Cronos Group Inc. 10-K

ITEM 1. BUSINESS General Cronos is incorporated under the laws of the Province of British Columbia with principal executive offices located at 4491 Concession Rd 12, Stayner, Ontario L0M 1S0. The Company’s telephone number is +1-416-504-0004, the website is https://thecronosgroup.com/ and the investor relations section of the website is https://ir.thecronosgroup.com/. All references to Cronos’ website are inactive references, are for informational purposes only and are not intended to incorporate any information from or referenced on its website into this Annual Report. Cronos common shares are currently listed on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Global Market (“Nasdaq”) under the trading symbol “CRON.” Description of the Business Overview Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos is building an iconic brand portfolio. Cronos’ diverse international brand portfolio includes Spinach ® , PEACE NATURALS ® , LIT™, and Lord Jones ® . Strategy Cronos seeks to create value for shareholders by focusing on four core strategic priorities: • growing a portfolio of iconic brands that responsibly elevate the consumer experience; • developing a diversified global sales and distribution network; • establishing an efficient global supply chain; and • creating and monetizing disruptive intellectual property. 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 in Stayner, Ontario (the “Peace Naturals Campus”). Cronos also consolidates the results of operations of Cronos GrowCo in its consolidated financial statements and maintains a 50% equity interest in Cronos GrowCo. Cronos GrowCo’s production facilities are licensed under the Cannabis Act and represent the Company’s principal source of cannabis. In Israel, Cronos operates under the Good Agricultural Practices (“IMC-GAP”), Good Manufacturing Practices (“IMC-GMP”) and Good Distribution Practices (“IMC-GDP”) certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel. Operations and Investments Peace Naturals Campus & Cronos GrowCo The production facilities at the Peace Naturals Campus and the production facilities of Cronos GrowCo are licensed by Health Canada under the Cannabis Act to engage in the cultivation, processing, distribution and sale of dried flower, cannabis seeds, cannabis plants, cannabis extracts, cannabis topicals and cannabis edibles, among other prescribed activities. Israel 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. Operations Outside of Canada and Israel Cronos distributes PEACE NATURALS ® and LIT™ branded products and white-labeled cannabis products to select international markets. Cronos anticipates that it will continue entering new markets and expanding in its current geographic markets. By leveraging operational, manufacturing and regulatory expertise, quality standards and procedures and intellectual property, the Company is well-positioned to effectively expand in its existing markets and access new markets. Subject to applicable regulatory approvals, strategic international business opportunities pursued by Cronos could include: • production, distribution, sales and marketing in jurisdictions that have passed legislation to legalize the production, distribution and possession of cannabis products at all relevant levels of government; and • the export of cannabis products to markets that permit the import of such products. 4 Table of Contents Cronos seeks to conduct business only in jurisdictions where Cronos has determined it is legal to do so and where such operations remain compliant with its TSX and Nasdaq listing obligations. Determining whether a business activity is legal in a jurisdiction may require judgment since laws, rules, regulations and licenses may not be clear and legal interpretation and advice of counsel may vary. If a business activity in which Cronos engages in any jurisdiction is determined to be illegal, the Company could be subject to fines, penalties, reputational harm, delisting from securities exchanges and material civil, criminal and regulatory litigation and proceedings or be enjoined from doing business in the applicable jurisdiction. See “ Risk Factors—Risks Relating to Regulation and Compliance—We operate in highly regulated sectors where the regulatory environment is rapidly developing, and we may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business. ” Joint Ventures/Strategic Investments Cronos has established two strategic joint ventures in Canada and Israel. Additionally, the Company held approximately 8.3% of the issued capital of Vitura following the issuance by Vitura of an additional 74,814,757 shares on February 12, 2025, which is accounted for as equity securities with a readily determinable fair value, and approximately 13.7% of the issued capital of NatuEra S.à.r.l. (“Natuera”), which is accounted for as equity securities without a readily determinable fair value, as of December 31, 2025. The Company has an investment in High Tide through the High Tide Loan and the High Tide Warrant. The High Tide Loan had an initial principal amount of C$30,000, subject to a 16% original issue discount. The High Tide Loan bears interest at a rate of 4% per annum, payable in cash quarterly, has a term of five years, and may be repaid by High Tide prior to maturity without penalty. The High Tide Loan is convertible into common shares of High Tide at a conversion price of C$4.20 per share, subject to mutual agreement of the Company and High Tide. The High Tide Warrant is exercisable into up to 3,836,317 common shares (the “Warrant Shares”) of High Tide at an exercise price of C$3.91 per Warrant Share, subject to customary adjustments. The Company’s ownership interest in each joint venture is summarized in the table below. Joint Venture Jurisdiction Ownership Interest (i) Cronos Israel (ii) Israel 70%/90% Cronos GrowCo (iii) Canada 50% (i) The Company defines ownership interest as the proportionate share of net income to which the Company is entitled; equity interest may differ from ownership interest shown above. The Company consolidates the financial results of Cronos Israel and Cronos GrowCo and accounts for other joint ventures under the equity method of accounting. See Note 1 “ Background, Basis of Presentation, and Summary of Significant Accounting Policies” and Note 5 “ Investments ” to its