensed consolidated statements of cash flows.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(b) Basis of presentation

The interim condensed consolidated financial statements of Cronos Group are unaudited.

5 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 and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for any other reporting period.

Operating results for the three months ended March 31, 2022 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, 2021 (the “Annual Report”).

1 unchanged sentence

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

(d) Adoption of new accounting pronouncements

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, loans 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 $ 1,098,413 and $ 1,118,684 as of March 31, 2022 and December 31, 2021, respectively.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses.

The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns.

The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

Accounts receivable are written off when there is no reasonable expectation of recovery.

Indicators that there is no reasonable expectation of recovery include, amongst 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, 2022 and December 31, 2021, the Company had $ 9 and $ 8 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the Rest of World (“ROW”) segment.

As of March 31, 2022 and December 31, 2021, the Company had $ 138 and $ 104 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the United States (“U.S.”) segment.

As of March 31, 2022, the Company assessed that there is a concentration of credit risk, as 72 % of the Company’s accounts receivable were due from three customers with an established credit history with the Company.

As of December 31, 2021, 88 % of the Company’s accounts receivable were due from four customers with an established credit history with the Company.

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

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

During the three months ended March 31, 2022, the Company earned a total net revenue before excise taxes of $ 9,833 from two major customers in the ROW segment, together accounting for 33 % of the Company’s total net revenue before excise taxes.

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, together accounting for 61 % of the Company’s total net revenues before excise taxes.

During the three months ended March 31, 2022 and 2021, the U.S.

segment had no major customers.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(d) Segment information

Segment reporting is prepared on the same basis that the Company’s chief operating decision makers (the “CODMs”) manage the business, make operating decisions and assess the Company’s performance.

The Company determined that it has the following two reportable segments:

segment”) and ROW (the “ROW segment”).

operating segment consists of the manufacture and distribution of U.S.

hemp-derived cannabinoid infused products.

The ROW operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets .

These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region.

The results of each segment are regularly reviewed by the CODMs to assess the performance of the segment and make decisions regarding the allocation of resources using Adjusted EBITDA (as defined below) as the measure of segment profit or loss.

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

(e) Adoption of new accounting pronouncements

On January 1, 2022, the Company adopted ASU No.

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 forward contracts to acquire investments.

The adoption of ASU No.

2020-01 did not have an impact on the Company’s interim condensed consolidated financial statements.

On January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU No.

2019-12 eliminates certain exceptions and simplifies the application of U.S.

GAAP-related changes in enacted tax laws or rates and employee stock option plans.

The adoption of ASU No.

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

(e) New accounting pronouncements not yet adopted

In August 2020, the FASB issued ASU 2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No.

2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No.

2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

2020-06 is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S.

2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

The adoption of ASU No.

2020-06 did not have an impact on the Company’s interim condensed consolidated financial statements.

(f) New accounting pronouncements not yet adopted

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326) (“ASU No.

2022-02 eliminates the existing troubled debt restructuring recognition and measurement guidance, and instead aligns the accounting treatment to that of other loan modifications.

The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

2022-02 also requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

2022-02 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and is to be adopted prospectively.

The Company does not expect the adoption of ASU No.

2 unchanged sentences

Inventory, net is comprised of the following items:

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

As of March 31, 2022 As of December 31, 2021

Raw materials $ 8,523 $ 9,211

3 unchanged sentences

Total $ 37,054 $ 32,802

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 amount.

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

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

The Company holds variable interests in Cronos Growing Company Inc.

(“Cronos GrowCo”), Natuera S.à.r.l (“Natuera”), MedMen Canada Inc.

(“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.

Cronos GrowCo’s economic performance is driven by the day-to-day operations of Cronos GrowCo, which are controlled by 2645485 Ontario Inc.

(“Mucci”), the Company’s joint venture partner.

During the three months ended September 30, 2021, the Company concluded that lower than expected sales forecasts combined with the increase to the aggregate principal amount of the GrowCo Facility (as defined below) were indicators of impairment for the Company’s equity method investment in Cronos GrowCo.

Accordingly, the Company performed an interim impairment assessment to compare the fair value of the investment in Cronos GrowCo to its carrying amount.

The fair value was estimated using the discounted cash flow method.

Significant inputs include discount rate, growth rates, and cash flow projections.

As a result of this analysis, the Company concluded that as of September 30, 2021, the estimated fair value was higher than the carrying amount and no impairment charges were recorded.

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.

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.

Subject to applicable law, the joint venture partners mutually determine the quantity and strains of cannabis to be sold in MedMen Canada’s retail stores, if and when stores are opened.

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

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

An affiliate of Agroidea owns the remaining 50 % of Natuera’s common shares (such affiliate, the “Natuera JV Partner”).

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

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 ($ 2,488 ) 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.

Cronos Israel will receive 70 % of the profits of the laboratory until such time as it has recovered 150 % of the amounts advanced to CLS, after which time it will receive 50 % of the laboratory profits.

As a result, the Company is exposed to economic variability from CLS’s performance.

The Company does not consolidate CLS as it does not have the power to direct the activities that most significantly impact the entity’s economic performance;

thus, the Company is not considered the primary beneficiary of the entity.

The carrying amount of the non-recourse loan is recorded under loans receivable and the full loan amount, ILS 8,297 , represents the Company’s maximum potential exposure to losses through the Cannasoul Collaboration.

Loans Receivable, net for further information regarding loans receivable.

Cronos Australia Limited

On September 14, 2021, Cronos Australia entered into a merger agreement to acquire 100 % of the issued shares of CDA Health Pty Ltd, an Australian medicinal cannabis company, subject to customary closing conditions, including shareholder approval (the “Cronos Australia Merger”).

The Cronos Australia Merger closed on December 16, 2021.

In connection with the closing of the Cronos Australia Merger, the Company converted all advances made under its A$ 1,500 unsecured loan to Cronos Australia, plus accrued interest and certain royalties payable, into ordinary shares of Cronos Australia.

As a result of the closing of the Cronos Australia Merger, the Company’s ownership interest in Cronos Australia decreased to approximately 10 % and the Company’s number of Cronos Australia board seats has been reduced from two to one .

This reduction in ownership interest and board seats constitutes a loss of significant influence and will result in a change on the condensed consolidated balance sheet from equity method to mark-to-market accounting commencing on December 16, 2021, with unrealized holding gains and losses to be included in net income (loss) on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

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

Cronos Australia (i)

A reconciliation of the carrying amount of the investments in equity method investees, net is as follows:

Ownership interest As of March 31, 2022 As of December 31, 2021

Cronos Growing Company Inc.

(“Cronos GrowCo”)

50 % $ 17,084 $ 16,764

(i) The gross investment balance in Cronos Australia has been offset by the equity losses as of September 30, 2021 and December 31, 2020.

(ii) On April 1, 2021, the Company and the Natuera JV Partner, 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 the Natuera JV Partner advanced the remaining 50 %, or $ 7,750 each.

As a result, the Company transferred the carrying amount 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 September 30, For the nine months ended September 30,

NatuEra S.à.r.l.

(“Natuera”) 50 % — —

$ 17,084 $ 16,764

Cronos Australia $ — $ ( 57 ) $ — $ ( 292 )

Cronos Group Inc.

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(In thousands of U.S.

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

For the three months ended March 31,

Cronos GrowCo $ — $ ( 299 )

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(b) Other investments

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

Other investments consist of investments in common shares and options of two companies in the cannabis industry.

PharmaCann, Inc.

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 September 30, 2021.

Whistler Medical Marijuana Corporation

On March 4, 2019, the Company sold all 2,563 shares of Whistler Medical Marijuana Corporation (“Whistler”), representing approximately 19.0 % of Whistler’s issued and outstanding common shares, to Aurora Cannabis Inc.

(“Aurora”), in connection with Aurora's acquisition of Whistler (the “Whistler Transaction”).

As a result of the closing of the Whistler Transaction, the Company received 2,524,341 Aurora common shares.

During the nine months ended September 30, 2019, the Company sold all 2,524,341 common shares of Aurora, for gross proceeds of $ 19,259 recorded as a gain on disposal of other investments in other income (expense).

No transactions occurred during the three months ended September 30, 2019.

During the three months ended September 30, 2020, in connection with the achievement of the final milestone related to the Whistler Transaction, the Company received 402,561 shares of Aurora.

The Company subsequently sold all 402,561 of the Aurora shares during the three months ended September 30, 2020 for gross proceeds of approximately $ 3,974 (C$ 5,354 ) recorded as a gain on disposal of other investments in other income (expense).

During the nine months ended September 30, 2020, in connection with the achievement of certain milestones related to the Whistler Transaction, the Company received 980,662 shares of Aurora.

The Company sold all 980,662 of the Aurora shares during the nine months ended September 30, 2020 for gross proceeds of approximately $ 4,743 (C$ 6,404 ) recorded as a gain on disposal of other investments in other income (expense).

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

In 2021, the Company purchased an option (the “PharmaCann Option”) to acquire 473,787 shares of Class A Common Stock of PharmaCann Inc.

(“PharmaCann”), a vertically integrated cannabis company in the United States, which represented an ownership interest of approximately 10.5 % as of December 31, 2021.

The PharmaCann Option is classified as an equity security without a readily determinable fair value.

The Company has elected to measure the fair value of the PharmaCann 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.

On February 28, 2022, PharmaCann closed the previously announced transaction with LivWell Holdings, Inc.

(“LivWell”) pursuant to which PharmaCann acquired LivWell (the “LivWell Transaction”).

