Cronos Group Inc. 10-Q

Item 2. 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 the Company’s condensed consolidated 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, 2026 (this “Quarterly Report”), consolidated financial statements appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (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 This Quarterly Report, the documents incorporated into this Quarterly Report by reference, other reports we file with, or furnish to, the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and other regulatory agencies, and statements by our directors, officers, other employees and other persons authorized to speak on our behalf contain information that may constitute forward-looking information and forward-looking statements within the meaning of applicable U.S. and Canadian securities laws and court decisions (collectively, “Forward-Looking Statements”), which are based upon our current internal expectations, estimates, projections, assumptions and beliefs. Information that is not clearly historical in nature may constitute Forward-Looking Statements. In some cases, Forward-Looking Statements can be identified by the use of forward-looking terminology, such as “expect,” “likely,” “may,” “will,” “should,” “intend,” “anticipate,” “potential,” “proposed,” “estimate,” “believe,” “plan” and other similar words, expressions and phrases, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussion of strategy. Forward-Looking Statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact. 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 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 the United States, 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 markets outside of Canada and Israel, and our ability to successfully distribute the PEACE NATURALS ® brand in those markets; • expectations related to the impact of our decision to exit our U.S. hemp-derived cannabinoid product operations and any future plans to re-enter the U.S. market; • 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 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 and any additional supply or growth opportunities (including in the wholesale market) provided thereby; • expectations related to the transaction by which we, as lender, obtained junior secured convertible debt (the “High Tide Loan”) from High Tide Inc. (“High Tide”), as borrower, and a warrant (the “High Tide Warrant”) to purchase common shares of High Tide, the performance of the High Tide Loan and the High Tide Warrant, and High Tide’s ability to repay the High Tide Loan; • expectations related to our agreement to acquire CanAdelaar B.V. (“CanAdelaar”), including the timing and completion of the transaction, and the anticipated costs, benefits and integration matters associated therewith and the performance of the business from and following closing; • expectations related to the impact of the renewed share repurchase program that was authorized on May 8, 2026, including the timing and amount of repurchases; • our ability or plans to identify, develop, commercialize or expand our technology and research and development (“R&D”) initiatives in cannabinoids, or the success thereof; • expectations regarding revenues, expenses, gross margins and capital expenditures; 27 Table of Contents • expectations regarding our future production and manufacturing strategy and operations, the costs and timing associated therewith and the receipt of applicable production and sale licenses; • the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets; • the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if, when and to the extent such use is legalized; • the grant, renewal, withdrawal, suspension, delay and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof; • our ability to successfully create, launch and scale brands and cannabis products; • expectations related to the differentiation of our products, including through the utilization of rare cannabinoids; • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids; • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to cannabis and U.S. hemp (including CBD and other U.S. hemp-derived cannabinoids) products and the scope of any regulations by the U.S. Department of Health and Human Services (“HHS”), 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. hemp-derived cannabinoids) products, including the final order issued by the U.S. Department of Justice (the “DOJ”) in April 2026, which moved certain categories of medical marijuana products from Schedule I to Schedule III of the U.S. Controlled Substances Act and any future actions that may be taken or considered by the DOJ or other government agencies; • the anticipated benefits and impact of Altria Group, Inc.’s investment in the Company (the “Altria Investment”), pursuant to a subscription agreement dated December 7, 2018; • expectations regarding the implementation and effectiveness of key personnel changes; • expectations regarding business combinations and dispositions and the anticipated benefits therefrom; • expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill; • 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 SEC and the settlement agreement (the “Settlement Agreement”) with the Ontario Securities Commission (the “OSC”); and • the impact of the loss of our ability to rely on private offering exemptions under Regulation A and Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), as a result of the Settlement Order. Certain of the Forward-Looking Statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below. 28 Table of Contents 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 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 markets outside of Canada and Israel; (iv) expectations related to the impact of our decision to exit our U.S. hemp-derived cannabinoid product operations; (v) 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; (vi) our ability to efficiently and effectively manage our operations at our Peace Naturals Campus; (vii) our ability to efficiently and effectively acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo; (viii) our ability to realize the expected benefits related to the expansion of Cronos GrowCo’s purpose-built cannabis facility (including the quantity and quality of any additional supply provided thereby and the stability of pricing and demand with respect to such supply) and the ability of Cronos GrowCo to repay the credit facility provided by Cronos; (ix) High Tide’s ability to repay the High Tide Loan, the performance of the High Tide Loan