consolidated financial statements in Item 8 of this Annual Report. (ii) A strategic joint venture with Kibbutz Gan Shmuel, an Israeli agricultural collective settlement, for the production, manufacturing and global distribution of medical cannabis, consisting 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.), collectively, “Cronos Israel.” The Company holds a 70% equity interest in the cultivation company and a 90% equity interest in each of the manufacturing, distribution and pharmacy companies. (iii) A strategic joint venture with a group of investors led by Bert Mucci (the “Greenhouse Partners”), a Canadian large-scale greenhouse operator. Each of Cronos and the Greenhouse Partners owns a 50% equity interest in Cronos GrowCo. On July 1, 2024, the Company obtained majority control of the board of directors of Cronos GrowCo, which qualified as a business combination under ASC 805. No U.S. Schedule I Cannabis-Related Activities Although several states in the U.S. have authorized the cultivation, distribution or possession of U.S. Schedule I cannabis and U.S. Schedule I cannabis containing products to various degrees and subject to various requirements or conditions and although President Trump signed an executive order on December 18, 2025 (the “Executive Order”) directing the U.S. Attorney General to expedite the completion of the administrative process to reschedule marijuana from Schedule I to Schedule III under the U.S. Controlled Substances Act (the “CSA”), U.S. Schedule I cannabis continues to be a Schedule I controlled substance under the CSA unless and until the required federal rulemaking process is complete. Accordingly, the cultivation, manufacture, distribution and possession of U.S. Schedule I cannabis violates federal law in the U.S. unless a U.S. federal agency, such as the DEA, grants a registration for a specific activity, such as research, with U.S. Schedule I cannabis. Cronos does not engage in any activities related to U.S. Schedule I cannabis in the U.S. Brand Portfolio Cronos is committed to building a portfolio of iconic brands that responsibly elevate the consumer experience. In Canada, Cronos sells a variety of cannabis products through wholesale channels including under our Spinach ® , PEACE NATURALS ® and Lord Jones ® brands . Cronos also sells cannabis flower in several international medical markets under our PEACE NATURALS ® , LIT™ and Lord Jones ® brands. 5 Table of Contents Brand Positioning Mainstream Mainstream Value Premium Product Offering Dried flower, pre-rolls, vaporizers, edibles Dried flower, pre-rolls, tinctures Dried flower Dried flower, pre-rolls, vaporizers, edibles Geographic Availability Canada Canada, Israel, Germany, Australia, Switzerland & the UK Germany, Israel & the UK Canada & Israel Spinach ® is a mainstream adult-use cannabis brand focused on friends, fun and legendary cannabis. The Spinach ® brand portfolio includes cannabinoid products in a wide range of formats including dried flower, pre-rolls, vaporizers and edibles. PEACE NATURALS ® is a mainstream global medical brand committed to producing high-quality cannabis products. The brand is focused on building and shaping the global medical market. The Company currently distributes products under the PEACE NATURALS ® brand for the Canadian market and several international medical markets. LIT™ is a value‑driven medical cannabis brand designed to make high‑quality relief more accessible, without compromising quality or care. The brand offers a focused lineup of dried flower products, currently sold in medical markets across Israel, Germany and the United Kingdom (the “UK”). Lord Jones ® is a premium cannabis brand that goes above and beyond to unlock differentiated ways to experience cannabis. The Lord Jones ® brand portfolio includes cannabis products in the pre-roll, vaporizers, concentrates and edible categories. In February 2026, Cronos launched the Lord Jones ® brand in the Israeli medical market with cannabis flower products. Cronos Marketing Code In 2021, Cronos released its Marketing Code, which is designed to responsibly move the emerging cannabis industry forward. Cronos believes that those below the legal age of consumption should not be targeted in an adult-use cannabis market. Cronos recognizes there is a clear need for standards. The principles in the Cronos Marketing Code apply to all marketing activities of all Cronos brands globally and the Company strives to communicate these principles to all business partners as part of any work they do on the Company’s behalf. The Marketing Code represents Cronos’ commitment to responsible marketing standards. The code standards are: • Cronos advertising will be targeted to adults. • Cronos will highlight responsible cannabis consumption and any people depicted in any imagery will be adults. • Brand websites and social media will be designed for adults. • All packaging will be child resistant. Cronos encourages parents to store products securely in their homes, out of sight and reach of children. • Cronos marketing events will be targeted to adults and will promote responsible cannabis consumption. • Cronos will provide customers with facts and substantiate its claims. Global Sales and Distribution - Principal Markets Cronos has developed a diversified global sales and distribution network. The Company has built a distribution footprint in Canada through the adult-use and medical markets, as well as markets and distribution channels outside of Canada. Canadian Market and Distribution • Adult-Use. Cronos currently sells dried flower, pre-rolls, vaporizers, concentrates and edibles through its brands, Spinach ® and Lord Jones ® , to cannabis control authorities in all provinces of Canada and the Yukon territory, except Saskatchewan, where the Company sells to private-sector retailers, subject to the relevant provincial or territorial restrictions and requirements. As the Company’s supply chain grows, Cronos continues to expand its portfolio of cannabis products for the existing markets in Canada. • Medical Market. Cronos sells cannabis products under the PEACE NATURALS ® , Spinach ® and Lord Jones ® brands to medical cannabis users in Canada through various third-party distributors. 