LivWell is a multi-state cannabis cultivation and retail leader based in Colorado.

As a result of the LivWell Transaction, the Company’s ownership percentage in PharmaCann on a fully-diluted basis decreased to approximately 6.4 %.

The decrease in ownership percentage does not materially affect the Company’s rights under the PharmaCann Option.

During the three months ended March 31, 2022, the Company identified indicators of impairment related to the PharmaCann Option and conducted an analysis comparing the PharmaCann Option’s carrying amount to its estimated fair value.

The fair value was estimated using a combination of the market and income approaches.

Under the income approach, significant inputs used in the discounted cash flow method include discount rate, growth rates, and cash flow projections.

As a result of this analysis, the Company recorded a non-cash impairment charge of $ 11,238 , as the difference between the carrying amount of the PharmaCann Option and its estimated fair value in the condensed consolidated statements of net income (loss) and comprehensive income (loss).

Cronos Australia Limited

The Company owns approximately 10 % of the outstanding common shares of Cronos Australia Limited (“Cronos Australia”).

The investment is considered an equity security with a readily determinable fair value.

Changes in the fair value of the investment are recorded as gain (loss) on revaluation of financial instruments on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

The following table summarizes the Company’s other investments activity:

As of December 31, 2021 Unrealized gain Impairment charges Foreign exchange effect As of March 31, 2022

PharmaCann $ 110,392 $ — $ ( 11,238 ) $ — $ 99,154

Cronos Australia 8,000 4,196 — 411 12,607

$ 118,392 $ 4,196 $ ( 11,238 ) $ 411 $ 111,761

During the three months ended March 31, 2021, the Company had no gain or loss on revaluation of other investments.

As of March 31, 2022 and December 31, 2021, the Company did not hold any additional other investments.

Cronos Group Inc.

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dollars, except share amounts) Table of Contents

Loans Receivable, net

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

Natuera Series A Loan (i)

GrowCo Facility (ii)

Accrued interest 3,413 428

Loans receivable, net consists of the following:

As of March 31, 2022 As of December 31, 2021

GrowCo Facility (i)

$ 3,198 $ 3,138

Current portion of accrued interest 3,037 2,322

Total current portion of loans receivable 6,235 5,460

GrowCo Facility (ii)

GrowCo Facility (i)

64,801 64,367

1 unchanged sentence

14,414 14,019

Cannasoul Collaboration Loan (iii)

Accrued interest 1,468 2,667

Cannasoul Collaboration Loan (ii)

Long-term portion of accrued interest 122 —

Total long-term portion of loans receivable 81,529 80,635

Total loans receivable, net $ 87,764 $ 86,095

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

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

(ii) In August 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$ 100,000 (the “GrowCo Facility”).

(i) On August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$ 100,000 (the “GrowCo Facility”).

In August 2021, the GrowCo Facility was amended to increase the aggregate principal amount available to C$ 105,000 .

As a result of the increase in the aggregate principal amount of the GrowCo Facility and lower than expected sales forecasts from Cronos GrowCo, the Company revalued its allowance for credit loss on the GrowCo Facility resulting in an increase in the allowance of $ 13,074 , which was recorded in general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) in both the three and nine months ended September 30, 2021.

In conjunction with the aforementioned revaluation, the Company changed its expected credit loss valuation methodology from the historical credit loss method to the probability of default method.

As of September 30, 2021 and December 31, 2020, Cronos GrowCo had drawn C$ 103,000 ($ 81,230 ) and C$ 95,150 ($ 74,626 ), respectively, from the GrowCo Facility.

(iii) As of September 30, 2021 and December 31, 2020, CLS has received ILS 6,223 and ILS 4,148 , respectively (approximately $ 1,928 and $ 1,287 , respectively), from the Cannasoul Collaboration Loan.

Expected credit loss allowances on the Company’s long-term financial assets for the three and nine months ended September 30, 2021 and 2020 were comprised of the following items:

As of July 1, 2021 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2021

GrowCo Facility $ 1,590 $ 13,074 $ ( 202 ) $ 14,462

Mucci Promissory Note 278 ( 184 ) ( 4 ) 90

Cannasoul Collaboration Loan 39 272 ( 9 ) 302

$ 1,907 $ 13,162 $ ( 215 ) $ 14,854

As of July 1, 2020 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2020

GrowCo Facility $ 1,089 $ 211 $ 17 $ 1,317

Natuera Series A Loan — — — —

Mucci Promissory Note 250 5 3 258

Cannasoul Collaboration Loan 24 — 1 25

$ 1,363 $ 216 $ 21 $ 1,600

As of March 31, 2022 and December 31, 2021, Cronos GrowCo had outstanding borrowings of C$ 103,000 ($ 82,354 ) and C$ 104,000 ($ 81,598 ), respectively, from the GrowCo Facility.

As of March 31, 2022, Cronos GrowCo had repaid C$ 1,000 ($ 800 ) under the terms of the GrowCo Facility.

The available borrowing capacity under the GrowCo Facility was C$ 1,000 ($ 800 ) at March 31, 2022 and December 31, 2021.

(ii) As of March 31, 2022 and December 31, 2021, CLS has received ILS 8,297 ($ 2,600 ) and ILS 8,297 ($ 2,664 ), respectively, from the Cannasoul Collaboration Loan.

Expected credit loss allowances on the Company’s long-term financial assets was comprised of the following items:

As of January 1, 2022 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2021

Foreign exchange effect As of March 31, 2022

GrowCo Facility $ 14,089 $ ( 4 ) $ 269 $ 14,354

Natuera Series A Loan 721 ( 737 ) 16 —

Mucci Promissory Note 90 1 2 93

1 unchanged sentence

$ 14,594 $ — $ 262 $ 14,856

Cronos Group Inc.

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

As of January 1, 2021 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2020

Foreign exchange effect As of March 31, 2021

GrowCo Facility $ 1,546 $ — $ 23 $ 1,569

Natuera Series A Loan — — — —

Natuera Series A Loan (ii)

721 416 14 1,151

Mucci Promissory Note 270 — 4 274

1 unchanged sentence

$ 2,563 $ 416 $ 41 $ 3,020

(i) During the nine months ended September 30, 2021, $ 737 of expected credit losses on long-term financial assets was transferred to investments in equity method investees in relation to the Natuera Debt Conversion, as the carrying amount of the loan receivable, net, approximated fair value as of the date of transfer.

During the three and nine months ended September 30, 2021, $ 13,162 and $ 13,162 , respectively, were recorded to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses.

During the three and nine months ended September 30, 2020, $ 216 and $ 1,573 , respectively, were recorded to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses.

Goodwill and Intangible Assets, Net

(a) Intangible assets, net

Intangible assets, net are comprised of the following items:

Useful life (in years) As of September 30, 2021

Cost Accumulated amortization Accumulated impairment charges Net

Software 5 $ 5,696 $ ( 1,299 ) $ — $ 4,397

Health Canada licenses 17 8,627 ( 1,577 ) ( 1,059 ) 5,991

Ginkgo exclusive license (i)

10 9,143 ( 83 ) ( 1,762 ) 7,298

Israeli codes (ii)

20 319 ( 34 ) — 285

Total definite-lived intangible assets 23,785 ( 2,993 ) ( 2,821 ) 17,971

Lord Jones ® brand

N/A 64,000 — ( 61,500 ) 2,500

Trademarks N/A 142 — ( 142 ) —

Total intangible assets $ 87,927 $ ( 2,993 ) $ ( 64,463 ) $ 20,471

Useful life (in years) As of December 31, 2020

Cost Accumulated amortization Accumulated impairment charges

Software 5 $ 4,565 $ ( 565 ) $ — $ 4,000

Health Canada licenses 17 8,579 ( 1,254 ) ( 1,053 ) 6,272

Israeli code (ii)

20 322 ( 22 ) — 300

Total definite-lived intangible assets 13,466 ( 1,841 ) ( 1,053 ) 10,572

Lord Jones ® brand

N/A 64,000 — ( 5,000 ) 59,000

Trademarks N/A 148 — — 148

Total intangible assets $ 77,614 $ (1,841) $ (6,053) $ 69,720

(i) In August 2021, the Company announced the achievement of the final productivity target in respect of cannabigerolic acid (“CBGA”) under its collaboration and license agreement (the “Ginkgo Collaboration Agreement”) with Ginkgo Bioworks Holdings, Inc.

As a result of this achievement, on August 21, 2021, the Company issued 1,467,490 common shares at a share price of C$ 7.90 for total consideration given of C$ 11,593 ($ 9,042 ) to Ginkgo through its collaboration and license agreement (the “Ginkgo Collaboration Agreement”) for the achievement of commercialization and productivity milestones for CBGA.

Pursuant to the terms of the Ginkgo Collaboration Agreement, the Company was and will be granted an exclusive right to use and commercialize certain key intellectual property for the use of the microorganisms developed for the production of up to eight different cannabinoids, including CBGA.

The estimated fair value of the exclusive license for CBGA was $ 7,300 determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows.

The definite lived intangible asset is being amortized using the straight-line method over its estimated useful life of ten years.

The difference between the consideration paid Ginkgo and the fair value of the exclusive license intangible asset of $ 1,784 (including the effect of foreign currency of $ 42 ) was recognized as an impairment charge on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the three months ended September 30, 2021.

(ii) The Israeli codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities as discussed in Part II, Item 8.

