What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-12 · 220 added, 371 removed, 274 unchanged (68% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read together with other information, including Cronos Group’s condensed consolidated interim financial statements and the related notes to those statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 (this “Quarterly Report”), consolidated financial statements appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report.

The following discussion and analysis should be read together with other information, including the Company’s condensed consolidated interim financial statements and the related notes to those statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 (this “Quarterly Report”), consolidated financial statements appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report.

Forward-Looking Statements

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Forward-Looking Statements include, but are not limited to, statements with respect to:

• the ongoing impact of the public investigation into Canadian licensed producers of alleged dumping of medical cannabis imports from Canada into Israel by the Israel Trade Levies Commissioner of the Israel Ministry of Economy and Industry (the “Anti-Dumping Investigation”);

• expectations related to the conflict involving Israel, Hamas, Iran and other stakeholders in the region (the “Middle East Conflict”) and its impact on our operations in Israel, the supply of product in the market and the demand for product by medical patients in Israel, as well as any regional or global escalations and their impact to global commerce and stability;

• expectations related to the German, Australian and United Kingdom (“UK”) markets, including our strategic partnerships with Cansativa GmbH (“Cansativa”), Vitura Health Limited (“Vitura”) and GROW ® Pharma, respectively, and our ability to successfully distribute the PEACE NATURALS® brand in Germany and the UK;

• the ongoing impact of the public investigation into Canadian licensed producers of alleged dumping of medical cannabis imports from Canada into Israel by the Trade Levies Commissioner of the Israel Ministry of Economy and Industry (the “Anti-Dumping Investigation”) and the proposed anti-dumping duty to which the Company’s imports would be subject;

• expectations related to the conflict involving Israel, Hamas, Hezbollah, Houthis, Iran, Iran’s proxies and other stakeholders in the region (the “Middle East Conflict”) and its impact on our operations in Israel, the supply of product in the market and the demand for product by medical patients in Israel, as well as any regional or global escalations and their impact to global commerce and stability;

• expectations related to the German, Australian and United Kingdom (“UK”) markets, including our strategic partnerships with Cansativa GmbH (“Cansativa”), Vitura Health Limited (“Vitura”), and other distributors, respectively, and our ability to successfully distribute the PEACE NATURALS ® brand in Germany and the UK;

• expectations related to our announcement of cost-cutting measures, including our decision to wind down operations at our Winnipeg, Manitoba facility and list the facility for sale, the expected costs and benefits from the wind-down of production activities at the facility, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;

• expectations related to the impact of our decision to exit our U.S.

hemp-derived cannabinoid product operations, including the costs, expenses and write-offs associated therewith, the impact on our operations and our financial statements and any future plans to re-enter the U.S.

• expectations related to our announced realignment (the “Realignment”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, reporting structure, costs, operating expenses, employee turnover and other changes with respect thereto;

• our expectations as to the use of our facility in Stayner, Ontario (the “Peace Naturals Campus”);

• our ability to acquire raw materials from suppliers, including Cronos GrowCo, and the costs and timing associated therewith;

hemp-derived cannabinoid product operations and any future plans to re-enter the U.S.

• the ongoing impact of our announced realignment (inclusive of any revisions thereto, the “Realignment”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, reporting structure, costs, operating expenses, employee turnover and other changes with respect thereto;

• our expectations as to the use and expansion of our facility in Stayner, Ontario (the “Peace Naturals Campus”);

• our ability to acquire raw materials from suppliers, including Cronos Growing Company Inc.

(“Cronos GrowCo”), and the costs and timing associated therewith;

• expectations regarding the potential success of, and the costs and benefits associated with, our joint ventures, strategic alliances and equity investments;

• expectations related to the expansion of Cronos GrowCo’s purpose-built cannabis facility;

• expectations related to the Cronos GrowCo Transaction and the expansion of its cultivation and processing facilities;

• expectations related to the transaction by which we obtained majority control of the board of directors of Cronos GrowCo (the “Cronos GrowCo Transaction”), which qualified as a business combination under Accounting Standards Codification (“ASC”) 805, and the expansion of Cronos GrowCo’s purpose-built cultivation and processing facilities;

• our ability or plans to identify, develop, commercialize or expand our technology research and development (“R&D”) initiatives in cannabinoids, or the success thereof;

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hemp-derived cannabinoids) products and the scope of any regulations by the U.S.

Food and Drug Administration, the U.S.

Drug Enforcement Administration, the U.S.

Federal Trade Commission, the U.S.

Patent and Trademark Office and any state equivalent regulatory agencies over cannabis and U.S.

Food and Drug Administration (the “FDA”), the U.S.

Drug Enforcement Administration (the “DEA”), the U.S.

Federal Trade Commission (the “FTC”), the U.S.

Patent and Trademark Office (the “PTO”) and any state equivalent regulatory agencies over cannabis and U.S.

hemp (including CBD and other U.S.

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• the impact of the ongoing military conflict between Russia and Ukraine (and resulting sanctions) on our business, financial condition and results of operations or cash flows;

• our compliance with the terms of the settlement (the “Settlement Order”) with the Securities and Exchange Commission (the “SEC”) and the settlement agreement (the “Settlement Agreement”) with the Ontario Securities Commission (the “OSC”);

• our compliance with the terms of the settlement (the “Settlement Order”) with the SEC and the settlement agreement (the “Settlement Agreement”) with the Ontario Securities Commission (the “OSC”);

• the impact of the loss of our ability to rely on private offering exemptions under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), and the loss of our status as a well-known seasoned issuer, each as a result of the Settlement Order.

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The Forward-Looking Statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including:

(i) our ability to effectively navigate developments related to the Anti-Dumping Investigation and its impact on our operations in Israel;

(i) our ability to effectively navigate developments related to the Anti-Dumping Investigation and the proposed anti-dumping duty to which the Company’s imports would be subject and its impact on our operations in Israel;

(ii) our ability to effectively navigate developments related to the Middle East Conflict and its impact on our employees and operations in Israel, the supply of product in the market and demand for product by medical patients in Israel;

(iii) our ability to efficiently and effectively distribute our PEACE NATURALS ® brand in Germany with our strategic partner Cansativa and in the UK with our strategic partner GROW ® Pharma and our ability to efficiently and effectively distribute products in Australia with our strategic partner Vitura;

(iv) our ability to realize the expected cost-savings and other benefits related to the wind-down of our operations at our Winnipeg, Manitoba facility, (v) expectations related to the impact of our decision to exit our U.S.

(iii) our ability to efficiently and effectively distribute our PEACE NATURALS ® brand in Germany with our strategic partner Cansativa and in the UK and our ability to efficiently and effectively distribute products in Australia with our strategic partner Vitura;

(iv) our ability to realize the expected cost-savings and other benefits related to the wind-down of our operations at our Winnipeg, Manitoba facility;

(v) expectations related to the impact of our decision to exit our U.S.

hemp-derived cannabinoid product operations;

(vi) our ability to realize the expected cost-savings, efficiencies and other benefits of our Realignment and other announced cost-cutting measures and employee turnover related thereto;

(vii) our ability to efficiently and effectively change the nature of our operations at our Peace Naturals Campus and receive the benefits thereof and acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo;

(viii) the timely completion of the expansion of Cronos GrowCo’s purpose-built cannabis facility and the ability of Cronos GrowCo to repay the credit facility provided by Cronos;

(ix) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our business combinations and strategic investments;

(x) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments;

(xi) government regulation of our activities and products including, but not limited to, the areas of cannabis taxation and environmental protection;

(xii) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses;

(xiii) consumer interest in our products;

(xiv) our ability to differentiate our products, including through the utilization of rare cannabinoids;

(xv) competition;

(xvi) anticipated and unanticipated costs;

(xvii) our ability to generate cash flow from operations;

(xviii) our ability to conduct operations in a safe, efficient and effective manner;

(xix) our ability to hire and retain qualified staff, and acquire equipment and services in a timely and cost-efficient manner;

(xx) our ability to exercise the PharmaCann Option and realize the anticipated benefits of the transaction with PharmaCann;

(xxi) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price;

(xxii) general economic, financial market, regulatory and political conditions in which we operate;

(xxiii) management’s perceptions of historical trends, current conditions and expected future developments;

and (xxiv) other considerations that management believes to be appropriate in the circumstances.