6 Table of Contents Markets and Distribution Outside of Canada • Israel. Cronos Israel distributes PEACE NATURALS ® and LIT™ branded cannabis products to the Israeli medical market through pharmacies. In February 2026, Cronos launched the Lord Jones ® brand in the Israeli medical market. See “ — Licenses and Regulatory Framework in Israel.” • Germany. In September 2023, Cronos established a strategic partnership with Cansativa, a leading German cannabis company, to distribute PEACE NATURALS ® and LIT™ branded products along with other white-labeled cannabis products in the German medical market. • United Kingdom. In February 2024, Cronos expanded into the UK by shipping its first batch of PEACE NATURALS ® medical cannabis flower to this emerging market, through a partnership with a third-party distributor of prescribed cannabis products. In 2025, LIT™ branded products also became available in the UK market. • Other International Markets. Cronos distributes PEACE NATURALS ® medical cannabis flower in Australia, Switzerland, and Malta through third-party distributor relationships. Additionally, Cronos GrowCo sells products in the wholesale channel into the markets listed above as well as Canada and select other international markets. Cronos continues to seek new international distribution channels in jurisdictions that have legalized the production, distribution and possession of cannabis products at all relevant levels of government. Global Supply Chain Cronos is focused on establishing an efficient global supply chain by seeking to develop industry-leading methodologies and best practices at the cultivation and processing facilities of Cronos GrowCo (the “Cronos GrowCo Facility”), the Peace Naturals Campus and the Cronos Israel facility at Kibbutz Gan Shmuel and leveraging this expertise to create beneficial production partnerships. The Company plans to continue to develop a global supply chain, which will employ a combination of wholly owned production facilities, third-party suppliers and global production partnerships, all of which will support the manufacturing of cannabinoid-based consumer goods. • Peace Naturals Campus. The Peace Naturals Campus is licensed for cannabis production and the manufacturing of certain cannabis products. Activities at the Peace Naturals Campus include production, processing, finishing, packaging and shipping, as well as R&D, including cannabinoid product formulation, product development, tissue culture and micro propagation. The Company plans to continue and expand operations at the Peace Naturals Campus. • Cronos GrowCo. The Cronos GrowCo Facility is licensed for cannabis production and the manufacturing of certain cannabis products. Under its current licenses, Cronos GrowCo is permitted to sell certain cannabis products to other license holders in the wholesale channel, as well as to provincial cannabis control authorities. Cronos GrowCo holds Global GAP and ICANN GAP certifications (equivalent to IMC-GAP) for the export of dried flower to Israel. In the second quarter of 2024, the Company entered into an amended and restated supply agreement with Cronos GrowCo (the “Cronos GrowCo Supply Agreement”), pursuant to which the Company has the right, but not the obligation, to purchase up to 70% of Cronos GrowCo’s total production from the Cronos GrowCo Facility. Cronos GrowCo supplies products to Canada, Israel and select international markets. • Cronos Israel . Cronos Israel holds the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel. Cronos Israel distributes PEACE NATURALS ® and LIT™ branded cannabis products to the Israeli medical market. In February 2026, Cronos launched the Lord Jones ® brand in the Israeli medical market. See “ —Licenses and Regulatory Framework in Israel ” for more information on the Company’s licenses in Israel. • Third-party Supply and Manufacturing Agreements. In the ordinary course of business, the Company enters into spot market purchase agreements and supply agreements with suppliers of dried flower and other cannabis products to supply its global markets. These supply agreements, for the most part, do not oblige Cronos to purchase minimum quantities of products and generally contain provisions permitting cancellation of orders or termination on notice. Contract manufacturing agreements are entered with other license holders for certain manufacturing and processing services related to Cronos products. Major Customers Major customers are customers for which sales equaled or exceeded 10% of our consolidated net revenues for the year. In 2025, there were two major customers, Ontario Cannabis Retail Corporation and Alberta Gaming, Liquor and Cannabis Commission, which accounted for approximately 27% and 16%, respectively, of the Company’s consolidated net revenues, before excises taxes, for the year ended December 31, 2025. The Company verifies the customers’ liquidity prior to the authorization of material transactions for the purpose of mitigating credit risk. 7 Table of Contents Government Contracts In Canada, Cronos sells cannabis products to cannabis control authorities in all provinces of Canada and the Yukon territory, except for Saskatchewan (where cannabis products are sold directly to private-sector retailers). Each such cannabis control authority is the sole wholesale distributor in the province, except in Manitoba (where the Company distributes cannabis products through private-sector distributors authorized by the provincial cannabis control authority), and in certain provinces, the sole retailer, of cannabis products. These products are sold to the various cannabis control authorities under supply agreements that are subject to terms that allow for renegotiation of sale prices and termination at the election of the applicable cannabis control authority. For the year ended December 31, 2025, the Company made approximately $122.4 million in sales to cannabis control authorities in Canada. Competitive Conditions Competitive Conditions in Canada The Company faces competition in all aspects of its business in the Canadian adult-use and medical markets. As the demand for cannabis increases as a result of the legalization of adult-use cannabis in Canada under the Cannabis Act, Cronos believes that new competitors will continue to enter the market. The principal factors on which Cronos competes with other Canadian license holders are product quality, cost of production, innovation, intellectual property, brand recognition