Note 2(c) “Basis of consolidation” and Note 2(h) “Definite life intangible assets” of the Company’s Annual Report.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Accumulated impairment charges on intangible assets for the three and nine months ended September 30, 2021 and 2020 consist of:

As of July 1, 2021 Impairment charges Foreign exchange effect As of September 30, 2021

Health Canada licenses $ ( 1,083 ) $ — $ 24 $ ( 1,059 )

Ginkgo exclusive license — ( 1,784 ) 22 ( 1,762 )

Lord Jones ® brand

( 61,500 ) — — ( 61,500 )

Trademarks — ( 142 ) — ( 142 )

$ ( 62,583 ) $ ( 1,926 ) $ 46 $ ( 64,463 )

As of July 1, 2020 Impairment charges (i)

Foreign exchange effect As of September 30, 2020

Health Canada licenses $ — $ ( 113 ) $ — $ ( 113 )

Lord Jones ® brand

( 5,000 ) — — ( 5,000 )

$ ( 5,000 ) $ ( 113 ) $ — $ ( 5,113 )

As of January 1, 2021 Impairment charges Foreign exchange effect As of September 30, 2021

Health Canada licenses $ ( 1,053 ) $ — $ ( 6 ) $ ( 1,059 )

Ginkgo exclusive license — ( 1,784 ) 22 ( 1,762 )

Lord Jones ® brand

( 5,000 ) ( 56,500 ) — ( 61,500 )

Trademarks — ( 142 ) — ( 142 )

$ ( 6,053 ) $ ( 58,426 ) $ 16 $ ( 64,463 )

As of January 1, 2020 Impairment charges (i)

Foreign exchange effect As of September 30, 2020

Health Canada licenses $ — $ ( 113 ) $ — $ ( 113 )

Lord Jones ® brand

— ( 5,000 ) — ( 5,000 )

$ — $ ( 5,113 ) $ — $ ( 5,113 )

(i) Impairment charges to Health Canada licenses are related to the discontinuation of Original B.C.

(“OGBC”) and were included in other, net on the condensed consolidated statement of net income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2020.

Amortization expense was $ 641 and $ 224 for the three months ended September 30, 2021 and 2020, respectively, and $ 1,084 and $ 570 for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, the estimated future amortization of definite-lived intangible assets is as follows:

As of September 30, 2021

Remainder of 2021 (3 months) $ 583

Thereafter 7,408

Definite-lived intangible assets are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Impairment charges are recognized when the carrying amount of a definite-lived intangible asset is not recoverable and its carrying amount exceeds its fair value.

For definite-lived intangible assets, the Company assessed the factors and circumstances present as of September 30, 2021.

As a result of this assessment, the Company performed an interim impairment test on the Ginkgo exclusive license intangible asset.

The fair value of the Ginkgo exclusive license was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows and resulted in a difference between the consideration paid to Ginkgo and the fair value of the exclusive license intangible asset of $ 1,784 , which was recognized as an impairment charge on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2021.

Cronos Group Inc.

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

Indefinite-lived intangible assets are reviewed for impairment annually or more frequently when events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Indefinite-lived intangible assets are subject to a qualitative assessment, which requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows as potential indicators when determining the need for a quantitative assessment of impairment.

The Company has reassessed the existence of impairment indicators on goodwill associated with the U.S.

reporting unit derived from the acquisition of four Redwood Holding Group, LLC subsidiaries (collectively, “Redwood”) and the Lord Jones ® brand indefinite-lived intangible asset as of June 30, 2021, and determined that quantitative impairment analyses were required as of June 30, 2021 due to slower actual revenue growth as compared to previous revenue growth forecasts and significant pricing pressures brought about by increased competition and aggressive discounting in the U.S.

reporting unit and associated with the Lord Jones ® brand indefinite-lived intangible asset.

As such, the Company reassessed its estimates and forecasts as of June 30, 2021, to determine the fair values of the reporting unit and intangible asset using a discounted cash flow method on the reporting unit and the relief-from-royalty method on the Lord Jones ® brand.

Significant inputs include discount rate, growth rates, and cash flow projections, and, for the Lord Jones ® brand, royalty rates.

These valuation inputs would be considered Level 3 inputs as defined by ASC 820 Fair Value Measurement .

As a result of the analysis as of June 30, 2021, the Company concluded the carrying amount of the Lord Jones ® brand exceeded its fair value, which resulted in impairment charges of $ 56,500 on its Lord Jones ® brand on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the nine months ended September 30, 2021.

In June 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 indicators of impairment for the U.S.

reporting unit’s Lord Jones ® brand.

Accordingly, the Company performed an interim impairment analysis, which concluded the carrying amount of the brand exceeded its fair value.

As a result of the analysis, the Company recorded an impairment charge of $ 5,000 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the nine months ended September 30, 2020.

Goodwill assets are comprised of the following items as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

Cost Accumulated impairment charges Net

OGBC $ 309 $ ( 309 ) $ —

Peace Naturals Project Inc.

(“Peace Naturals”) 1,104 — 1,104

Redwood 213,414 ( 213,414 ) —

$ 214,827 $ ( 213,723 ) $ 1,104

As of December 31, 2020

Cost Accumulated impairment charges Net

OGBC $ 307 $ ( 307 ) $ —

Peace Naturals 1,108 — 1,108

Redwood 213,414 ( 35,000 ) 178,414

$ 214,829 $ ( 35,307 ) $ 179,522

Accumulated impairment charges on goodwill for three and nine months ended September 30, 2021 and 2020, consist of:

As of July 1, 2021 Impairment charges Foreign exchange effect As of September 30, 2021

OGBC $ ( 312 ) $ — $ 3 $ ( 309 )

Redwood ( 213,414 ) — — ( 213,414 )

$ ( 213,726 ) $ — $ 3 $ ( 213,723 )

As of July 1, 2020 Impairment charges (i)

Foreign exchange effect As of September 30, 2020

OGBC $ — $ ( 290 ) $ ( 5 ) $ ( 295 )

Redwood ( 35,000 ) — — ( 35,000 )

$ ( 35,000 ) $ ( 290 ) $ ( 5 ) $ ( 35,295 )

Cronos Group Inc.

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As of January 1, 2021 Impairment charges Foreign exchange effect As of September 30, 2021

OGBC $ ( 307 ) $ — $ ( 2 ) $ ( 309 )

Redwood ( 35,000 ) ( 178,414 ) — ( 213,414 )

$ ( 35,307 ) $ ( 178,414 ) $ ( 2 ) $ ( 213,723 )

As of January 1, 2020 Impairment charges (i)

Foreign exchange effect As of September 30, 2020

OGBC $ — $ ( 290 ) $ ( 5 ) $ ( 295 )

Redwood — ( 35,000 ) — ( 35,000 )

$ — $ ( 35,290 ) $ ( 5 ) $ ( 35,295 )

(i) Impairment charges to OGBC goodwill were related to the discontinuation of OGBC and included in other, net on the condensed consolidated statement of net income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2020.

The Company is required to perform a quantitative analysis of goodwill to test for impairment on an annual basis or more frequently when events or changes in circumstances indicate that fair value of the reporting unit may be less than its carrying amount.

Under ASC 350, Intangibles - Goodwill and Other , the qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows or planned revenue or earnings of the reporting unit as indicators when determining the need for a quantitative assessment of impairment.

As a result of the reassessment of impairment indicators and interim impairment analysis as of June 30, 2021, as described above, the Company concluded that the carrying amount of the U.S.

reporting unit exceeded its fair value, which resulted in an impairment charge of $ 178,414 on goodwill associated with the U.S.

reporting unit on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the nine months ended September 30, 2021.

reporting unit.

Accordingly, the Company performed an interim impairment analysis, which revealed the carrying amount of the reporting unit exceeded its fair value.

As a result, the Company recorded an impairment charge of $ 35,000 on goodwill associated with its U.S.

reporting unit for the nine months ended September 30, 2020.

(i) During the three months ended March 31, 2022 and 2021, $ nil and $ 416 , respectively, were recorded to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses.

(ii) As of March 31, 2022 and December 31, 2021, loans receivable, net for the Natuera Series A Loan was $ nil .

Derivative Liabilities

On March 8, 2019, the Company closed the previously announced investment in the Company (the “Altria Investment”) by Altria Group, Inc.

(“Altria”), pursuant to a subscription agreement dated December 7, 2018.

As of the closing date of the Altria Investment, the Altria Investment consisted of 149,831,154 common shares of the Company and one warrant of the Company (the “Altria Warrant”), all of which were issued to a wholly owned subsidiary of Altria.

As of the closing date of the Altria Investment, Altria beneficially held an approximate 45 % ownership interest in the Company (calculated on a non-diluted basis).

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

As of March 31, 2022, Altria Group Inc.

(“Altria”) beneficially held 156,573,537 of the Company’s common shares, an approximate 42 % ownership interest in the Company (calculated on a non-diluted basis) and one warrant of the Company (the “Altria Warrant”).

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.

Pursuant to the investor rights agreement between the Company and Altria (the “Investor Rights Agreement”), entered into in connection with the closing of Altria’s investment in the Company (the “Altria Investment”) pursuant to a subscription agreement dated December 7, 2018, the Company granted Altria certain rights, among others, summarized in this note.

Cronos Group Inc.

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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 approximate 10 % of the common shares of Cronos (approximately 83 million common shares at September 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 research and development (“R&D”) partnership with Ginkgo (the “Ginkgo Strategic Partnership”)), the right to purchase up to such number of common shares of the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any issuance of shares by the Company (“Pre-emptive Rights”), at the same price per common share of the Company at which the common shares are sold in the relevant issuance.