(vii) our ability to efficiently and effectively manage our operations at our Peace Naturals Campus;

(viii) our ability to efficiently and effectively acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo;

(ix) the timely completion of the expansion of Cronos GrowCo’s purpose-built cannabis facility and the ability of Cronos GrowCo to repay the credit facility provided by Cronos;

(x) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our business combinations and strategic investments;

(xi) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments;

(xii) government regulation of our activities and products including, but not limited to, the areas of cannabis taxation and environmental protection;

(xiii) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses;

(xiv) consumer interest in our products;

(xv) our ability to differentiate our products, including through the utilization of rare cannabinoids;

(xvi) competition;

(xvii) anticipated and unanticipated costs;

(xviii) our ability to generate cash flow from operations;

(xix) our ability to conduct operations in a safe, efficient and effective manner;

(xx) our ability to hire and retain qualified staff and acquire equipment and services in a timely and cost-efficient manner;

(xxi) our ability to exercise the PharmaCann Option and realize the anticipated benefits of the transaction with PharmaCann;

(xxii) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price;

(xxiii) general economic, financial market, regulatory and political conditions in which we operate;

(xxiv) management’s perceptions of historical trends, current conditions and expected future developments;

and (xxv) other considerations that management believes to be appropriate in the circumstances.

While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

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that we may not be able to access raw materials on a timely and cost-effective basis from third-parties or Cronos GrowCo;

that Cronos GrowCo may not be able to complete the expansion of its purpose-built cannabis facility within a reasonable time or repay its borrowings under the Cronos GrowCo Credit Facility;

that Cronos GrowCo may not be able to complete the expansion of its purpose-built cannabis facility within a reasonable time or repay its borrowings under the credit facility provided by Cronos;

the military conflict between Russia and Ukraine may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products;

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failure to execute key personnel changes;

the risks that our Realignment, the change in the nature of our operations at the Peace Naturals Campus and our further leveraging of our strategic partnerships will not result in the expected cost-savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel;

that our Realignment and our further leveraging of our strategic partnerships will not result in the expected cost-savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel;

that we may not be able to efficiently and effectively manage our operations, and any changes thereto, at our Peace Naturals Campus;

lower levels of revenues;

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unanticipated future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;

growth opportunities not turning out as expected;

failure to realize expected growth opportunities;

the lack of cash flow necessary to execute our business plan (either within the expected timeframe or at all);

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dilution of our fully diluted ownership of PharmaCann and the loss of our rights as a result of that dilution;

our failure to improve our internal control environment and our systems, processes and procedures;

and the factors discussed under Part I, Item 1A “Risk Factors” of the Annual Report on Form 10-K for the year ended December 31, 2023 and under Part II, Item 1A “Risk Factors” in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024.

our failure to improve our internal control environment and our

systems, processes and procedures;

and the factors discussed under Part I, Item 1A “Risk Factors” in our Annual Report and under Part II, Item 1A “Risk Factors” in this Quarterly Report.

Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on Forward-Looking Statements.

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All references to “dollars” or “$” are to U.S.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of September 30, 2024, September 30, 2023, and December 31, 2023.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of March 31, 2025, March 31, 2024, and December 31, 2024.

Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates.

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(Exchange rates are shown as C$ per $) As of

September 30, 2024 September 30, 2023 December 31, 2023

March 31, 2025 March 31, 2024 December 31, 2024

Spot rate 1.4393 1.3532 1.4351

Year-to-date average rate 1.3601 1.3455 N/A

Average rate 1.4356 1.3479 N/A

The exchange rates used to translate from New Israeli Shekels (“ILS”) to dollars is shown below:

(Exchange rates are shown as ILS per $) As of

September 30, 2024 September 30, 2023 December 31, 2023

March 31, 2025 March 31, 2024 December 31, 2023

Spot rate 3.7191 3.6887 3.6526

Year-to-date average rate 3.6994 3.6385 N/A

Average rate 3.6145 3.6617 N/A

Business Overview

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• creating and monetizing disruptive intellectual property.

Discontinued Operations

In the second quarter of 2023, Cronos exited its U.S.

hemp-derived cannabinoid product operations.

The exit of the U.S.

operations represented a strategic shift that has a major effect on Cronos’ operations and financial results, and as such, qualifies for reporting as discontinued operations in our condensed consolidated statements of net income (loss) and comprehensive income (loss).

Prior period amounts have been reclassified to reflect the discontinued operations classification of the U.S.

For further detail on the discontinuation of the U.S.

operations, see Note 3 “ Discontinued Operations ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Business Segments

Beginning in the second quarter of 2023, following the exit of our U.S.

operations, Cronos is reporting through one consolidated segment, which includes operations in both Canada and Israel.

Business Segment

Cronos reports through one consolidated segment, which includes operations in both Canada and Israel.

In Canada, Cronos operates one wholly owned license holder under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc.

(“Peace Naturals”), which has production facilities near Stayner, Ontario.

In Israel, the Company operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production and marketing of dried flower, pre-rolls and oils in the Israeli medical market.

(“Peace Naturals”), which has production facilities near Stayner, Ontario (the “Peace Naturals Campus”).

On July 1, 2024, the Company obtained majority control of the board of directors of Cronos GrowCo, a license holder under the Cannabis Act, which qualified as a business combination under ASC 805.

As a result, the Company now consolidates the results of operations of Cronos GrowCo in its consolidated financial statements.

Cronos maintains its 50% equity interest in Cronos GrowCo.

In Israel, the Company operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel.

Recent Developments

Middle East Conflict

Cronos continues to monitor the Middle East Conflict and potential impacts the Middle East Conflict could have on the Company’s personnel and business in Israel and the recorded amounts of assets and liabilities related to the Company’s operations in Israel.

The extent to which the Middle East Conflict may impact the Company’s personnel, business and activities will depend on future developments which remain highly uncertain and cannot be predicted.

It is possible that the recorded amounts of assets and liabilities related to the Company’s operations in Israel could change materially in the near term.

Cronos GrowCo Transaction

On July 1, 2024, the Company obtained majority control of the board of directors of Cronos Growing Company Inc.

(“Cronos GrowCo”), a leading cannabis cultivation company, which qualified as a business combination under ASC 805 (the “Cronos GrowCo Transaction”).

As a result, the Company now consolidates the results of operations of Cronos GrowCo in our condensed consolidated

financial statements.

Prior to this date, our investment in Cronos GrowCo consisted of an investment accounted for under the equity method and loans receivable from Cronos GrowCo.

Key Highlights of the Cronos GrowCo Transaction:

• Increased Board Representation :

As of July 1, 2024, the Cronos GrowCo board of directors expanded to five members, three of whom are appointed by Cronos.

• Financial Consolidation :

Cronos now consolidates Cronos GrowCo’s results in its financial statements beginning in the third quarter of 2024.

• Investment in Expansion :

Cronos has provided an approximately $51 million ($70 million CAD) secured non-revolving credit facility to Cronos GrowCo to fund the expansion of Cronos GrowCo’s cultivation and processing facilities (the “Phase 2 Expansion”), enabling growth opportunities in the markets Cronos operates in today as well as enabling future growth into new markets that open.