and price. The Company believes its strong capitalization resulting from the Altria Investment, along with the Spinach ® and Lord Jones ® brand recognition and differentiation in the Canadian market and Cronos GrowCo’s efficient and expanding operations functioning as a source of supply, will enable Cronos to develop better quality consumer products, grow its Canadian business and strengthen its market position in Canada. However, an evolving and stringent federal regulatory framework affects all areas of the business. See “ Business—Regulatory Framework in Canada ” for further information on the regulatory framework applicable to the Canadian business. Cronos also faces competition from illegal market participants that are unlicensed and unregulated. As these illegal market participants do not comply with the regulations governing the cannabis industry, their operations may also have significantly lower costs and their products may be more easily accessible by consumers. In addition to competition from illegal market participants, Cronos faces competition from licensed cannabis competitors that fail to comply with the regulations governing the cannabis industry when developing and selling cannabis products. Competitive Conditions Outside of Canada Cronos faces competition when entering new markets. The principal factors on which the Company competes are product quality, cost of production, innovation, intellectual property, brand recognition, price and physician familiarity. Cronos believes it is positioned to enter certain markets in Europe in a meaningful way while continuing to operate and penetrate the markets in which it currently participates due to the strong capitalization resulting from the Altria Investment, extensive experience and expertise in the highly regulated cannabis industry in Canada, which can be leveraged when entering new markets or growing existing operations, and strong partnerships with local distributors. The Company believes these factors will enable greater market penetration, provide a greater variety of quality consumer products, facilitate entry into new markets and strengthen its existing market position in overseas markets. However, a patchwork of regulatory frameworks and regulations in these various regions also affects the Company’s ability to compete in emerging markets as evolving regulations and frameworks have the potential to affect all areas of the business. Additionally, the Company faces competition from illegal market participants that are unlicensed and unregulated in these markets and licensed competitors that fail to comply with applicable regulations. Altria Strategic Investment Altria Investment and Investor Rights Agreement As of December 31, 2025, Altria beneficially owned 41.0% of Cronos’ common shares and had the right to acquire additional common shares under its pre-emptive and top-up rights as discussed under “ Pre-emptive Rights and Top-Up Rights ” below. Investor Rights Agreement In connection with the Altria Investment, Cronos entered into the Investor Rights Agreement, dated as of March 8, 2019, by and between Cronos and Altria (the “Investor Rights Agreement”) pursuant to which Altria received certain governance rights that are summarized below. 8 Table of Contents Board Representation The Investor Rights Agreement provides that, for so long as Altria and certain of its affiliates (the “Altria Group”) continue to beneficially own at least 40% of Cronos’ issued and outstanding common shares and the size of Cronos’ board of directors (the “Board”) is seven directors, Cronos agrees to nominate for election as directors to the Board four individuals designated by Altria (the “Altria Nominees”). In addition, for so long as the Altria Group continues to beneficially own greater than 10% but less than 40% of Cronos’ issued and outstanding common shares, Altria is entitled to nominate a number of Altria Nominees that represents its proportionate share of the number of directors comprising the Board (rounded up to the next whole number) based on the percentage of Cronos’ issued and outstanding common shares beneficially owned by the Altria Group at the relevant time. At least one Altria Nominee must be independent for so long as Altria has the right to designate at least three Altria Nominees and the Altria Group’s beneficial ownership of Cronos’ issued and outstanding common shares does not exceed 50%. The Investor Rights Agreement also provides that, subject to certain exceptions, for so long as Altria is entitled to designate one or more Altria Nominees, Cronos agrees to appoint to each committee established by the Board such number of Altria Nominees that represents Altria’s proportionate share of the number of directors comprising the applicable Board committee (rounded up to the next whole number) based on the percentage of Cronos’ issued and outstanding common shares beneficially owned by the Altria Group at the relevant time. Approval Rights The Investor Rights Agreement also grants Altria, until the Altria Group beneficially owns less than 10% of Cronos’ issued and outstanding common shares, approval rights over certain transactions that the Company may undertake. Cronos agreed that, among other things, it will not (and will use commercially reasonable efforts to cause its affiliates not to), without the prior written consent of Altria: • consolidate or merge into or with another person or enter into any similar business combination; • acquire any shares or similar equity interests, instruments convertible into or exchangeable for shares or similar equity interests, assets, business or operations with an aggregate value of more than C$100,000,000, in a single transaction or a series of related transactions; • sell, transfer, cause to be transferred, exclusively license, lease, pledge or otherwise dispose of any of the Company’s or its significant subsidiaries’ assets, business or operations in the aggregate with a value of more than C$60,000,000; • except as required by applicable law, make any changes to Cronos’ policy with respect to the declaration and payment of any dividends on its common shares; • subject to certain exceptions, enter into any contract or other agreement, arrangement, or understanding with respect to, or consummate, any transaction or series of related transactions between Cronos