The price per common share of the Company to be paid by Altria pursuant to its exercise of its Pre-emptive Rights related to the Ginkgo Strategic Partnership will be C$ 16.25 per common share.

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 ( 83,399,995 common shares as of March 31, 2022) at a per share exercise price of C$ 19.00 , which expires on March 8, 2023.

(“Ginkgo”)), the right to purchase up to such number of common shares of the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any issuance of shares by the Company (“Pre-emptive Rights”), at the same price per common share of the Company at which the common shares are sold in the relevant issuance;

provided that if the consideration paid in connection with any such issuance is non-cash, the price per common share of the Company that would have been received had such common shares been issued for cash consideration will be determined by an independent committee (acting reasonably and in good faith);

provided further that the price per common share of the Company to be paid by Altria pursuant to its exercise of its Pre-emptive Rights related to the Ginkgo Strategic Partnership will be C$ 16.25 per common share.

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

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”).

The price per common share to be paid by Altria pursuant to the exercise of its Top-up Rights will be, subject to certain limited exceptions, the 10 -day volume-weighted average price of the common shares of the Company on the TSX for the ten full days preceding such exercise by Altria, provided that the price per common share of the Company to be paid by Altria pursuant to the exercise of its Top-up Rights in connection with the issuance of common shares of the Company pursuant to the exercise of options or warrants that were outstanding as of March 8, 2019 will be C$ 16.25 per common share without any set off, counterclaim, deduction, or withholding.

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

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 September 30, 2021 and 2020:

As of July 1, 2021 Revaluation gain Exercise of rights Foreign exchange effect As of September 30, 2021

(a) Altria Warrant $ 150,083 $ ( 116,285 ) $ — $ ( 1,736 ) $ 32,062

(b) Pre-emptive Rights 13,926 ( 12,430 ) — ( 148 ) 1,348

$ 169,563 $ ( 132,916 ) $ — $ ( 2,119 ) $ 34,528

As of July 1, 2020 Revaluation gain Exercise of rights Foreign exchange effect As of September 30, 2020

(a) Altria Warrant $ 165,958 $ ( 82,495 ) $ — $ 2,374 $ 85,837

(b) Pre-emptive Rights 16,180 ( 8,702 ) — 143 7,621

$ 205,714 $ ( 105,307 ) $ ( 690 ) $ 2,938 $ 102,655

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 nine months ended September 30, 2021 and 2020:

As of January 1, 2021 Revaluation gain Exercise of rights Foreign exchange effect As of September 30, 2021

Reconciliation of the Company’s derivative liabilities activity are as follows:

As of January 1, 2022 Revaluation gain Exercise of rights Foreign exchange effect As of March 31, 2022

(a) Altria Warrant $ 13,720 $ ( 10,011 ) $ — $ 136 $ 3,845

2 unchanged sentences

$ 14,375 $ ( 10,419 ) $ — $ 143 $ 4,099

As of January 1, 2020 Revaluation gain Exercise of rights Foreign exchange effect As of September 30, 2020

As of January 1, 2021 Revaluation loss Exercise of rights Foreign exchange effect As of March 31, 2021

(a) Altria Warrant $ 138,858 $ 92,964 $ — $ 2,834 $ 234,656

5 unchanged sentences

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 and nine months ended September 30, 2021, the Company’s share price decreased, resulting in a gain on revaluation of $ 132,916 and $ 131,290 , respectively.

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

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

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

Share price at valuation date (i)

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

The fair values of the derivative liabilities were determined using the Black-Scholes pricing model using the following inputs:

As of March 31, 2022

Altria Warrant Pre-emptive Rights Top-up Rights

Share price at valuation date (per share in C$) $ 4.85 $ 4.85 $ 4.85

Subscription price (per share in C$) $ 19 $ 16.25 $ 16.25

Weighted-average risk-free interest rate (i)

1.84 % 1.31 % 1.38 %

Subscription price (i)

Weighted-average expected life (in years) (ii)

0.94 0.50 0.75

Weighted-average risk-free interest rate (ii)

Expected annualized volatility (iii)

71 % 71 % 71 %

Weighted-average expected life (iii)

Expected dividend yield — % — % — %

As of December 31, 2021

Altria Warrant Pre-emptive Rights Top-up Rights

Share price at valuation date (per share in C$) $ 4.98 $ 4.98 $ 4.98

Subscription price (per share in C$) $ 19.00 $ 16.25 $ 16.25

Weighted-average risk-free interest rate (i)

0.79 % 0.39 % 0.50 %

Expected annualized volatility (iv)

Weighted-average expected life (in years) (ii)

1.18 0.50 0.80

Expected annualized volatility (iii)

80 % 80 % 80 %

Expected dividend yield — % — % — %

(i) Per share in C$.

(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 September 30, 2021 and December 31, 2020, the risk-free interest rate uses a range of approximately 0.12 % to 0.89 % 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.

(i) 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, 2022 and December 31, 2021, the risk-free interest rate uses a range of approximately 0.60 % to 2.28 % and 0.16 % to 1.10 %, respectively, for the Pre-emptive Rights and Top-up Rights.

(ii) 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 September 30, 2021 and December 31, 2020, the expected life uses a range of approximately 0.25 year to 4.00 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 September 30, 2021.

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

As of March 31, 2022 and December 31, 2021, the expected life uses a range of approximately 0.25 years to 3.50 years and 0.25 years to 3.75 years, respectively, for the Pre-emptive Rights and Top-up Rights.

(iii) Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company.

The following table quantifies each of the significant inputs described above and provides a sensitivity analysis of the impact on the reported values of the derivative liabilities.

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 amount of the derivative liability, there would also be an equal but opposite impact on net income (loss).

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

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

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

10% decrease as of March 31, 2022

Altria Warrant Pre-emptive Rights Top-up Rights

Share price $ 1,445 $ 34 $ 53

1 unchanged sentence

Expected annualized volatility 1,930 41 67

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.

10% decrease as of December 31, 2021

Altria Warrant Pre-emptive Rights Top-up Rights

Share price $ 3,970 $ 80 $ 123

Weighted-average expected life 2,971 171 133

Expected annualized volatility 5,402 96 155

These inputs are classified as Level 3 on the fair value hierarchy and are subject to volatility and several factors outside 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

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Restructuring

In the first quarter of 2022, the Company initiated a strategic plan to realign the business around its brands, centralize functions and evaluate the Company’s supply chain (the “Realignment”).

As part of the Realignment, on February 28, 2022, the Board approved plans to leverage the Company’s strategic partnerships to improve supply chain efficiencies and reduce manufacturing overhead by exiting its production facility in Stayner, Ontario, Canada (the “Stayner Facility”).

The organizational and cost reduction initiatives being undertaken are intended to position the Company to drive profitable and sustainable growth over time.

The Company expects to spend approximately $ 5,800 in connection with the Realignment and the planned exit of the Stayner Facility, of which $ 3,084 has been incurred as of March 31, 2022.

Estimated charges related to the exit of the Stayner Facility include employee-related costs such as severance, relocation and other termination benefits, as well as contract termination and other related costs.

The Company expects to incur approximately $ 2,700 in additional charges related to the planned exit of the Stayner Facility, primarily in the second half of 2022.

In addition, the Company anticipates capital expenditures of approximately $ 2,500 to modernize information technology systems and build distribution capabilities.

These anticipated charges and capital expenditures are subject to a number of assumptions, including product costs, the timing of certain events, market factors and others.

As a result of these assumptions, actual results may differ materially.

The Company incurred the following restructuring costs by reportable segment:

Three months ended March 31,

Rest of World $ 2,031 $ —

United States 1,053 —

Total $ 3,084 $ —

The following table summarizes the Company’s restructuring activity for the three months ended March 31, 2022:

Accrual as of December 31, 2021 Year-to-date expense Payments Accrual as of March 31, 2022

Employee termination benefits $ — $ 2,503 $ ( 1,249 ) $ 1,254

Other restructuring costs — 581 ( 437 ) 144

Total $ — $ 3,084 $ ( 1,686 ) $ 1,398

Share-based Compensation

(a) Share-based award plans

The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the Stock Option Plan dated May 26, 2015 (the “2015 Stock Option Plan”), the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan” and, together with the 2015 Stock Option Plan, the “Prior Option Plans”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU plan dated August 10, 2019 (the “DSU Plan”).

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

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

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the Stock Option Plan dated May 26, 2015 (the “2015 Stock Option Plan”), the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan” and, together with the 2015 Stock Option Plan, the “Prior Option Plans”), the Employment Inducement Award Plan #1 (the “Employment Inducement Award Plan”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU Plan dated August 10, 2019 (the “DSU Plan”).

The Company can no longer make grants under the Prior Option Plans or the Employment Inducement Award Plan.

The following table summarizes the total share-based compensation expense associated with the Company’s stock options and RSUs:

Three months ended March 31,

Stock options $ 1,729 $ 2,064

RSUs 1,957 435

Total share-based payments $ 2,667 $ 7,916 $ 7,731 $ 12,898

Total share-based compensation $ 3,686 $ 2,499

During the three months ended March 31, 2022, the Company recognized $ 1,583 of share-based compensation expense related to the severance of certain executives.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(b) Stock options

1 unchanged sentence

The typical vesting for stock option grants made under the 2020 Omnibus Plan is annual vesting over three to five years with a maximum term of ten years .

The typical vesting for stock option grants made under the Prior Option Plans is quarterly vesting over three to five years with a maximum term of seven years .