• New Supply Agreement :

Prior to the commencement of sales from the Phase 2 Expansion area, Cronos and its controlled affiliates (other than Cronos GrowCo) will have the right, but not the obligation to purchase up to an aggregate total quantity of 80% of Cronos GrowCo’s production.

Thereafter, Cronos and its controlled affiliates (other than Cronos GrowCo) will have the right, but not the obligation, to purchase 70% of Cronos GrowCo’s forecasted production capacity over a given period and 70% of Cronos GrowCo’s actual production in a given month.

Share Repurchase Authorization

On May 7, 2025, the Company’s Board of Directors authorized a share repurchase program of up to $50 million.

The share repurchase program is expected to commence on May 14, 2025 and terminate on May 13, 2026, unless earlier terminated.

Repurchases under the program may be made from time to time, either through open market purchases at then-prevailing market prices through the facilities of the NASDAQ Global Market or other U.S.

published markets, privately negotiated transactions or otherwise.

Open market repurchases will not exceed 19,270,951 common shares, being 5% of the outstanding common shares as of May 7, 2025.

The timing and amount of repurchases are subject to market conditions, compliance with applicable laws and regulations and any other factors management of the Company may deem relevant.

The program does not obligate Cronos to acquire any specific dollar amount or number of shares and may be modified, suspended, or discontinued at any time.

Brand and Product Portfolio

Despite strong consumer demand for our flower products, we have been constrained by supply limitations that have restricted growth for the Spinach ® brand, which we believe to be temporary.

In Q1 2025, the SOURZ by Spinach ® brand expanded its edible lineup with new launches.

A key addition to our gummy portfolio has been the 1-piece, 10mg THC Fully Blasted SOURZ by Spinach ® gummies featuring rare cannabinoids, including Mango Lime with CBC, Peach Passionfruit with CBN and Strawberry Watermelon with CBG.

In Q1 2025, we introduced two new Spinach ® 1-gram vapes, Cherry Crush and Cocoa Mintz, alongside new 1.2g cartridges, which extended our winning SOURZ by Spinach ® flavor profiles into this category with Mango Kiwi Haze CBC, Peach Passionfruit Kush CBN and Strawberry Watermelon OG CBG.

In January 2025, the brand launched a Lord Jones Chocolate Fusions™ fudge brownie bite flavor, which features a 1:1:1 ratio of CBN, CBD and THC.

Lord Jones Chocolate Fusions™ edibles highlight the brand’s commitment to innovation and craftsmanship, now offering four unique flavors:

cookies and cream, dazzle berry pop, salted caramel crunch and fudge brownie bite.

PEACE NATURALS ®

New launches in Israel in Q1 2025 included two new PEACE NATURALS ® strain-based cannabis oils, designed to deliver the full benefits and essence of our best-selling strains in the market, Wedding Cake and GMO Cookies.

In Germany and the United Kingdom (“UK”), we are experiencing strong traction with Cronos’ proprietary genetics, including GMO Cookies and Wedding Cake, under the PEACE NATURALS ® brand.

The expansion of Cronos GrowCo is intended to help enable Cronos to execute on these growth opportunities and other international markets as they become available.

Cronos GrowCo Expansion

The construction of Cronos GrowCo’s expanded cultivation facilities is on track for completion in Q2 2025, with first harvests and sales beginning in the second half of the year.

The Company believes this additional supply will fuel growth internationally and within the domestic Canadian market.

Proposed Tariffs in Israel

Following an investigation into allegations of dumping of Canadian medical cannabis imports into Israel—which Cronos firmly disputes—on April 10, Israel’s Minister of Economy approved an anti-dumping duty of up to 165% on Canadian medical cannabis, which would include Cronos’ imports.

On April 25, Israel’s Minister of Finance vetoed the proposed duty.

Despite the veto, on April 29, the Minister of Economy issued a memorandum stating that the Ministry of Economy and Industry intends to move forward with the duty process, including seeking final approval from the Knesset’s Finance Committee.

Cronos agrees with the conclusions of Israel’s Ministry of Finance, Ministry of Health, and Competition Authority that the proposed duty is inappropriate and would

adversely impact the Israeli medical cannabis market by significantly raising prices and reducing product choice for patients.

The Company intends to continue to advocate for a fair and equitable medical cannabis market in Israel.

In March 2025, Cronos appointed Anna Shlimak as Chief Financial Officer.

Shlimak, who previously served as Cronos’ Chief Strategy Officer, has been a key member of the leadership team for seven years, driving strategic initiatives such as cost optimization, revenue growth, and corporate branding, all of which have positioned the Company for long-term success.

Prior to joining Cronos, Anna was the Head of Investor Relations at Quest Partners LLC, a research-driven alternative investment firm.

Anna was responsible for business development, investor reporting, marketing, and communication initiatives for the fund.

Before that, Anna held a range of roles at the New York Stock Exchange in both the New York and London offices.

Consolidated Results of Operations

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

(in thousands of USD) Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Three months ended March 31,

Net revenue, before excise taxes $ 41,898 $ 35,367

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Cost of sales 18,528 20,805

Inventory write-down 312 716 707 716

Gross profit 13,734 4,483

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Income tax benefit (455) (558)

Loss from discontinued operations — (182) — (4,238)

Net income (loss) 7,723 (2,484)

Net loss attributable to non-controlling interest (1,025) (128) (1,270) (353)

Net income (loss) attributable to non-controlling interest 1,601 (243)

Net income (loss) attributable to Cronos Group $ 6,122 $ (2,241)

Summary of select financial results

(in thousands of USD) Three months ended September 30, Change Nine months ended September 30, Change

Three months ended March 31, Change

2025 2024 $ %

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Cost of sales 18,528 20,805 (2,277) (11) %

Inventory write-down 312 716 (404) (56) % 707 716 (9) (1) %

Gross profit 13,734 4,483 9,251 206 %

Gross margin (i)

11 % 16 % N/A (5) pp 16 % 16 % N/A — pp

43 % 18 % N/A 25 pp

(i) Gross margin is defined as gross profit divided by net revenue.

For the three months ended September 30, 2024, we reported consolidated net revenue of $34.3 million, representing an increase of $9.5 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, we reported consolidated net revenue of $87.3 million, representing an increase of $24.0 million from the nine months ended September 30, 2023.

For both the three and nine month comparative periods, the increase was primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries, partially offset by an adverse price/mix in the Canadian adult-use cannabis flower category driving increased excise tax payments as a percentage of net revenue.

The Cronos GrowCo Transaction contributed $4.3 million of cannabis flower sales in both the three and nine months ended September 30, 2024.

No such sales were recognized for the three and nine months ended September 30, 2023.

Inventory write-down

For the three and nine months ended September 30, 2024, we reported inventory write-downs of $0.3 million and $0.7 million, compared to $0.7 million in both the three and nine months ended September 30, 2023.

For both the three and nine month comparative periods, the activity was primarily due to write-downs resulting from unusable inventory that was scrapped in the period.

For the three months ended March 31, 2025, we reported consolidated net revenue of $32.3 million, representing an increase of $7.0 million from the three months ended March 31, 2024.

The increase was primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract sales in the Canadian market.

Due to the consolidation of Cronos GrowCo’s results of operations in our financial statements beginning July 1, 2024, Cronos GrowCo contributed $2.9 million of cannabis flower sales in the three months ended March 31, 2025.

No such sales were recognized for the three months ended March 31, 2024.

Cost of sales

For the three months ended September 30, 2024, we reported consolidated cost of sales of $30.3 million, representing an increase of $10.2 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, we reported consolidated cost of sales of $72.2 million, representing an increase of $19.6 million from the nine months ended September 30, 2023.

For both the three and nine month comparative periods, the increase was primarily due to the impact of the inventory step-up from the Cronos GrowCo Transaction, higher cannabis flower and extract sales in the Canadian market, higher wholesale cannabis flower sales in Canada, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries.