or any of its subsidiaries, on the one hand, and any related parties, on the other hand, involving consideration or any other transfer of value required to be disclosed pursuant to Item 404 of Regulation S-K promulgated pursuant to the Securities Act; or • engage in the production, cultivation, advertisement, marketing, promotion, sale or distribution of cannabis or any Related Products and Services (as defined in the Investor Rights Agreement) in any jurisdiction, including the U.S., where such activity is prohibited by applicable law as of the date of the Investor Rights Agreement (subject to certain limitations). Exclusivity Covenant Pursuant to the terms of the Investor Rights Agreement, until the earlier of: • the six-month anniversary of the date on which the Altria Group beneficially owns less than 10% of Cronos’ issued and outstanding common shares; and • the six-month anniversary of the termination of the Investor Rights Agreement, Altria has agreed to make Cronos its exclusive partner for pursuing cannabis opportunities throughout the world (subject to certain limited exceptions). 9 Table of Contents Pre-emptive Rights and Top-Up Rights Pursuant to the terms of the Investor Rights Agreement and provided the Altria Group continues to beneficially own at least 20% of Cronos’ issued and outstanding common shares, Altria has a right to purchase, directly or indirectly by another member of the Altria Group, upon the occurrence of certain issuances of common shares by Cronos (each, a “Triggering Event”) and subject to obtaining the necessary approvals, up to such number of common shares issuable in connection with the Triggering Event which will, when added to Cronos’ common shares beneficially owned by the Altria Group immediately prior to the Triggering Event, result in the Altria Group beneficially owning the same percentage of Cronos’ issued and outstanding common shares that the Altria Group beneficially owned immediately prior to the Triggering Event (in each case, calculated on a non-diluted basis). The price per common share to be paid by Altria pursuant to the exercise of these pre-emptive rights will be, subject to certain limited exceptions, the same price per common share at which the common shares are sold in the relevant Triggering Event; provided that if the consideration paid in connection with any such issuance is non-cash, the price per common share 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). In addition to (and without duplication of) the aforementioned pre-emptive rights, the Investor Rights Agreement provides Altria with top-up rights, exercisable on a quarterly basis, whereby, subject to obtaining the necessary approvals and for so long as the Altria Group beneficially owns at least 20% of Cronos’ issued and outstanding common shares, Altria has the right to subscribe for such number of common shares in connection with any Top-Up Securities (as defined below) that Cronos may, from time to time, issue after the date of the Investor Rights Agreement, as will, when added to the Cronos common shares beneficially owned by the Altria Group prior to such issuance, result in the Altria Group beneficially owning the same percentage of Cronos’ issued and outstanding common shares that the Altria Group beneficially owned immediately prior to such issuance. “Top-Up Securities” means any Cronos common shares issued: • on the exercise, conversion or exchange of Cronos convertible securities issued prior to the date of the Investor Rights Agreement or on the exercise, conversion or exchange of Cronos convertible securities issued after the date of the Investor Rights Agreement in compliance with the terms of the Investor Rights Agreement, in each case, excluding any of Cronos convertible securities owned by any member of the Altria Group; • pursuant to any share incentive plan of the Company; • on the exercise of any right granted by Cronos pro rata to all shareholders to purchase additional common shares and/or other securities of the Company (other than a right issued in a rights offering in which Altria had the right to participate); • in connection with bona fide bank debt, equipment financing or non-equity interim financing transactions with Cronos’ lenders, in each case, with an equity component; or • in connection with bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures undertaken and completed by Cronos, in each case, other than (A) common shares issued pursuant to Altria’s pre-emptive right and (B) common shares issued pursuant to the collaboration and license agreement (the “Ginkgo Collaboration Agreement”) between Cronos and Ginkgo Bioworks Holdings, Inc. (“Ginkgo”). 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 volume-weighted average price of Cronos common shares on the TSX for the 10 full trading days preceding such exercise by Altria; provided that the price per common share to be paid by Altria pursuant to the exercise of its top-up rights in connection with the issuance of common shares pursuant to the exercise of options or warrants that were outstanding on the date of closing of the Altria Investment will be C$16.25 per common share without any set off, counterclaim, deduction or withholding. Open Market Purchases The Altria Group is permitted to acquire Cronos common shares in the open market at any time and in any amount. Registration Rights The Investor Rights Agreement provides Altria with the right, subject to certain limitations and to the extent permitted by applicable law, to require Cronos to use reasonable commercial efforts to file a prospectus under applicable securities laws and/or a registration statement, qualifying Cronos common shares held by Altria for distribution in Canada and/or the U.S. In addition, the Investor Rights Agreement provides Altria with the right to require Cronos to include its common shares held by Altria in any proposed distribution of common shares in Canada and/or the U.S. by Cronos for its own account. Commercial Arrangements In connection with the Altria Investment, Cronos and Altria have entered into certain commercial arrangements (the “Commercial Arrangements”), pursuant to which Altria may provide Cronos with consulting services on matters which may include R&D, marketing, advertising and brand management, government relations and regulatory affairs, finance, tax planning, logistics and other corporate administrative matters. The services under the Commercial Arrangements are provided on customary terms and for a services fee payable by Cronos that is equal to Altria’s reasonably allocated costs plus 5%. 