The typical vesting for stock option grants made under the Prior Option Plans is quarterly vesting over three to five with a maximum term of seven years .

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 in stock options during the nine months ended September 30, 2021 and 2020:

The following is a summary of the changes in stock options:

Weighted-average exercise price (C$) (i)

1 unchanged sentence

Balance as of January 1, 2022 $ 7.75 8,939,330 2.70

Issuance of options 9.19 900,000

Exercise of options 3.14 ( 1,356,875 )

Cancellation, forfeiture and expiry of options 12.46 ( 55,791 )

Balance as of September 30, 2021 $ 7.62 9,204,824 3.15

Exercisable as of September 30, 2021 $ 6.25 5,844,094 1.46

Balance as of March 31, 2022 $ 8.55 7,526,664 1.72

Exercisable as of March 31, 2022 $ 7.96 4,654,574 1.14

Weighted-average exercise price (C$) (i)

1 unchanged sentence

Balance as of January 1, 2021 $ 5.40 13,755,148 2.30

Issuance of options 6.96 2,000,000

Exercise of options 2.13 ( 5,230,550 )

Cancellation, forfeiture and expiry of options 14.71 ( 25,771 )

Balance as of September 30, 2020 $ 5.34 14,085,206 2.54

Exercisable as of September 30, 2020 $ 3.56 9,381,601 1.57

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

(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.

During the nine months ended September 30, 2021 and 2020, the fair value per share at grant date of options was C$ 6.39 and C$ 4.84 , respectively.

The fair value of the options issued was determined using the Black-Scholes option pricing model, using the following inputs:

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

September 30, 2021 September 30, 2020

Share price at grant date (per share) C$ 9.19 C$ 6.96

Exercise price (per option) C$ 9.19 C$ 6.96

Risk-free interest rate 1.39 % 0.43 %

Expected life of options (in years) (i)

Expected annualized volatility 75 % 91 %

Expected dividend yield — % — %

Black-Scholes value at grant date (per option) C$ 6.39 C$ 4.84

Forfeiture rate — % — %

(i) The expected life of the awards represents the period of time stock options are expected to be outstanding and is estimated considering vesting terms and employees’ and non-employees’ historical exercise and post-vesting employment termination behavior.

Volatility was based on an equally weighted blended historical volatility level of the underlying equity securities of the Company and peer companies.

The risk-free interest rate was based on the Bank of Canada government bonds with a remaining term equal to the expected life of the options at the grant date.

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

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

The following table summarizes stock options outstanding:

As of March 31, 2022 As of December 31, 2021

2020 Omnibus Plan 2,900,000 2,900,000

2 unchanged sentences

Total stock options outstanding 7,526,664 8,939,330

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

The following is a summary of the changes in RSUs:

Weighted-average grant date fair value (C$) (i)

4 unchanged sentences

Cancellation and forfeitures 7.92 ( 55,479 )

Balance as of September 30, 2021 $ 9.12 1,372,604

Balance as of March 31, 2022 $ 4.74 5,042,094

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

1 unchanged sentence

Balance as of January 1, 2021 $ 7.66 948,357

Vested and issued 15.34 ( 732,972 )

Cancellation and forfeitures 7.52 ( 9,497 )

Balance as of September 30, 2020 $ 7.32 805,377

(i) RSUs granted in the period vest annually in equal installments over a three-year period from either the grant date or after a five year “cliff-period.” All RSUs are subject to such holder’s continued employment through each vesting date.

13.27 265,904

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

(i) RSUs granted in the period vest annually in equal installments over a three-year period from the grant date or vest after a three or five year “cliff-period.” All RSUs are 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 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.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(d) Deferred share units

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

Number of DSUs Financial liability

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

Granting and vesting of DSUs 48,913 354

DSU liabilities settled ( 27,764 ) ( 203 )

Gain on revaluation — ( 139 )

Balance as of September 30, 2021 104,442 $ 589

Number of DSUs Financial liability

The following is a summary of the changes in DSUs:

Financial liability Number of DSUs

Balance as of January 1, 2022 $ 408 104,442

Granting and vesting of DSUs 58,380 338

DSU liabilities settled ( 8,484 ) ( 46 )

Gain on revaluation ( 66 ) —

Balance as of September 30, 2020 83,293 $ 419

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

Weighted-average exercise price (C$) Number of warrants

Balance as of March 31, 2022 $ 342 104,442

Financial liability Number of DSUs

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

Exercise of warrants 0.25 ( 7,987,349 )

Balance as of September 30, 2021 $ — —

Loss on revaluation 211 —

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

The following is a summary of the changes in warrants:

Weighted-average exercise price (C$) Number of warrants

1 unchanged sentence

Exercise of warrants 0.25 ( 7,977,349 )

Balance as of September 30, 2020 $ 0.25 12,440,252

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

Derivative Liabilities for further description of the Altria Warrant.

Balance as of March 31, 2021 $ 0.25 10,000

As of March 31, 2022, there are no warrants outstanding other than the Altria Warrant.

See Note 5 “ Derivative Liabilities ” for further description of the Altria Warrant.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Earnings (Loss) per Share

Basic and diluted earnings (loss) per share from continuing and discontinued operations are calculated as follows (in thousands, except share and per share amounts):

Three months ended September 30, Nine months ended September 30,

Three months ended March 31,

Basic and diluted loss per share computation

Net loss from continuing operations attributable to the shareholders of Cronos Group $ ( 32,638 ) $ ( 161,291 )

Weighted-average number of common shares outstanding for computation for basic and diluted earnings per share (i)

375,022,724 363,012,740

Basic earnings (loss) per share computation

Net income (loss) from continuing operations attributable to the shareholders of Cronos Group $ 77,834 $ 69,506 $ ( 261,970 ) $ 38,615

Weighted-average number of common shares outstanding 372,456,354 350,288,783 369,097,920 349,397,156

Basic earnings (loss) from continuing operations per share $ 0.21 $ 0.20 $ ( 0.71 ) $ 0.11

Basic loss from continuing operations per share $ ( 0.09 ) $ ( 0.44 )

Diluted loss from continuing operations per share $ ( 0.09 ) $ ( 0.44 )

Loss from discontinued operations attributable to the shareholders of Cronos Group $ — $ ( 21 )

Weighted-average number of common shares outstanding 372,456,354 350,288,783 369,097,920 349,397,156

Weighted-average number of common shares outstanding from computation for basic and diluted earnings per share 375,022,724 363,012,740

Basic loss from discontinued operations per share $ 0.00 $ 0.00

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Diluted earnings (loss) per share computation

Net income (loss) used in the computation of basic earnings (loss) from continuing operations per share $ 77,834 $ 69,506 $ ( 261,970 ) $ 38,615

Adjustment for exercise of rights on derivative liabilities — ( 690 ) — ( 1,407 )

Net income (loss) used in the computation of diluted earnings (loss) from continuing operations per share $ 77,834 $ 68,816 $ ( 261,970 ) $ 37,208

Weighted-average number of common shares outstanding used in the computation of basic earnings (loss) per share 372,456,354 350,288,783 369,097,920 349,397,156

Dilutive effect of warrants — 16,965,763 — 17,346,039

Dilutive effect of stock options 2,507,471 6,331,545 — 7,276,194

Dilutive effect of RSUs 581,481 195,750 — 72,099

Dilutive effect of Top-up Rights – market price 107,942 81,573 — 30,069

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

375,653,248 373,863,414 369,097,920 374,121,557

Diluted earnings (loss) per share from continuing operations $ 0.21 $ 0.18 $ ( 0.71 ) $ 0.10

Income (loss) from discontinued operations attributable to the shareholders of Cronos Group $ 82 $ ( 473 ) $ ( 500 ) $ ( 519 )

Weighted-average number of common shares for computation of diluted earnings (loss) from discontinued operations per share 375,653,248 373,863,414 369,097,920 374,121,557

Diluted loss from discontinued operations per share $ 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.

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 September 30, Nine months ended September 30,

2021 2020 2021 2020

Ginkgo equity milestones 13,207,414 14,674,904 14,185,741 14,674,904

Pre-emptive Rights 10,668,647 12,006,740 10,878,993 12,006,740

Top-up Rights – fixed price 3,601,810 23,502,403 7,318,628 24,355,967

Top-up Rights – market price 3,036,327 1,507,739 2,627,890 1,458,569

Altria Warrant 82,956,191 79,051,981 82,723,333 78,106,502

Stock options 4,489,391 3,648,232 6,775,634 3,413,211

Warrants — — 1,856,251 —

Restricted share units 295,897 — 770,544 488,648

Total anti-dilutive securities 118,255,677 134,391,999 127,137,014 134,504,541

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Total securities of 118,224,080 and 136,945,023 were not included in the computation of diluted shares outstanding for the three months ended March 31, 2022 and, 2021, respectively, because the effect would be anti-dilutive.

Segment Information

The Company determined that it has the following two reportable segments:

United States and Rest of World.

The United States operating segment consists of the manufacture and distribution of U.S.

hemp-derived CBD infused products.

The Rest of World operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets .

These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region.

The results of each segment are regularly reviewed by the CODMs to assess the performance of the segment and make decisions regarding the allocation of resources.

The CODMs review adjusted earnings (loss) before interest, tax, depreciation and amortization (“Adjusted EBITDA”) as the measure of segment profit or loss to evaluate performance of and allocate resources for its reportable segments.

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.

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

dollars for the periods presented.

The tables below set forth our condensed consolidated results of operations by segment.

The Company’s condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that the Company will achieve in future periods .