For both the three and nine months ended September 30, 2024, we recognized $7.1 million of inventory step-up from the Cronos GrowCo Transaction into cost of sales.

No such costs were recognized for the three and nine months ended September 30, 2023.

For the three months ended September 30, 2024, we reported gross profit of $3.6 million, representing a decrease of $0.4 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, we reported gross profit of $14.4 million, representing an increase of $4.4 million from the nine months ended September 30, 2023.

For the three month comparative periods, the decrease was primarily due to the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction, partially offset by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries.

For the nine month comparative periods, the increase was primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.

For both the three and nine months ended September 30, 2024, gross profit was reduced by $7.1 million as a result of the impact of the inventory step-up from the Cronos GrowCo Transaction that was recorded into cost of sales.

For the three months ended March 31, 2025, we reported consolidated cost of sales of $18.5 million, representing a decrease of $2.3 million from the three months ended March 31, 2024.

The decrease was primarily due to lower direct costs and production efficiencies, partially offset by higher sales volumes and the impact of the inventory step-up from the Cronos GrowCo Transaction.

For the three months ended March 31, 2025, we recognized $0.5 million of inventory step-up from the Cronos GrowCo Transaction into cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

For the three months ended March 31, 2025, we reported gross profit of $13.7 million, representing an increase of $9.3 million from the three months ended March 31, 2024.

The increase was primarily due to higher sales volumes and average sales prices, lower direct costs, and production efficiencies, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.

For the three months ended March 31, 2025, gross profit was reduced by $0.5 million as a result of the impact of the inventory step-up from the Cronos GrowCo Transaction that was recorded into cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

Operating expenses

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

Three months ended March 31, Change

2025 2024 $ %

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General and administrative 9,309 8,907 402 5 %

Restructuring costs — 1,423 (1,423) N/M 630 1,423 (793) N/M

Restructuring costs 555 83 472 569 %

Share-based payments 2,088 2,015 73 4 %

Depreciation and amortization 496 1,123 (627) (56) %

Impairment loss on long-lived assets 14,376 — 14,376 N/A 16,350 — 16,350 N/A

Impairment loss on long-lived assets — 1,974 (1,974) N/A

Total operating expenses $ 17,806 $ 20,431 $ (2,625) (13) %

Sales and marketing

For the three months ended September 30, 2024, sales and marketing expenses were $5.5 million, representing an increase of $0.2 million compared to the three months ended September 30, 2023.

For the nine months ended September 30, 2024, sales and marketing expenses were $15.2 million, representing a decrease of $1.1 million compared to the nine months ended September 30, 2023.

For the three month comparative periods, the increase was primarily due to higher salaries and benefits.

For the nine month comparative periods, the decrease was primarily due to lower salaries and benefits and favorable advertising and marketing spend.

For the three months ended March 31, 2025, sales and marketing expenses were $4.6 million, representing a decrease of $0.8 million compared to the three months ended March 31, 2024.

The decrease was primarily due to lower marketing expenses and lower salaries and benefits.

Research and development

For the three months ended September 30, 2024, research and development expenses were $1.2 million, essentially unchanged from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, research and development expenses were $3.2 million, representing a decrease of $1.2 million from the nine months ended September 30, 2023.

The decrease for the nine months ended September 30, 2024, was primarily due to lower costs associated with the collaboration and license agreement between Ginkgo Bioworks Holdings, Inc.

(“Ginkgo”) and the Company.

For the three months ended March 31, 2025, research and development expenses were $0.8 million, representing a decrease of $0.2 million compared to the three months ended March 31, 2024.

General and administrative

For the three months ended September 30, 2024, general and administrative expenses were $12.8 million, representing a decrease of $1.6 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, general and administrative expenses were $34.4 million, representing a decrease of $5.2 million from the nine months ended September 30, 2023.

For the three month comparative periods, the decrease was primarily due to lower professional fees, largely related to financial statement review costs in the prior year period, and lower salaries and benefits, partially offset by the impact of the Cronos GrowCo Transaction, which increased general and administrative expenses by $1.6 million.

For the nine month comparative periods, the decrease was primarily due to lower professional fees, largely related to financial statement review costs, and lower salaries and benefits and insurance costs, partially offset by the impact of the Cronos GrowCo Transaction, which increased general and administrative expenses by $1.6 million, and $1.2 million higher expected credit loss allowance on loans receivable related to the increased borrowings by Cronos GrowCo in the second quarter of 2024.

For the three months ended March 31, 2025, general and administrative expenses were $9.3 million, representing an increase of $0.4 million from the three months ended March 31, 2024.

The increase was primarily due to higher legal fees and the impact of the Cronos GrowCo Transaction, partially offset by lower salaries and benefits.

The impact of the Cronos GrowCo Transaction increased general and administrative expenses by $0.8 million.

No such costs were incurred in the three months ended March 31, 2024.

Restructuring costs

For the three months ended September 30, 2024, we did not incur any restructuring costs.

For the nine months ended September 30, 2024, restructuring costs were $0.6 million.

For the three and nine months ended September 30, 2023, restructuring costs were $1.4 million.

For the three months ended March 31, 2025, restructuring costs were $0.6 million, representing an increase of $0.5 million from the three months ended March 31, 2024.

For further information, see Note 8 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Share-based compensation

For the three months ended September 30, 2024, share-based compensation expense was $2.3 million, representing an increase of $0.3 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, share-based compensation expense was $6.5 million, representing a decrease of $0.3 million from the nine months ended September 30, 2023.

For the three month comparative periods, the increase was primarily due to new awards granted in the current year and higher forfeitures in the prior year period.

For the nine month comparative periods, the decrease was primarily due to headcount reductions that occurred in the prior year period.

For the three months ended March 31, 2025, share-based compensation expense was $2.1 million, representing an increase of $0.1 million from the three months ended March 31, 2024.

Depreciation and amortization

For the three months ended September 30, 2024, depreciation and amortization expenses were $1.1 million, representing a decrease of $0.4 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, depreciation and

amortization expenses were $3.2 million, representing a decrease of $1.3 million from the nine months ended September 30, 2023.

For both the three and nine month comparative periods, the decrease was primarily due to lower depreciation on property, plant and equipment as a result of the reclassification of the Cronos Fermentation Facility to held-for-sale in the first quarter of 2024.

For the three months ended March 31, 2025, depreciation and amortization expenses were $0.5 million, representing a decrease of $0.6 million from the three months ended March 31, 2024.

The decrease was primarily due to lower amortization on intangible assets.

Impairment loss on long-lived assets

For the three months ended September 30, 2024, impairment loss on long-lived assets was $14.4 million and was primarily due to the impairment of the Ginkgo exclusive licenses.

For the nine months ended September 30, 2024, impairment loss on long-lived assets was $16.4 million and was primarily due to the impairment of the Ginkgo exclusive licenses and the cessation of operations at Cronos Fermentation.

There were no such impairment loss on long-lived assets for the three and nine months ended September 30, 2023.

For further information, see Note 9 “ Restructuring ” and Note 8 “ Goodwill and Intangible Assets, net ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Other income and income tax benefit

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

For the three months ended March 31, 2024, impairment loss on long-lived assets was $2.0 million and was primarily due to the cessation of operations at Cronos Fermentation during the first quarter of 2024.

For the three months ended March 31, 2025, there were no such impairment losses.