10 Table of Contents Protection of Intangible Assets The ownership and protection of Cronos’ intellectual property rights is a significant aspect of its future success. Currently, the Company relies on trademarks, patents, copyrights, trade secrets, technical know-how and proprietary information. Cronos seeks to protect its intellectual property by strategically seeking and obtaining registered protection where appropriate, developing and implementing standard operating procedures to protect inventions, germplasm, trade secrets, technical know-how and proprietary information and entering into agreements with parties that have access to its inventions, germplasm, trade secrets, technical know-how and proprietary information, such as its partners, collaborators, employees and consultants, to protect confidentiality and ownership. The Company also seeks to preserve the integrity and confidentiality of its inventions, germplasm, trade secrets, trademarks, technical know-how and proprietary information by maintaining physical security of its premises and physical and electronic security of its information technology systems. In addition, trademark protections have been sought in many jurisdictions, including Canada, the U.S., Israel, the UK, Switzerland, the European Union (the “EU”), Australia and China. Cronos’ ability to obtain registered trademark protection for cannabis-related goods and services, in particular for cannabis itself, may be limited in certain countries outside of Canada. For example, in the U.S., registered federal trademark protection is only available for goods and services that can be lawfully used in interstate commerce; the PTO is not currently approving any trademark applications for U.S. Schedule I cannabis, or certain goods containing U.S. hemp-derived CBD (such as dietary supplements and food) until the FDA provides clearer guidance on the regulation of such products. In the EU, trademarks cannot be obtained for products that are “contrary to public policy or accepted principles of morality.” Accordingly, the Company’s ability to obtain intellectual property rights and enforce intellectual property rights against third-party uses of similar trademarks may be limited in certain jurisdictions. Human Capital Resources Cronos employees are critical in achieving its mission. In order to compete and succeed in a highly competitive and rapidly evolving industry, it is crucial that Cronos continue to attract, develop, motivate and retain skilled, talented and passionate employees. The Company’s people strategy seeks to build a winning team and to foster a community of mission-driven people, where everyone feels empowered to do their best work. As of December 31, 2025, Cronos had 610 full-time employees. Of the full-time employees, 507 were in Canada, 36 were in the U.S., and 67 were in Israel. No employees are represented by a labor union or covered by a collective bargaining agreement. Compensation and Benefits . The Company’s compensation program is designed to attract, motivate and reward talented individuals who possess the skills necessary to support Cronos’ business objectives, assist in the achievement of the strategic goals and create long-term value for Cronos shareholders. The Company believes it offers competitive compensation and benefits in each of its locations, including long-term equity awards to eligible employees under its 2020 Omnibus Equity Incentive Plan to reward and retain talented individuals and align employee and shareholder interests. Safety, Health and Well-being . The safety, health and well-being of employees is paramount to the Company. Cronos provides employees and their families with access to a variety of health and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health status. See “ Risk Factors—Risks Relating to Operations in Israel ” for risks to the safety, health and well-being of employees in Israel due to the Middle East Conflict. Employee Engagement, Development and Training . Cronos is committed to providing development opportunities for employees, building an agile and resilient organization and fostering a workforce with the skillset to effectively adapt to changing business needs in order to best position the Company for success. The Company seeks to foster a culture of employee learning, innovation and a drive to succeed through a talent development strategy that adapts to changing business needs. Management is an active enabler of the people strategy to recruit, retain and engage talent that will maximize business performance. Employees are enabled to succeed through the Company’s communicated behaviors, development training opportunities, performance management program and pay for performance philosophy, and using their voice in its employee engagement survey. Inclusion, Belonging and Ethical Business Practices . Cronos believes that maintaining a work environment that supports a wide range of experiences and perspectives, and where all employees feel a sense of belonging, allows the Company to benefit from all available talent and enhances, among other things, organizational strength, problem-solving ability and opportunity for innovation. Cronos continues to focus on a strategy to support further progress. Cronos is committed to fair hiring, development, and promotion of employees. The Company maintains a whistleblower policy and an anonymous hotline for the confidential reporting of any suspected policy violations and provides training and education to its global workforce with respect to the Code of Business Conduct and Ethics and related policies. Regulatory Framework in Canada Federal Regime The Cannabis Act provides a licensing and permitting scheme for, among other things, the cultivation, processing, testing, packaging, labeling, distribution, sale, possession and disposal of adult-use cannabis, implemented by regulations promulgated under the Cannabis Act (the “Cannabis Regulations”). The Cannabis Act and Cannabis Regulations include, among other things, strict 11 Table of Contents specifications for the plain packaging and labeling and analytical