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

Three months ended September 30, 2021

United States Rest of World Corporate Total

Cannabis flower $ — $ 15,306 $ — $ 15,306

Cannabis extracts 2,100 2,786 — 4,886

Other — 215 — 215

Net revenue $ 2,100 $ 18,307 $ — $ 20,407

Share of loss from equity accounted investments $ — $ 1,414 $ — $ 1,414

Interest income 4 2,067 — 2,071

Interest expense — ( 7 ) — ( 7 )

Interest income, net $ 4 $ 2,060 $ — $ 2,064

Depreciation and amortization $ 70 $ 1,181 $ — $ 1,251

Impairment loss on goodwill and indefinite-lived assets 105 37 — 142

Impairment loss on long-lived assets — 1,784 — 1,784

Gain from discontinued operations — ( 82 ) — ( 82 )

Adjusted EBITDA ( 12,200 ) ( 29,760 ) ( 4,813 ) ( 46,773 )

Purchase of property, plant and equipment, net 101 2,203 — 2,304

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Three months ended September 30, 2020

United States Rest of World Corporate Total

Cannabis flower $ — $ 7,958 $ — $ 7,958

Cannabis extracts 1,639 1,504 — 3,143

Other — 257 — 257

Net revenue $ 1,639 $ 9,719 $ — $ 11,358

Share of loss from equity accounted investments $ — $ 1,327 $ — $ 1,327

Interest income — 3,907 — 3,907

Interest expense ( 30 ) ( 96 ) — ( 126 )

Interest income, net $ ( 30 ) $ 3,811 $ — $ 3,781

Depreciation and amortization $ 35 $ 851 $ — $ 886

Adjusted EBITDA ( 5,687 ) ( 14,371 ) ( 10,021 ) ( 30,079 )

Purchase of property, plant and equipment, net 75 7,915 — 7,990

Nine months ended September 30, 2021

Segment data was as follows for the three months ended March 31, 2022 and 2021:

Three months ended March 31, 2022

United States Rest of World Corporate Total

3 unchanged sentences

Net revenue $ 2,328 $ 22,705 $ — $ 25,033

Share of loss from equity accounted investments $ — $ 4,172 $ — $ 4,172

Interest income 27 6,679 — 6,706

Interest expense — ( 20 ) — ( 20 )

Interest income, net $ 27 $ 6,659 $ — $ 6,686

Total assets $ 441,064 $ 283,182 $ 646,755 $ 1,371,001

Depreciation and amortization 96 1,197 — 1,293

Impairment loss on goodwill and indefinite-lived intangible assets 235,019 37 — 235,056

Impairment loss on long-lived assets 2,955 1,784 — 4,739

Loss from discontinued operations — 500 — 500

Adjusted EBITDA ( 7,086 ) ( 3,425 ) ( 8,389 ) ( 18,900 )

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Nine months ended September 30, 2020

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Three months ended March 31, 2021

United States Rest of World Corporate Total

3 unchanged sentences

Net revenue $ 2,441 $ 10,170 $ — $ 12,611

Share of loss from equity accounted investments $ — $ 3,293 $ — $ 3,293

Interest income 16 15,466 — 15,482

Interest expense ( 30 ) ( 186 ) — ( 216 )

Interest income, net $ ( 14 ) $ 15,280 $ — $ 15,266

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

Total assets $ 252,449 $ 394,442 $ 1,234,391 $ 1,881,282

Depreciation and amortization 71 664 — 735

Impairment loss on goodwill and indefinite-lived intangible assets 40,000 — — 40,000

Income tax expense 143 845 — 988

Loss from discontinued operations — 21 — 21

Adjusted EBITDA ( 9,510 ) ( 22,184 ) ( 4,880 ) ( 36,574 )

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GAAP to Adjusted EBITDA for the periods indicated:

Three months ended September 30, 2021

United States Rest of World Corporate Total

Net income (loss) $ ( 13,499 ) $ 97,198 $ ( 6,033 ) $ 77,666

Interest income, net ( 4 ) ( 2,060 ) — ( 2,064 )

Income tax benefit — ( 159 ) — ( 159 )

Share of loss from equity accounted investments — 1,414 — 1,414

Impairment loss on goodwill and indefinite-lived intangible assets (i)

Impairment loss on long-lived assets (ii)

— 1,784 — 1,784

Gain on revaluation of derivative liabilities (iii)

— ( 132,916 ) — ( 132,916 )

Transaction costs (iv)

Other, net (vi)

— ( 273 ) — ( 273 )

Income from discontinued operations (vii)

— ( 82 ) — ( 82 )

Share-based payments (viii)

967 1,700 — 2,667

Financial statement review costs (ix)

Depreciation and amortization 231 3,597 — 3,828

Adjusted EBITDA $ ( 12,200 ) $ ( 29,760 ) $ ( 4,813 ) $ ( 46,773 )

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Three months ended September 30, 2020

Three months ended March 31, 2022

United States Rest of World Corporate Total

2 unchanged sentences

Income tax expense — 362 — 362

Share of loss from equity accounted investments — 1,327 — 1,327

Gain on revaluation of derivative liabilities (iii)

— ( 105,307 ) — ( 105,307 )

Gain on disposal of other investments (v)

— ( 3,974 ) — ( 3,974 )

Other, net (vi)

Loss from discontinued operations (vii)

Share-based payments (viii)

6,469 1,447 — 7,916

Financial statement review costs (ix)

Depreciation and amortization 35 2,181 — 2,216

Adjusted EBITDA $ ( 5,687 ) $ ( 14,371 ) $ ( 10,021 ) $ ( 30,079 )

Nine months ended September 30, 2021

United States Rest of World Corporate Total

Net income (loss) $ ( 273,438 ) $ 34,678 $ ( 24,552 ) $ ( 263,312 )

Interest income, net ( 27 ) ( 6,659 ) — ( 6,686 )

Income tax benefit — ( 159 ) — ( 159 )

Share of loss from equity accounted investments — 4,172 — 4,172

Impairment loss on goodwill and indefinite-lived intangible assets (i)

Impairment loss on long-lived assets (i)

— 3,493 — 3,493

Impairment loss on long-lived assets (ii)

Gain on revaluation of derivative liabilities (ii)

— ( 10,419 ) — ( 10,419 )

Gain on revaluation of derivative liabilities (iii)

Gain on revaluation of financial instruments (iv)

— ( 4,268 ) — ( 4,268 )

Transaction costs (iv)

Impairment loss on other investment (v)

11,238 — — 11,238

Foreign currency transaction loss — 1,872 — 1,872

Other, net (vi)

— ( 135 ) — ( 135 )

Loss from discontinued operations (vii)

Share-based payments (viii)

Restructuring costs (viii)

1,053 2,031 — 3,084

Financial statement review costs (ix)

Share-based compensation (ix)

2,436 1,250 — 3,686

Financial statement review costs (x)

— — 4,062 4,062

Depreciation and amortization 432 2,392 — 2,824

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Nine months ended September 30, 2020

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Three months ended March 31, 2021

United States Rest of World Corporate Total

Net income (loss) $ ( 64,507 ) $ 125,640 $ ( 24,691 ) $ 36,442

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

Interest income, net ( 3 ) ( 2,326 ) — ( 2,329 )

Income tax expense 143 845 — 988

Share of loss from equity accounted investments — 1,643 — 1,643

Impairment loss on goodwill and indefinite-lived intangible assets (i)

40,000 — — 40,000

Gain on revaluation of derivative liabilities (iii)

Impairment loss on long-lived assets (i)

1,741 — — 1,741

Gain on disposal of other investments (v)

Loss on revaluation of derivative liabilities (ii)

— 116,874 — 116,874

Transaction costs (iii)

Loss on revaluation of financial instruments (iv)

Other, net (vi)

Loss from discontinued operations (vii)

Share-based payments (viii)

Share-based compensation (ix)

745 1,754 — 2,499

Financial statement review costs (ix)

Financial statement review costs (x)

— — 2,005 2,005

1 unchanged sentence

Adjusted EBITDA $ ( 9,510 ) $ ( 22,184 ) $ ( 4,880 ) $ ( 36,574 )

(i) For the nine months ended September 30, 2021, and three and nine months ended September 30, 2020, impairment loss on goodwill and indefinite-lived intangible assets relates to impairment on goodwill and intangible assets related to the Company’s U.S.

For the three months ended September 30, 2021, impairment loss on goodwill and indefinite-lived intangible assets relates to impairment on goodwill and intangible assets related to the Company’s U.S.

segment and impairment on an indefinite-lived trademark related to the Company’s ROW segment.

Goodwill and Intangible Assets, net.

(ii) For the three months ended September 30, 2021, impairment loss on long-lived assets relates to impairment charges for the difference between the consideration paid to Ginkgo for the achievement of certain milestones in connection with the Ginkgo Collaboration Agreement and the fair value of the Ginkgo exclusive license intellectual property .

For the nine months ended September 30, 2021, impairment loss on long-lived assets relates to an impairment on leased premises in the U.S.

segment, impairment on property, plant and equipment in the U.S.

segment and the aforementioned impairment of the Ginkgo intellectual property.

For the three and nine months ended September 30, 2020, there was no impairment loss on long-lived assets.

Impairment Loss on Long-lived Assets and Note 5.

Goodwill and Intangible Assets, net.

(iii) For the three and nine months ended September 30, 2021 and 2020, gain on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities.

Derivative Liabilities.