For further information, see Note 8 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Other income and income tax expense (benefit)

Three months ended March 31, Change

2025 2024 $ %

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Share of income from equity method investments — 1,448 (1,448) (100) %

Gain on revaluation of loan receivable 11,804 — 11,804 N/M 11,804 — 11,804 N/M

Gain on revaluation of equity method investment 32,469 — 32,469 N/M 32,469 — 32,469 N/M

Loss on revaluation of financial instruments (293) (5,291) 4,998 94 % (6,550) (7,856) 1,306 17 %

Impairment loss on other investments — — — N/M (25,650) — (25,650) N/M

Foreign currency transaction gain (loss) (7,432) 8,816 (16,248) N/M 12,370 3,999 8,371 209 %

Loss on held-for-sale assets (10,422) — (10,422) N/M (10,422) — (10,422) N/M

Other, net (315) 974 (1,289) N/M (737) 1,011 (1,748) N/M

Gain (loss) on revaluation of financial instruments 49 (2,642) 2,691 102 %

Impairment loss on other investments — (12,734) 12,734 N/M

Foreign currency transaction gain 1,583 13,259 (11,676) (88) %

Other, net 43 (670) 713 N/M

Total other income 11,340 12,906 (1,566) (12) %

Income tax benefit (2,708) (1,254) (1,454) (116) % (5,440) (2,870) (2,570) (90) %

Income (loss) from continuing operations 7,324 (1,590) 8,914 561 % (3,919) (25,288) 21,369 85 %

Loss from discontinued operations — (182) 182 N/M — (4,238) 4,238 N/M

Net income (loss) $ 7,324 $ (1,772) $ 9,096 513 % $ (3,919) $ (29,526) $ 25,607 87 %

Income tax expense (benefit) (455) (558) 103 18 %

Net income (loss) $ 7,723 $ (2,484) $ 10,207 N/M

(i) “N/M” is defined as not meaningful.

Interest income, net

For the three months ended September 30, 2024, interest income, net was $12.5 million, representing a decrease of $0.9 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, interest income, net was $40.2 million, representing an increase of $3.1 million from the nine months ended September 30, 2023.

For the three month comparative periods, the decrease in net interest income was primarily due to the absence of income recognized on the Cronos GrowCo loan receivable, which is eliminated in consolidation, effective July 1, 2024 and forward.

For the nine month comparative periods, the increase in net interest income was primarily due to higher interest rates in the current period compared to the prior period.

For the three months ended March 31, 2025, interest income, net was $9.7 million, representing a decrease of $4.6 million from the three months ended March 31, 2024.

The decrease in net interest income was primarily due to lower interest rates in the current period and the absence of income recognized on the Cronos GrowCo loan receivable, which is eliminated in consolidation, effective from and after July 1, 2024.

Share of income from equity method investments

For the three months ended September 30, 2024, we had no income from equity method investments, compared to $1.1 million for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, our share of income from equity method investments was $2.4 million, representing an increase of $1.5 million from the nine months ended September 30, 2023.

For the three months ended September 30, 2023 and the nine months ended September 30, 2024 and 2023, the income from equity method investments was due to income pick-ups from our equity method investment in Cronos GrowCo.

For the three months ended March 31, 2025, we had no income from equity method investments, compared to $1.4 million for the three months ended March 31, 2024.

As a result of the Cronos GrowCo Transaction on July 1, 2024, we now consolidate Cronos GrowCo and no longer account for our investment in Cronos GrowCo as an equity method investment.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Gain on revaluation of loans receivable

For both the three and nine months ended September 30, 2024, we recognized $11.8 million of gain on revaluation of loans receivable related to the remeasurement of the existing loans receivable under the credit facility as a result of the Cronos GrowCo Transaction.

No such gain was recognized for the three and nine months ended September 30, 2023.

For further information, see Note 6 “ Loans Receivable ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Gain on revaluation of equity method investment

For both the three and nine months ended September 30, 2024, we recognized $32.5 million of gain on revaluation of equity method investment related to the remeasurement of the existing investment in Cronos GrowCo as a result of the Cronos GrowCo Transaction.

No such gain was recognized for the three and nine months ended September 30, 2023.

For further information, see Note 5 “ Investments” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Loss on revaluation of financial instruments

For the three months ended September 30, 2024, the loss on revaluation of financial instruments was $0.3 million, representing an improvement of $5.0 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, the loss on revaluation of financial instruments was $6.6 million, representing an improvement of $1.3 million from the nine months ended September 30, 2023.

The change was primarily related to the change in fair value of our investment in Vitura Health Limited (“Vitura”).

Gain (loss) on revaluation of financial instruments

For the three months ended March 31, 2025, the income on revaluation of financial instruments was $49 thousand, representing an improvement of $2.7 million from the three months ended March 31, 2024.

The change was primarily related to the change in fair value of our investment in Vitura.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Impairment loss on other investments

For the nine months ended September 30, 2024, we recognized $25.7 million of impairment loss on other investments, driven by impairment charges recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.

There was no such impairment loss on other investments for the three months ended September 30, 2024 or the three and nine months ended September 30, 2023.

For the three months ended March 31, 2024, we recognized $12.7 million of impairment loss on other investments, driven by an impairment charge recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.

There was no such impairment loss on other investments for the three months ended March 31, 2025.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Foreign currency transaction gain (loss)

For the three months ended September 30, 2024, foreign currency transaction loss was $7.4 million, representing a deterioration of $16.2 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, foreign currency transaction gain was $12.4 million, representing an improvement of $8.4 million from the nine months ended September 30, 2023.

For both the three and nine month comparative periods, the change was primarily due to certain foreign currency-denominated cash equivalents and certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future.

Gain (loss) on held-for-sale assets

For both the three and nine months ended September 30, 2024, we recognized $10.4 million of loss on held-for-sale assets as a result of the change in the Company’s sales strategy for the Cronos Fermentation assets to market the assets to a broader buyer pool.

No such gain was recognized for the three and nine months ended September 30, 2023.

For further information, see Note 9 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

For the three months ended March 31, 2025, foreign currency transaction gain was $1.6 million, representing a deterioration of $11.7 million from the three months ended March 31, 2024.

The change was primarily due to certain foreign currency-denominated cash equivalents and certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future.

Other, net primarily includes gains and losses on the disposal of assets.

Income tax benefit

For the three months ended September 30, 2024, income tax benefit was $2.7 million, compared to $1.3 million for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, income tax benefit was $5.4 million, compared to $2.9 million for the nine months ended September 30, 2023.

For both the three and nine month comparative periods, the increased benefit was driven by higher current income tax benefits recorded on the losses that will be carried back to recover taxes paid in prior years.

Loss from discontinued operations

There was no activity in discontinued operations for the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2023, loss from discontinued operations was due to the exit of U.S.

For more information, see Note 3 “ Discontinued Operations ” in our condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

For the three months ended March 31, 2025, income tax benefit was $0.5 million, compared to a benefit of $0.6 million for the three months ended March 31, 2024.

Non-GAAP Measures

Cronos Group reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S.

Cronos reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S.

This Quarterly Report refers to measures not recognized under U.S.

22 unchanged sentences

impairment loss on other investments;

foreign currency transaction loss;

foreign currency transaction (gain) loss;

loss from discontinued operations;

2 unchanged sentences

share-based compensation;

costs related to the Israel Ministry of Economy and Industry dumping inquiry;

purchase accounting adjustment-related inventory step-up adjustments recorded through cost of sales;

and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including the costs related to the settlement of the SEC and the OSC investigation of the Restatements and legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Part II, Item 1 “Legal Proceedings” of this Quarterly Report for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC’s and the OSC’s investigations of the Restatements).

and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including the costs related to the settlement of the SEC’s and the OSC’s investigations of the Restatements and legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Part II, Item 1 “Legal Proceedings” of this Quarterly Report for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC’s and the OSC’s investigations of the Restatements).

Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment.