testing of all cannabis products as well as stringent physical and personnel security requirements for all federally licensed cultivation, processing and sales sites. Health Canada allows license holders to export cannabis products with appropriate export permits. Export permits issued by Health Canada are specific to each shipment and may only be obtained for medical or scientific purposes. To apply for a permit to export cannabis, a license holder must submit significant information to Health Canada including information about the substance to be exported (including description, intended use and quantity) and the importer. As part of the application, applicants are also generally required to provide a copy of the import permit issued by a competent authority in the jurisdiction of final destination and to make a declaration to Health Canada that the shipment does not contravene the laws of the jurisdiction of the final destination or any country of transit or transshipment. The Cannabis Act required the federal government to conduct a review of the Cannabis Act after three years, which commenced in September 2022. The scope of this statutory review included, among other things, consideration of (i) the administration and operation of the Cannabis Act, (ii) the impact of the Cannabis Act on public health, (iii) the health and consumption habits of young persons, (iv) the impact of cannabis on indigenous persons and communities and (v) the impact of the cultivation of cannabis plants in a dwelling-house. The final report of an independent expert panel on a review of the Cannabis Act was published in March 2024 and contains a variety of recommendations, some of which could adversely affect Cronos’ business. For example, recommendation 27 suggests reforms to the excise tax regime which would apply progressively larger duties on cannabis products with higher quantities or concentrations of THC or other intoxicating cannabinoids. On March 12, 2025, previously proposed amendments to the Cannabis Regulations came into effect. The amendments are intended to reduce regulatory and administrative burden for regulated parties and support diversity and competition in the legal cannabis market, while continuing to meet the public health and safety objectives of the Cannabis Act. The amendments were supported by conclusions and recommendations from the independent expert panel’s final report published in March 2024 (described above), and were focused on five areas: (1) licensing, (2) personnel and physical security measures, (3) production requirements, (4) packaging and labeling, and (5) record-keeping and reporting. In December 2023, Health Canada released guidance on cannabis products deliberately made with intoxicating cannabinoids other than delta-9-tetrahydrocannabinol. Health Canada defines “intoxicating cannabinoids” as cannabinoids that bind to and activate the type 1 cannabinoid receptor (“CB1 receptor”). This guidance recommends that license holders apply the regulatory controls currently applicable to THC to all other cannabinoids that Health Canada defines as “intoxicating cannabinoids” in order to minimize the risks of accidental consumption, overconsumption and adverse effects. Provincial cannabis regulators have adopted Health Canada’s recommendation in various approaches. In September 2025, Health Canada jointly with the Public Health Agency of Canada published a report on red tape reduction. The ongoing and future initiatives for streamlining regulations, simplifying rules and enhancing flexibility include proposed changes to the Cannabis Tracking System Order (“CTSO”) to create operational efficiencies, while still meeting the objectives of the supply chain tracking system. Proposed amendments to the CTSO are expected in 2026. Provincial and Territorial Developments While the Cannabis Act provides for the regulation by the Canadian federal government of, among other things, the commercial production of cannabis and the sale of medical cannabis, the various provinces and territories of Canada regulate certain aspects of adult-use cannabis, including the distribution, sale, minimum age requirements and places where cannabis can be consumed. The governments of each Canadian province and territory have implemented regulatory regimes for the distribution and sale of cannabis for adult-use purposes which continue to evolve over time. Most provinces and territories have announced a minimum age for possession and consumption of 19 years old, except for Québec and Alberta, where the minimum age is 21 and 18, respectively. In addition, provinces and territories may impose additional licensing requirements and restrictions on sales, distribution and promotion which are more stringent than those at the federal level. For example, the Société Québécoise du Cannabis (the “SQDC”), the exclusive distributor of cannabis in the province of Québec and the sole retail and online vendor in Québec, does not permit non-edible cannabis products exceeding 30% THC to be sold through its channels. The SQDC has also placed significant restrictions on the types of edibles that may be sold through its channels, prohibiting edibles that are sweet, confectionary, dessert, chocolate or any other product SQDC considers attractive to persons under 21 years of age. Provincial distributors also take different positions on the sale and distribution of products with various cannabinoids (including tetrahydrocannabivarin and cannabinol). Licenses and Regulatory Framework in Israel Medical Cannabis in Israel - Background In Israel, cannabis is subject to the Israeli Dangerous Drugs Ordinance [New Version], 5733 – 1973 (the “Ordinance”), and its sale and use are prohibited unless applicable licenses or prescriptions have been obtained. Licenses to cultivate, produce, distribute, transport, conduct laboratory testing, dispense, possess and use cannabis for medical or research purposes in Israel are granted by the Israel Medical Cannabis Agency (the “Yakar”) within the Israeli Ministry of Health (the “Israeli MOH”). Under the “Enabling Reform” (the “Reform”), which came into effect on April 1, 2024, patients with certain medical indications can obtain medical cannabis through prescriptions issued by physicians certified in their area of expertise who have undergone dedicated training within the public 