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

(i) For the three months ended March 31, 2022, impairment loss on long-lived assets related to the Company’s decision to seek a sublease for leased office space located in Toronto, Ontario, Canada.

For the three months ended March 31, 2021, impairment loss on long-lived assets related to an impairment on leased premises in the U.S.

See Note 12 “ Impairment Loss on Long-lived Assets .”

(ii) For the three months ended March 31, 2022 and 2021, (gain) loss on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities.

See Note 5 “ Derivative Liabilities .”

(iii) For the three months ended March 31, 2021, transaction costs represent 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).

There were no transaction costs during the three and nine months ended September 30, 2020.

(v) For the three and nine months ended September 30, 2020, gain on disposal of other investments is primarily comprised of the gain recorded related to the sale of common shares of Aurora, which were received in connection with the achievement of a milestone related to Aurora’s acquisition of Whistler.

There were no disposals of investments during the three and nine months ended September 30, 2021.

(vi) For the three and nine months ended September 30, 2021 and 2020, other, net is primarily related to (gain) loss on reclassification of held-for-sale assets, (gain) loss recognized on the revaluation of financial liabilities and (gain) loss on disposal of assets.

(vii) For the three and nine months ended September 30, 2021 and 2020, loss (income) from discontinued operations relates to the discontinuance of OGBC.

Held-For-Sale Assets and Discontinued Operations.

(viii) For the three and nine months ended September 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 7.

Share-based Payments.

(ix) For the three and nine months ended September 30, 2021 and 2020, financial statement review costs include costs related to the restatements 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.

(iv) For the three months ended March 31, 2022, gain on revaluation of financial instruments related primarily to the Company’s equity securities in Cronos Australia.

For the three months ended March 31, 2021, loss on revaluation of financial instruments related primarily to revaluations of financial liabilities resulting from DSUs.

(v) For the three months ended March 31, 2022, impairment loss on other investments related to the PharmaCann Option for the difference between its fair value and carrying amount.

See Note 3 “ Investments.

(vi) For the three months ended March 31, 2022 and 2021, other, net is primarily related to (gain) loss on reclassification of held-for-sale assets and (gain) loss on disposal of assets.

(vii) For the three months ended March 31, 2021, loss from discontinued operations related to the discontinuance of Original B.C.

(viii) For the three months ended March 31, 2022, restructuring costs related to the employee-related severance costs and other restructuring costs associated with the Realignment and the exit of the Stayner Facility.

See Note 6 “ Restructuring.

(ix) For the three months ended March 31, 2022 and 2021, share-based compensation related to the vesting expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 7 “ Share-based Compensation .”

(x) For the three months ended March 31, 2022 and 2021, financial statement review costs include costs related to the restatements of the Company’s 2019 and second quarter 2021 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 2019 restatement.

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

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

Canada $ 13,576 $ 7,582

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

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

As of March 31, 2022 As of December 31, 2021

Canada $ 47,717 $ 49,117

2 unchanged sentences

Total $ 71,828 $ 74,070

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.

United States

During the three and nine months ended September 30, 2021 and 2020, the U.S.

segment had no major customers.

As of September 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 nine months ended September 30, 2021 and 2020.

Rest of World

During the three months ended September 30, 2021, the Rest of World segment earned a total net revenue before excise taxes of $ 12,256 from three major customers, Ontario Cannabis Retail Corporation, Société Québécoise du Cannabis, and Alberta Gaming, Liquor and Cannabis Commission accounting for 31 %, 16 %, and 13 % respectively, of the Company’s total net revenue before excise taxes.

During the three months ended September 30, 2020, the Rest of World segment earned a total net revenue before excise taxes of $ 9,790 from four major customers, together accounting for 82 % of the Company’s total net revenues before excise taxes.

During the nine months ended September 30, 2021, the Rest of World segment earned a total net revenue before excise taxes of $ 25,667 from three major customers, Ontario Cannabis Retail Corporation, Société Québécoise du Cannabis and Alberta Gaming, Liquor and Cannabis Commission, accounting for 24 %, 16 %, and 13 % respectively, of the Company’s total net revenue before excise taxes.

During the nine months ended September 30, 2020, the Rest of World segment earned a total net revenue before excise taxes of $ 22,142 from four major customers, together accounting for 74 % of the Company’s total net revenues before excise taxes.

As of September 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 Company recorded income from discontinued operations of $ 82 from the Rest of World segment for the three months ended September 30, 2021 and a loss from discontinued operations of $ 473 for the three months ended September 30, 2020.

The loss from discontinued operations from the Rest of World segment for the nine months ended September 30, 2021 and 2020 was $ 500 and $ 519 , respectively.

Commitments and Contingencies

1 unchanged sentence

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

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(b) Contingencies

4 unchanged sentences

On March 11 and 12, 2020, two alleged shareholders of the Company separately filed two putative class action complaints in the U.S.

District Court for the Eastern District of New York against the Company and its former Chief Executive Officer (now Executive Chairman) and now former Chief Financial Officer.

District Court for the Eastern District of New York against the Company and its Chief Executive Officer and now former Chief Financial Officer.

The court has consolidated the cases, and the consolidated amended complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants, and Section 20(a) of the Exchange Act against the individual defendants.

The consolidated amended complaint generally alleges that certain of the Company’s prior public statements about revenues and internal controls were incorrect based on the Company’s disclosures relating to the Audit Committee of the Board of Directors’ review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel.

The consolidated amended complaint generally alleges that certain of the Company’s prior public statements about revenues and internal control were incorrect based on the Company’s disclosures relating to the Audit Committee of the Board of Directors’ (the “Board”) review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel.

The consolidated amended complaint does not quantify a damage request.

1 unchanged sentence

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.

The Amended Statement of Claim names (i) the Company, (ii) its former Chief Executive Officer (now Executive Chairman), (iii) now former Chief Financial Officer, (iv) former Chief Financial Officer and Chief Commercial Officer, and (v) current and former members of the Board of Directors as defendants and alleges breaches of the Ontario Securities Act, oppression under the Ontario Business Corporations Act and common law misrepresentation.

The Amended Statement of Claim generally alleges that certain of the Company’s prior public statements about revenues and internal controls were misrepresentations based on the Company’s March 2, 2020 disclosure that the Audit Committee of the Board of Directors was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel, and the Company’s subsequent restatement.

The Amended Statement of Claim names (i) the Company, (ii) its Chief Executive Officer, (iii) now former Chief Financial Officer, (iv) former Chief Financial Officer and Chief Commercial Officer, and (v) current and former members of the Board as defendants and alleges breaches of the Ontario Securities Act, oppression under the Ontario Business Corporations Act and common law misrepresentation.

The Amended Statement of Claim generally alleges that certain of the Company’s prior public statements about revenues and internal control were misrepresentations based on the Company’s March 2, 2020 disclosure that the Audit Committee of the Board was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel, and the Company’s subsequent restatement.

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 has appealed the Court’s dismissal of the motions only with respect to the Company, the former Chief Executive Officer (now Executive Chairman), and the now former Chief Financial Officer;

On June 28, 2021, the 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 has appealed the Court’s dismissal of the motions only with respect to the Company, the Chief Executive Officer, and the now former Chief Financial Officer;

the remaining defendants were dismissed from the matter with prejudice, and the Company and all individual defendants agreed not to seek costs from plaintiff in connection with the dismissal of the motions.

(ii) Regulatory reviews relating to restatement

(ii) Regulatory reviews relating to restatements

The Company has been responding to requests for information from various regulatory authorities relating to its previously disclosed restatement of its financial statements for the first three quarters of 2019 as well as the previously disclosed restatement of the second quarter of 2021 interim financial statements.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

17 unchanged sentences

The Company expects litigation and regulatory proceedings relating to the marketing, distribution and sale of its products to increase.

Financial Instruments

(a) Fair value measurement

Fair Value Measurements

The Company complies with ASC 820 Fair Value Measurements for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

3 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 September 30, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

September 30, 2021

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis:

March 31, 2022

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Short-term investments 119,933 — — 119,933

Other investments (i)

12,607 — — 12,607

Derivative liabilities — — 4,099 4,099

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

December 31, 2021

2 unchanged sentences

Short-term investments 117,684 — — 117,684

Other investments (i)

8,000 — — 8,000

Derivative liabilities — — 14,375 14,375

(i) As of March 31, 2022 and December 31, 2021, the Company’s influence on Cronos Australia is deemed non-significant and the investment is considered an equity security with a readily determinable fair value.

See Note 3 “ Investments ” for additional information.

There were no transfers between fair value categories during the periods presented.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(b) Financial risks

The Company’s activities expose it to a variety of financial risks, including credit risk, market risk, interest rate risk, liquidity risk, and foreign currency rate risk.

(i) Credit risk

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’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 1,144,143 and $ 1,403,491 as of September 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 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.

In addition to interest receivable, other receivables include sales taxes receivable from the government.

As such, the Company has assessed an insignificant loss allowance on these financial instruments.

(b) Accounts receivable

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses.

The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns.

Accounts receivable are written off when there is no reasonable expectation of recovery.

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 September 30, 2021 and December 31, 2020, the Company had an allowance for credit losses of $ 202 and $ 74 , respectively.

As of September 30, 2021, the Company has assessed that there is a concentration of credit risk, as 84 % 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.

(ii) Market risk

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in market prices.

The value of financial instruments can be affected by changes in interest rates, market and economic conditions, and equity and commodity prices.

The Company is exposed to market risk in divesting its investments, such that unfavorable market conditions could result in dispositions of investments at less than their carrying amounts.