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GAAP to Adjusted EBITDA for the periods indicated:

Three months ended September 30, 2024

Continuing Operations Discontinued Operations Total

$ 7,324 $ — $ 7,324

Interest income, net (12,460) — (12,460)

Income tax benefit

(2,708) — (2,708)

Depreciation and amortization 3,567 — 3,567

EBITDA (4,277) — (4,277)

Impairment loss on long-lived assets (i)

14,376 — 14,376

Revaluation gain on loan receivable (ii)

(11,804) — (11,804)

Gain on revaluation of equity method investment (iii)

(32,469) — (32,469)

Loss on revaluation of financial instruments (iv)

Foreign currency transaction loss 7,432 — 7,432

Transaction costs (vi)

Loss on held-for-sale assets (vii)

10,422 — 10,422

Other, net (viii)

Share-based compensation (ix)

2,262 — 2,262

Financial statement review costs (xi)

Inventory step-up recorded to cost of sales (xiii)

7,116 — 7,116

Adjusted EBITDA $ (6,019) $ — $ (6,019)

Three months ended September 30, 2023

Continuing Operations Discontinued Operations Total

Net loss $ (1,590) $ (182) $ (1,772)

Interest income, net (13,375) (1) (13,376)

Income tax benefit (1,254) — (1,254)

Depreciation and amortization 2,148 — 2,148

EBITDA (14,071) (183) (14,254)

Share of income from equity method investments (1,057) — (1,057)

Loss on revaluation of financial instruments (iv)

5,291 — 5,291

Foreign currency transaction gain (8,816) — (8,816)

Other, net (viii)

(974) (31) (1,005)

Restructuring costs (ix)

1,423 28 1,451

Share-based compensation (x)

1,957 (4) 1,953

Financial statement review costs (xi)

Inventory write-down (xii)

Adjusted EBITDA $ (15,187) $ (190) $ (15,377)

Nine months ended September 30, 2024

Continuing Operations Discontinued Operations Total

$ (3,919) $ — $ (3,919)

Three months ended March 31, 2025

Interest income, net (9,665)

1 unchanged sentence

Depreciation and amortization 2,840

EBITDA (42,704) — (42,704)

Share of income from equity method investments

(2,365) — (2,365)

Impairment loss on long-lived assets (i)

16,350 — 16,350

Revaluation gain on loan receivable (ii)

(11,804) — (11,804)

Gain on revaluation of equity method investment (iii)

(32,469) — (32,469)

Loss on revaluation of financial instruments (iv)

6,550 — 6,550

Impairment loss on other investments (v)

25,650 — 25,650

Gain on revaluation of financial instruments (ii)

Foreign currency transaction gain (1,583)

Transaction costs (vi)

Loss on held-for-sale assets (vii)

10,422 — 10,422

Other, net (viii)

Restructuring costs (ix)

Share-based compensation (x)

6,513 — 6,513

Financial statement review costs (xi)

(525) — (525)

Inventory step-up recorded to cost of sales (xiii)

7,116 — 7,116

Transaction costs (iv)

Other, net (v)

Restructuring costs (vi)

Share-based compensation (vii)

Financial statement review costs (viii)

Inventory step-up recorded to cost of sales (ix)

Israel Ministry of Economy and Industry dumping inquiry expense (x)

Adjusted EBITDA $ 2,289

Nine months ended September 30, 2023

Continuing Operations Discontinued Operations Total

$ (25,288) $ (4,238) $ (29,526)

Three months ended March 31, 2024

Net loss $ (2,484)

Interest income, net (14,245)

4 unchanged sentences

Impairment loss on long-lived assets (i)

Loss on revaluation of financial instruments (iv)

7,856 — 7,856

Loss on revaluation of financial instruments (ii)

Impairment loss on other investments (iii)

Foreign currency transaction gain (13,259)

Other, net (viii)

(1,011) 132 (879)

Restructuring costs (ix)

1,423 562 1,985

Share-based compensation (x)

6,823 17 6,840

Financial statement review costs (xi)

Inventory write-down (xii)

716 839 1,555

Other, net (v)

Restructuring costs (vi)

Share-based compensation (vii)

Financial statement review costs (viii)

Adjusted EBITDA $ (10,669)

(i) For the three and nine months ended September 30, 2024, impairment loss on long-lived assets included $14,258 related to the write-down of our Ginkgo exclusive licenses.

For the nine months ended September 30, 2024, impairment loss on long-lived assets included $1,631 related to the winding down of operations at the Company’s Winnipeg, Manitoba facility (“Cronos Fermentation Facility”).

For the nine months ended September 30, 2023, impairment loss on long-lived assets related to certain leased properties associated with the Company’s U.S.

(ii) For the three and nine months ended September 30, 2024, a revaluation gain on loan receivable was recognized as a result of the Cronos GrowCo Transaction on July 1, 2024.

(iii) For the three and nine months ended September 30, 2024, the gain on revaluation of equity method investment was recognized as a result of the Cronos GrowCo Transaction on July 1, 2024.

(iv) For the three and nine months ended September 30, 2024 and 2023, loss on revaluation of financial instruments related primarily to the Company’s equity securities in Vitura.

(v) For the nine months ended September 30, 2024, impairment loss on other investments represents the fair value change on the PharmaCann Option.

(vi) For the three and nine months ended September 30, 2024, transaction costs represent professional fees associated with the Cronos GrowCo Transaction.

(vii) For the three and nine months ended September 30, 2024, a loss on held-for-sale assets was recognized as a result of the change in the Company’s sales strategy for the Cronos Fermentation Facility to market the assets to a broader buyer pool.

(viii) For the three and nine months ended September 30, 2024 and 2023, other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities.

(ix) For the nine months ended September 30, 2024, restructuring costs from continuing operations related to shutdown costs at the Cronos Fermentation Facility, as well as employee-related severance costs associated with the Realignment, as described in Note 9 “ Restructuring .” For the three and nine months ended September 30, 2023, restructuring costs related to employee-related severance costs and other restructuring costs associated with our U.S.

operations as described in Note 3 “ Discontinued Operations .”

(x) For the three and nine months ended September 30, 2024 and 2023, share-based compensation related to the non-cash expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 10 “ Share-based Compensation.

(xi) For the three and nine months ended September 30, 2024 and 2023, financial statement review costs include costs and reserves taken related to the Restatements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to the Restatements and legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.

For the three and nine months ended September 30, 2024, a credit balance is presented due to an insurance recovery.

(xii) For the three and nine months ended September 30, 2023, inventory write-downs relate to product destruction and obsolescence associated with the exit of our U.S.

operations as described in Note 3 “ Discontinued Operations.

(xiii) For the three and nine months ended September 30, 2024, inventory step-up recorded to cost of sales represents the portion of the inventory step-up from the Cronos GrowCo Transaction that was recorded through the condensed consolidated statements of income (loss) and comprehensive income (loss) in both periods.

(i) For the three months ended March 31, 2024, impairment loss on long-lived assets was primarily the result of the cessation of operations at Cronos Fermentation during the quarter.

(ii) For the three months ended March 31, 2025 and 2024, the (gain) loss on revaluation of financial instruments related primarily to the Company’s equity securities in Vitura.

(iii) For the three months ended March 31, 2024, impairment loss on other investments represents the fair value change on the PharmaCann Option.

(iv) For the three months ended March 31, 2025, transaction costs represented legal, financial and other advisory fees and expenses incurred in connection with the Cronos GrowCo Transaction.

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

(v) For the three months ended March 31, 2025 and 2024, other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities.

(vi) For the three months ended March 31, 2025, restructuring costs related to employee-related severance costs and IT infrastructure and finance transformation costs associated with the Realignment, as described in Note 8 “ Restructuring .” For the three months ended March 31, 2024, restructuring costs related to employee-related severance costs and other restructuring costs associated with the Realignment, as described in Note 8 “ Restructuring .”

(vii) For the three months ended March 31, 2025 and 2024, share-based compensation related to the non-cash expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 9 “ Share-based Compensation.

