Cronos Group Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to certain market risks, including changes from foreign currency exchange rates related to our international operations. Except as updated below, the Company’s market risks have not changed significantly from the market risk disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report. Foreign currency risk The Company’s condensed consolidated financial statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report are expressed in U.S. dollars. The Company is exposed to foreign currency risk based on its net assets, liabilities, and revenue denominated in foreign currencies, including Canadian dollars and Israeli new shekels. As a result, we are exposed to foreign currency translation gains and losses. Revenue and expenses of all foreign operations are translated into U.S. dollars at the foreign currency exchange rates that approximate the rates in effect during the period when such items are recognized. Appreciating foreign currencies relative to the U.S. dollar will positively impact operating income and net earnings, while depreciating foreign currencies relative to the U.S. dollar will have an adverse impact. A 10% change in the exchange rates for the Canadian dollar would have affected the carrying amount of the net assets by approximately $40.8 million and $40.1 million as of September 30, 2025 and December 31, 2024, respectively. The corresponding impact would be recorded in accumulated other comprehensive income. We have not historically engaged in hedging transactions and do not currently contemplate engaging in hedging transactions to mitigate foreign exchange risks. As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains and losses could have a significant, and potentially adverse, effect on the Company’s results of operations. During the three and nine months ended September 30, 2025, the Company had foreign currency gain (loss) on translation of $(26.0) million and $31.1 million, respectively. During the three and nine months ended September 30, 2024 the Company had foreign currency gain (loss) on translation of $12.4 million and $(20.1) million, respectively. 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. During the three months ended September 30, 2025 and 2024, we had interest income, net of $11.7 million and $12.5 million, respectively. During the nine months ended September 30, 2025 and 2024, we had interest income, net of $30.4 million and $40.2 million, respectively. A 10% decrease in the interest rate in effect on September 30, 2025 would not have a material effect on the fair value of our cash equivalents and short-term investments as the majority of the portfolio had a maturity date of three months or less. A 10% decrease in the interest rate in effect for the three and nine months ended September 30, 2025 would have an effect of $0.7 million and $2.6 million, respectively, on interest income, net earned on our cash equivalents and short-term investments. 55 Table of Contents