Further, the revaluation of securities classified as fair value through net income could result in significant write-downs of the Company’s investments, which would have an adverse impact on the Company’s financial position, unless these would flow through other comprehensive income.

The Company manages market risk by having a portfolio of securities from multiple issuers so that the Company is not materially exposed to any one issuer.

(iii) Interest rate risk

Interest rate risk is the risk that the value or yield of fixed-income investments may decline if interest rates change.

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 September 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 September 30, 2021 and 2020, the Company recorded net interest income of $ 2,064 and $ 3,781 , respectively.

During the nine months ended September 30, 2021 and 2020, the Company recorded net interest income of $ 6,686 and $ 15,266 , respectively.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

(iv) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due and arises principally from the Company’s accounts payable and other liabilities.

The Company’s policy is to review liquidity resources and ensure that sufficient funds are available to meet financial obligations as they become due.

Further, the Company’s management is responsible for ensuring funds exist and are readily accessible to support business opportunities as they arise.

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

As of September 30, 2021, the Company had assessed a concentration risk of vendors as 21 % of accounts payables were due to two vendors.

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

(v) Foreign currency risk

Currency rate risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in foreign exchange rates.

The Company is exposed to this risk on investments in equity investees denominated in dollars, A$ and C$, and other assets and liabilities denominated in A$ and C$.

The Company is further exposed to this risk through subsidiaries operating in Israel and the U.S.

as the Company’s functional currency is in Canadian dollars.

The Company does not currently use foreign exchange contracts to hedge its exposure to currency rate risk.

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 September 30, 2021 and 2020, the Company had foreign currency gain (loss) on translation of $( 22,818 ) and $ 26,167 , respectively.

During the nine months ended September 30, 2021 and 2020, the Company had foreign currency gain (loss) on translation of $ 6,936 and $( 35,654 ), respectively.

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

dollar would affect the carrying amount of net assets by approximately $ 99,056 and $ 97,237 as of September 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 OGBC and as a result, OGBC’s results of operations were reclassified as discontinued operations in the accompanying condensed consolidated financial statements.

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

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

On September 10, 2021, OGBC was sold for $ 727 , net of costs to sell.

As a result, the Company recorded $ 82 in income (loss) on discontinued operations in its condensed consolidated income statement for the three and nine months ended September 30, 2021.

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 nine months ended September 30, 2021.

The following table summarizes the financial information for discontinued operations:

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Income (loss) from discontinued operations, net of income taxes $ 82 $ ( 473 ) $ ( 500 ) $ ( 519 )

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

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

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Impairment Loss on Long-lived Assets

(a) Right-of-use assets and property, plant, and equipment, net

During the nine months ended September 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.

During the three months ended March 31, 2022, the Company recognized an impairment charge of $ 1,986 related to the right-of-use lease asset associated with the Company’s corporate headquarters, encompassing approximately 29,000 square feet, in Toronto, Ontario, Canada, for which the Company determined it would seek a sublease.

In addition, the Company recognized an impairment charge of $ 1,507 during the three months ended March 31, 2022 related to leasehold improvements and other office equipment that it plans to include in any potential sublease agreement.

The determination to seek a sublease of the property and include leasehold improvements and other office equipment in any potential sublease agreement triggered the impairment charges.

Both of the impairment charges are recognized as impairment loss on long-lived assets on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

During the three months ended March 31, 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 the Company’s 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 nine months ended September 30, 2021.

Both of the impairment charges described above are recognized on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as impairment loss on long-lived assets.

Additionally, during the nine months ended September 30, 2021, the Company reassessed the existence of impairment indicators on property, plant and equipment associated with sales channels in the U.S.

The Company determined that slower actual revenue growth as compared to previous revenue growth forecasts and significant pricing pressures brought about by increased competition and aggressive discounting in sales channels in the U.S.

segment represented indicators of impairment.

As a result, a quantitative impairment analysis was required as of June 30, 2021.

As such, the Company reassessed its estimates and forecasts as of June 30, 2021, to determine the fair values of the property, plant and equipment using an undiscounted cash flow methodology.

Significant inputs include growth rates and cash flow projections.

As a result of the analysis as of June 30, 2021, the Company concluded the carrying amount of the property, plant and equipment associated with sales channels in the U.S.

segment exceeded its fair value, which resulted in impairment charges of $ 1,214 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the nine months ended September 30, 2021.

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

(b) Intangible assets, net

During the three and nine months ended September 30, 2021, the Company recognized an impairment charge of $ 1,784 on definite-lived intangible assets for the difference between the consideration paid to Ginkgo for the achievement of certain milestones in connection with the Ginkgo Collaboration Agreement and the fair value of the Ginkgo exclusive license intellectual property .

Goodwill and Intangible Assets, Net.

The impairment charge is recognized on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as impairment loss on long-lived assets.

No impairment charges were recorded during the three and nine months ended September 30, 2020 on definite-lived intangible assets.

Subsequent Events

(a) PharmaCann

On October 12, 2021, PharmaCann announced that it had entered into a definitive merger agreement pursuant to which PharmaCann will acquire LivWell Holdings, Inc.

LivWell is a multi-state cannabis cultivation and retail leader based in Colorado.

Based upon the terms of the proposed merger, upon the closing of the proposed merger, the Company’s best estimate is that its ownership percentage in PharmaCann on a fully-diluted basis would decrease to approximately 6.7 %.

Under the terms of the Company’s investment in PharmaCann, the Company’s rights to nominate an observer or a director to the PharmaCann board of directors could be lost if the Company’s ownership drops below 6.0 % on a fully diluted basis and it sells or transfers all or any portion of the option (subject to certain exceptions).

Further dilution, therefore, could adversely affect the Company’s rights under the PharmaCann option.

As a result of the merger, the value of the Company’s option in PharmaCann could be materially impacted.

(b) Ginkgo Collaboration Agreement

On November 12, 2021, the Company announced the achievement of the final productivity target in respect of cannabigerovarinic acid (“CBGVA”) under the Ginkgo Collaboration Agreement with Ginkgo.

As a result of this achievement on November 12, 2021, the Company issued 1,467,490 common shares at a share price of C$ 7.12 for total consideration given of C$ 10,449 ($ 8,150 ) to Ginkgo.

The estimated fair value of the exclusive license for CBGVA is still being evaluated.

The definite-lived intangible asset will be amortized using the straight-line method over its estimated useful life of ten years .

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

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 as impairment loss on long-lived assets on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

Related Party Transactions

On March 8, 2019, in connection with the Altria Investment, Altria, through certain of its wholly owned subsidiaries, purchased a 45 % equity interest in the Company.

As of March 31, 2022, Altria beneficially held an approximately 42 % ownership interest in the Company (calculated on a non-diluted basis).

The Company incurred the following expenses for consulting services from Altria Pinnacle LLC, a subsidiary of Altria (“Altria Pinnacle”):

Three months ended March 31,

Altria Pinnacle - expense $ 28 $ 8

As of March 31, 2022 and December 31, 2021, the Company had payables outstanding to Altria Pinnacle of $ 13 and $ nil , respectively.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

The Cronos Australia Merger closed on December 16, 2021.

In connection with the closing of the Cronos Australia Merger, all advances made under the Company’s A$ 1,500 unsecured loan to Cronos Australia, plus accrued interest and certain royalties payable, were converted into ordinary shares of Cronos Australia.

In addition, the Company’s ownership interest in Cronos Australia decreased to approximately 10 % and the Company’s number of Cronos Australia board seats was reduced from two to one .

The reduction in ownership interest and board seats constitutes a loss of significant influence and will result in a change beginning in the fourth quarter of 2021 on the condensed consolidated balance sheet from equity method to mark-to-market accounting, with unrealized holding gains and losses included in net income (loss) on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

The fair value of the Company’s investment in Cronos Australia was valued at approximately $ 8,300 as of December 16, 2021.

(d) MedMen Enterprises, Inc.

On December 31, 2021, the Company and MedMen Enterprises, Inc., the joint venture partner (“the MedMen JV partner”), agreed to fully dissolve MedMen Canada (“the MedMen dissolution agreement”) due to its prolonged inactivity and a lack of business operations.

In accordance with the MedMen dissolution agreement, cash of $ 256 and $ 220 was distributed to the Company and the MedMen JV partner, respectively.

The remaining $ 118 of cash held by MedMen Canada will be used to settle any remaining legal fees and related charges.

Any remaining funds will then be distributed 50/50 between the Company and the MedMen JV partner.

(e) Realignment

In the first quarter of 2022, the Company initiated a strategic plan to realign the business around its brands, centralize functions and evaluate the Company’s supply chain (the “Realignment”).

The organizational and cost initiatives being undertaken are intended to position the Company to drive profitable and sustainable growth over time.

The Company expects to incur charges associated with the Realignment over a one-year period of approximately $1,219, the majority of which are expected to be incurred in the first half of 2022, relating to one-time severance charges.

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(b) Cronos GrowCo

The Company holds a variable interest in Cronos GrowCo through its ownership of 50 % of Cronos GrowCo’s common shares and senior secured debt in Cronos GrowCo.

See Note 3 “ Investments ” for additional information.

The Company made the following purchases of cannabis products from Cronos GrowCo:

Three months ended March 31,

Cronos GrowCo - purchases $ 3,218 $ —

There were $ nil and $ 82 amounts payable to Cronos GrowCo as of March 31, 2022 and December 31, 2021, respectively.

Additionally, on August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into the GrowCo Facility.

See Note 4 “ Loans Receivable, net ” for additional information.

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