(viii) For the three months ended March 31, 2025 and 2024, financial statement review costs include costs and reserves taken related to the Restatements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to the Restatements and legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.

(ix) For the three months ended March 31, 2025, inventory step-up recorded to cost of sales represents the portion of the inventory step-up from the Cronos GrowCo Transaction that was recorded through the condensed consolidated statements of income (loss) and comprehensive income (loss).

(x) For the three months ended March 31, 2025, Israel Ministry of Economy and Industry dumping inquiry expense included expenditures relating to the regulatory inquiry about alleged dumping of medical cannabis products in Israel and related litigation and external relations expenses.

Adjusted Gross Profit and Adjusted Gross Margin

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GAAP, to Adjusted Gross Profit and Adjusted Gross Margin, respectively, for the periods indicated:

(in thousands of USD) Three months ended September 30, Change Nine months ended September 30, Change

(in thousands of USD) Three months ended March 31, Change

2025 2024 $ %

1 unchanged sentence

Gross profit $ 13,734 $ 4,483 $ 9,251 206 %

Inventory step-up recorded to cost of sales 7,116 — 7,116 N/M 7,116 — 7,116 N/M

Inventory step-up recorded to cost of sales 517 — 517 N/A

Adjusted Gross Profit

1 unchanged sentence

Gross margin (i)

11 % 16 % N/A (5) pp 16 % 16 % N/A — pp

43 % 18 % N/A 25 pp

Adjusted Gross Margin (ii)

31 % 16 % N/A 15 pp 25 % 16 % N/A 9 pp

44 % 18 % N/A 26 pp

(i) Gross margin is defined as gross profit divided by net revenue.

2 unchanged sentences

To supplement the consolidated financial statements presented in accordance with U.S.

GAAP, we have presented constant currency adjusted financial measures for net revenue, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for the three and nine months ended September 30, 2024, as well as cash and cash equivalents and short-term investment balances as of September 30, 2024 compared to December 31, 2023, which are considered non-GAAP financial measures.

GAAP, we have presented constant currency adjusted financial measures for net revenue, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for the three months ended March 31, 2025, as well as cash and cash equivalents and short-term investment balances as of March 31, 2025 compared to December 31, 2024, which are considered non-GAAP financial measures.

We present constant currency information to provide a framework for assessing how our underlying operations performed excluding the effect of foreign currency rate fluctuations.

1 unchanged sentence

dollars are converted into U.S.

dollars using the average exchange rates from the three and nine months comparative periods in 2023 rather than the actual average exchange rates in effect during the respective current periods;

dollars using the average exchange rates from the three month comparative period in 2024 rather than the actual average exchange rates in effect during the respective current period;

constant currency current and prior comparative balance sheet information is translated at the prior year-end spot rate rather than the current period spot rate.

3 unchanged sentences

See further discussion on foreign currency risk as noted in Item 3 “Quantitative and Qualitative Disclosures About Market Risk.”

The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 as well as cash and cash equivalents and short-term investments as of September 30, 2024 and December 31, 2023, both on an as-reported and constant currency basis (in thousands):

The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 as well as cash and cash equivalents and short-term investments as of March 31, 2025 and December 31, 2024, both on an as-reported and constant currency basis (in thousands):

As Reported As Adjusted for Constant Currency

Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change

2024 2023 $ % 2024 $ %

Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %

Gross profit 3,611 3,970 (359) (9) % 3,608 (362) (9) %

Gross margin 11 % 16 % N/A (5) pp 10 % N/A (6) pp

Operating expenses 37,266 25,745 11,521 45 % 38,079 12,334 48 %

Net income (loss) from continuing operations

7,324 (1,590) 8,914 N/M 8,219 9,809 N/M

Adjusted EBITDA $ (6,019) $ (15,187) $ 9,168 60 % $ (6,514) $ 8,673 57 %

Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

2025 2024 $ % 2025 $ %

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Operating expenses 17,806 20,431 (2,625) (13) % 18,476 (1,955) (10) %

Net loss from continuing operations

(3,919) (25,288) 21,369 85 % (2,424) 22,864 90 %

Adjusted EBITDA $ (27,739) $ (46,774) $ 19,035 41 % $ (28,022) $ 18,752 40 %

As of September 30, As of December 31, As Reported Change As of September 30, Constant Currency Change

Net income (loss) 7,723 (2,484) 10,207 N/M 7,321 9,805 N/M

Adjusted EBITDA $ 2,289 $ (10,669) $ 12,958 N/M $ 2,333 $ 13,002 N/M

As of March 31, As of December 31, As Reported Change As of March 31, Constant Currency Change

2025 2024 $ % 2025 $ %

Cash and cash equivalents $ 797,819 $ 858,805 $ (60,986) (7) % $ 798,128 $ (60,677) (7) %

Short-term investments — 192,237 (192,237) (100) % — (192,237) (100) %

Short-term investments 40,000 — 40,000 N/A 40,000 40,000 N/A

Total cash and cash equivalents and short-term investments $ 837,819 $ 858,805 $ (20,986) (2) % $ 838,128 $ (20,677) (2) %

As Reported As Adjusted for Constant Currency

Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change

2024 2023 $ % 2024 $ %

Cannabis flower $ 26,328 $ 17,414 $ 8,914 51 % $ 26,601 $ 9,187 53 %

Cannabis extracts 7,789 7,268 521 7 % 7,914 646 9 %

Other 147 128 19 15 % 146 18 14 %

Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %

As Reported As Adjusted for Constant Currency

Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

2025 2024 $ % 2025 $ %

4 unchanged sentences

As Reported As Adjusted for Constant Currency

Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change

2024 2023 $ % 2024 $ %

Canada $ 24,067 $ 18,738 $ 5,329 28 % $ 24,509 $ 5,771 31 %

Israel 7,259 5,673 1,586 28 % 7,201 1,528 27 %

Other countries 2,938 399 2,539 636 % 2,951 2,552 640 %

Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %

As Reported As Adjusted for Constant Currency

Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

2025 2024 $ % 2025 $ %

1 unchanged sentence

Israel 9,229 6,417 2,812 44 % 9,093 2,676 42 %

Other countries 3,968 399 3,569 894 % 3,995 3,596 901 %

Other countries 2,903 — 2,903 N/A 3,058 3,058 N/A

Net revenue $ 32,262 $ 25,288 $ 6,974 28 % $ 33,622 $ 8,334 33 %

For the three months ended September 30, 2024, net revenue on a constant currency basis was $34.7 million, representing a 40% increase from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, net revenue on a constant currency basis was $88.5 million, representing a 40% increase from the nine months ended September 30, 2023.

On a constant currency basis, net revenue increased for the three and nine months ended September 30, 2024, primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries, partially offset by an adverse price/mix in the Canadian adult-use cannabis flower category driving increased excise tax payments as a percentage of net revenue.

On a constant currency basis, the Cronos GrowCo Transaction contributed $4.3 million of cannabis flower sales in both the three and nine months ended September 30, 2024.

No such sales were recognized for the three and nine months ended September 30, 2023.

For the three months ended September 30, 2024, gross profit on a constant currency basis was $3.6 million, representing a 9% decrease from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, gross profit on a constant currency basis was $14.6 million, representing a 46% increase from the nine months ended September 30, 2023.

On a constant currency basis, gross profit decreased for the three month comparative periods primarily due to the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction, partially offset by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries.

On a constant currency basis, for both the three and nine months ended September 30, 2024, we recognized $7.2 million of inventory step-up from the Cronos GrowCo Transaction in cost of sales.

No such costs were recognized for the three and nine months ended September 30, 2023.

For the three months ended March 31, 2025, net revenue on a constant currency basis was $33.6 million, representing a 33% increase from the three months ended March 31, 2024.