12 Table of Contents healthcare system. However, the majority of medical cannabis patients in Israel still rely on the traditional licensing system, either obtaining licenses directly from certified physicians or through the Yakar. In addition to allowing for medical cannabis prescriptions in certain cases, the Reform introduced key changes in other areas, including removing the restriction of medical cannabis as a last-line of treatment for certain indications, simplifying regulatory requirements for operators, establishing a structured research license for cultivators and manufacturers, and easing research and development processes. It also proposed further examination into excluding all cannabinoids besides THC at a THC concentration exceeding 0.3% (and its related cannabinoid family) from the Ordinance. Export From Israel In December 2020, the Israeli MOH initiated a pilot program in which certain medical cannabis companies were permitted to export their products, and the Yakar issued guidelines relating to the export of medical cannabis products. These guidelines set forth the process and conditions for obtaining an export license, which can only be issued to an applicant already holding a valid Yakar license. In March 2024, within the framework of the Reform, the Israeli MOH updated Procedure 110 (Guidelines for the Process of Approving Applications for the Export of a Dangerous Drug (Cannabis)), introducing updates to the regulatory framework for medicinal cannabis exports. A key change in the updated procedure was the removal of the words “for medical use and research” from its then title and guidelines. This change potentially expands the markets for Israeli cannabis products beyond medical markets, provided that the products are manufactured on a separate production line from those marketed in Israel under Israeli regulatory standards and are intended for sale outside Israel in jurisdictions where regulators have approved their import and use. The updated Procedure 110 establishes that export approvals are primarily contingent on the submission of a valid import permit or official confirmation from the competent authority in the destination country. Additionally, Procedure 110 exempts cannabis products intended solely for export from meeting Israeli domestic quality standards, subject to the restrictions above, except for compliance with mandatory security requirements specified under IMC-GSP guidelines. Constructive Licenses The Yakar is also able to issue constructive licenses (i.e., licenses for dealing with medical cannabis, without direct contact with the product, such as brokering medical cannabis transactions) (the “Constructive Licenses”). While arguments were previously made by local manufacturers against the issuance of these Constructive Licenses due to the less stringent requirements needed to obtain one, on February 12, 2023, the Director General of the Yakar published a decision regarding the Constructive Licenses, clarifying the Yakar’s authority to grant Constructive Licenses for the import/export of medical cannabis. Licenses and Regulatory Framework in Other Jurisdictions Cronos and its joint venture partners, strategic investments and strategic partners are subject to comprehensive and evolving regulations in each jurisdiction in which they operate. All aspects of the production, manufacture and distribution of cannabis products are regulated and subject to licensing regimes. These regulations and licensing regimes vary by jurisdiction and the Company, its joint venture partners, strategic investments and strategic partners spend significant time, effort and money to comply with the applicable requirements. The Company seeks to comply with export laws in connection with distributing products in other jurisdictions by obtaining export permits from Health Canada. The Company’s strategic partners are responsible for compliance with import laws and local regulatory requirements (including laws related to distribution of medical products) in jurisdictions in which they operate. Available Information Cronos is subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance with the Exchange Act, the Company files reports with, and furnishes other information to, the SEC. The public may obtain any document filed with or furnished to the SEC from the SEC’s Electronic Document Gathering, Analysis, and Retrieval system, which can be accessed at www.sec.gov , or via the System for Electronic Data Analysis and Retrieval, which can be accessed at www.sedarplus.com , as well as from commercial document retrieval services. Copies of this Annual Report may be obtained on request without charge from the Company’s Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004. Cronos also provides access without charge to all of its SEC filings, including copies of this Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as Section 16 reports on Forms 3, 4 or 5, as soon as reasonably practicable after filing or furnishing, on its website located at https://ir.thecronosgroup.com. In addition, the Company’s website includes, among other things, the Company’s Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is also available in print to any shareholder upon request without charge from our Corporate Secretary, corporate.secretary@thecronosgroup.com, telephone: +1-416-504-0004. Within the time period required by the SEC, the Company will post on its website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer. 13 Table of Contents From time to time, Cronos may use its website, as well as the following social media sites, as an additional means of disclosing public information to investors, the media and others interested in the Company; • Facebook ( https://www.facebook.com/The-Cronos-Group-419168411987225 ); • X (f.k.a. Twitter) ( https://x.com/cronosgroup ); and • LinkedIn ( https://www.linkedin.com/company/cronosgroupcron/ ). It is possible that certain information on Cronos’ website or these social media sites could be deemed to be material information. Investors, the media and others interested in the Company should review the business and financial information posted on the Company’s website or these social media sites. None of the information on Cronos’ website or disclosed through these social media sites is incorporated by reference into this Annual Report.