On a constant currency basis, net revenue increased for the three months ended March 31, 2025, primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract sales in the Canadian market.

On a constant currency basis, the Cronos GrowCo Transaction contributed $3.1 million of cannabis flower sales in the three months ended March 31, 2025.

No such sales were recognized for the three months ended March 31, 2024.

For the three months ended March 31, 2025, gross profit on a constant currency basis was $14.2 million, representing a 217% increase from the three months ended March 31, 2024.

On a constant currency basis, gross profit increased for the three months ended March 31, 2025, primarily due to higher sales volumes and average sales prices, lower direct costs, and production efficiencies, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.

On a constant currency basis, for the three months ended March 31, 2025, we recognized $0.6 million of inventory step-up from the Cronos GrowCo Transaction in cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

Operating expenses

For the three months ended September 30, 2024, operating expenses on a constant currency basis were $38.1 million, representing a 48% increase from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, operating expenses on a constant currency basis were $80.4 million, representing a 10% increase from the nine months ended September 30, 2023.

On a constant currency basis, operating expenses increased for the three and nine months ended September 30, 2024, primarily due to the impairment of the Ginkgo exclusive licenses, partially offset by lower salaries and benefits, professional fees and restructuring costs.

Net income (loss) from continuing operations

For the three months ended September 30, 2024, net income from continuing operations on a constant currency basis was $8.2 million, representing an improvement of $9.8 million from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, net loss from continuing operations on a constant currency basis was $2.4 million, representing an improvement of $22.9 million from the nine months ended September 30, 2023.

For the three months ended March 31, 2025, operating expenses on a constant currency basis were $18.5 million, representing a 10% decrease from the three months ended March 31, 2024.

On a constant currency basis, operating expenses decreased for the three months ended March 31, 2025, primarily due to lower impairment loss on long-lived assets, lower salaries and benefits, and lower amortization on intangible assets, partially offset by higher restructuring costs.

Net income (loss)

For the three months ended March 31, 2025, net income on a constant currency basis was $7.3 million, representing an improvement of $9.8 million from the three months ended March 31, 2024.

Adjusted EBITDA

For the three months ended September 30, 2024, Adjusted EBITDA on a constant currency basis was $(6.5) million, representing a 57% improvement from the three months ended September 30, 2023.

For the nine months ended September 30, 2024, Adjusted EBITDA on a constant currency basis was $(28.0) million, representing a 40% improvement from the nine months ended September 30, 2023.

The improvement in Adjusted EBITDA for the three and nine months ended September 30, 2024 on a constant currency basis was driven by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and decreases in general and administrative expenses, partially offset by an adverse price/mix in Canada in the cannabis flower category driving increased excise tax payments as a percentage of net revenue.

For the three months ended March 31, 2025, Adjusted EBITDA on a constant currency basis was $2.3 million, representing a $13.0 million improvement from the three months ended March 31, 2024.

The improvement in Adjusted EBITDA for the three months ended March 31, 2025 on a constant currency basis was driven by higher sales volumes and average sales prices, lower direct costs, production efficiencies, and lower operating expenses.

Cash and cash equivalents & short-term investments

Cash and cash equivalents and short-term investments on a constant currency basis was essentially unchanged at $865.3 million as of September 30, 2024, compared to December 31, 2023.

Cash and cash equivalents and short-term investments on a constant currency basis decreased 2% to $838.1 million as of March 31, 2025, from $858.8 million as of December 31, 2024.

The decrease in cash and cash equivalents and short-term investments on a constant currency basis is primarily due to purchases of property, plant and equipment in the three months ended March 31, 2025.

Liquidity and Capital Resources

As of September 30, 2024, we had $862 million in cash and cash equivalents and no short-term investments.

As of March 31, 2025, we had $798 million in cash and cash equivalents and $40 million in short-term investments.

We believe that the existing cash and cash equivalents and short-term investments will be sufficient to fund the business operations and capital expenditures over the next twelve months.

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(In thousands of U.S.

dollars) Nine months ended September 30, 2024

Cash flows provided by (used in) operating activities $ 11,123 $ (59,650)

Cash flows provided by (used in) investing activities

180,181 (141,392)

Cash flows used in financing activities (918) (812)

dollars) Three months ended March 31,

Net cash used in operating activities $ (2,096) $ (2,204)

Net cash provided by (used in) investing activities (55,356) 189,556

Net cash used in financing activities (2,930) (645)

Effect of foreign currency translation on cash and cash equivalents (604) (884)

Net change in cash $ (60,986) $ 185,823

Comparison of cash flows between the nine months ended September 30, 2024 and the nine months ended September 30, 2023

Comparison of cash flows between the three months ended March 31, 2025 and the three months ended March 31, 2024

Operating activities

During the nine months ended September 30, 2024, we generated $11.1 million of cash from operating activities as compared to cash used of $59.7 million in the nine months ended September 30, 2023, representing a decrease in cash used of $70.8 million.

This change is primarily driven by a $32.8 million decrease in income taxes payable in the prior period as a result of a tax payment connected to the previously disclosed relinquishment by Altria of its warrant to purchase additional shares of the Company, a $33.1 million increase in net income after adjusting for non-cash items during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, higher interest received, and higher decreases in inventory, partially offset by an increase in accounts receivable, net.

During the three months ended March 31, 2025, we used $2.1 million of cash from operating activities as compared to cash used of $2.2 million in the three months ended March 31, 2024, representing a decrease in cash used of $0.1 million.

This change is primarily driven by a $7.9 million increase in net income after adjusting for non-cash items during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, partially offset by increases in accounts receivable and other receivables and decreases in accrued liabilities.

Investing activities

During the nine months ended September 30, 2024, we generated $180.2 million of cash from investing activities, compared to $141.4 million of cash used in investing activities during the nine months ended September 30, 2023, representing a change of $321.6 million.

This change is primarily driven by the maturity of certain short-term investments, which were reinvested as cash equivalents upon maturity, as well as cash obtained from the business combination of Cronos GrowCo, partially offset by higher advances of loans receivable, lower loan repayments, and higher purchases of property, plant and equipment in the nine months ended September 30, 2024.

During the three months ended March 31, 2025, we used $55.4 million of cash from investing activities, compared to $189.6 million of cash provided in investing activities during the three months ended March 31, 2024, representing a change of $244.9 million.

This change was driven by the purchase of short-term investments and higher capital expenditures during the three months ended March 31, 2025, compared to the maturity of certain short-term investments, which were reinvested as cash equivalents upon maturity during the three months ended March 31, 2024.

Financing activities

During the nine months ended September 30, 2024, cash used in financing activities was $0.9 million, compared to $0.8 million of cash used in financing activities during the nine months ended September 30, 2023, representing an increase of $0.1 million.

This change is primarily driven by an increase of $0.1 million in withholding taxes paid on share-based awards during the nine months ended September 30, 2024 compared to nine months ended September 30, 2023.

During the three months ended March 31, 2025, cash used in financing activities was $2.9 million, compared to $0.6 million of cash used in financing activities during the three months ended March 31, 2024, representing an increase of $2.3 million.

This change is primarily driven by an increase in withholding taxes paid on share-based awards during the three months ended March 31, 2025 compared to three months ended March 31, 2024.

Cash Requirements

2 unchanged sentences

Our critical accounting policies and estimates are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Aside from the item listed below, our critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.

Business combinations

We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, as well as any non-controlling interest in the acquired business, are recorded at their estimated fair values as of the date that we obtain control of the acquired business.

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows and discount rates, among other items.

We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors.

The fair value determination requires a number of judgments, particularly around forecasted revenue and growth rates, obsolescence, royalty rates, tax rates and discount rates.

If actual results are materially different than the assumptions we used to determine the fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on net income.

Our critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.

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 2. Management’s Discussion and Analysis