and the High Tide Warrant, and our ability to realize benefits related to the performance of the High Tide Warrant; (x) our ability to complete the acquisition of CanAdelaar on the terms and within the timelines anticipated, including the timely receipt of required regulatory approvals and the satisfaction of other closing conditions, and our ability to realize any expected benefits, synergies and operational performance associated with such acquisition; (xi) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our business combinations and strategic investments; (xii) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (xiii) government regulation of our activities and products including, but not limited to, the areas of cannabis taxation and environmental protection; (xiv) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (xv) consumer interest in and the scalability of our products; (xvi) our ability to differentiate our products, including through the utilization of rare cannabinoids; (xvii) competition; (xviii) anticipated and unanticipated costs; (xix) our ability to generate cash flow from operations; (xx) our ability to conduct operations in a safe, efficient and effective manner; (xxi) our ability to hire and retain qualified staff and acquire equipment and services in a timely and cost-efficient manner; (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. By their nature, Forward-Looking Statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the Forward-Looking Statements in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, negative impacts on our business and operations in Israel due to the Anti-Dumping Investigation, including that we may not be able to produce, import or sell our products in Israel as a result thereof; negative impacts on our employees, business and operations in Israel due to the Middle East Conflict, including that we may not be able to produce, import or sell our products or protect our people or facilities in Israel during the Middle East Conflict, the supply of product in the market and the demand for product by medical patients in Israel, and inflationary pressures and related increases in input, production, transportation and other operating costs, as well as potential impacts on consumer purchasing power; that we may not be able to successfully maintain or expand distribution of our products in our markets outside of Canada or Israel or generate meaningful revenue in those markets; that we may be unable to further streamline our operations and expenses; that we may not be able to effectively and efficiently re-enter the U.S. market in the future; that we may not be able to access raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo; that the expected benefits of the expansion of Cronos GrowCo’s purpose-built cannabis facility (including any additional supply provided thereby) may not be fully realized within a reasonable time or at all or that Cronos GrowCo may not be able to repay its borrowings under the credit facility provided by Cronos; that the expected benefits of the High Tide Warrant and the High Tide Loan may not be fully realized within a reasonable time or at all or that High Tide may not be able to repay its borrowings under the High Tide Loan; that we may not be able to consummate our planned acquisition of CanAdelaar on the anticipated timeline or at all; 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; the risk that cost savings and any other synergies from the Altria Investment may not be fully realized or may take longer to realize than expected; failure to execute key personnel changes; 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; the lack of consumer demand for or our inability or challenges in successfully scaling our products; our inability to manage disruptions in credit markets; unanticipated future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; failure to realize expected growth opportunities; the lack of cash flow necessary to execute our business plan (either within the expected timeframe or at 29 Table of Contents all); difficulty raising capital; the potential adverse effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the unexpected effects of actions of third parties such as competitors, activist investors or federal (including U.S. federal), state, provincial, territorial or local regulatory authorities or self-regulatory organizations; adverse changes in regulatory requirements in relation to our business and products; our failure to improve our internal control environment and our systems, processes and procedures; and the factors discussed 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. Forward-Looking Statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned not to place undue reliance on these Forward-Looking Statements because of their inherent uncertainty and to appreciate the limited purposes for which they are being used by management. While we believe that the assumptions and expectations reflected in the Forward-Looking Statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-Looking Statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any Forward-Looking Statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such Forward-Looking Statements. The Forward-Looking Statements contained in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements. Foreign currency exchange rates All currency amounts in this Quarterly Report are stated in U.S. dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to U.S. dollars. The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of March 31, 2026, March 31, 2025, and December 31, 2025. Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates. The condensed consolidated statements of net income (loss) and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period as reported on Bloomberg. The exchange rates used to translate from Canadian dollars (“C$”) to dollars are shown below: (Exchange rates are shown as C$ per $) As of March 31, 2026 March 31, 2025 December 31, 2025 Spot rate 1.3916 1.4393 1.3698 Year-to-date average rate 1.3720 1.4356 N/A The exchange rates used to translate from New Israeli Shekels (“ILS”) to dollars are shown below: (Exchange rates are shown as ILS per $) As of March 31, 2026 March 31, 2025 December 31, 2025 Spot rate 3.1441 3.7191 3.1863 Year-to-date average rate 3.1240 3.6145 N/A Business Overview Cronos is a global cannabis company focused on scaling leading consumer goods products through research and development and innovation. 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. 30 Table of Contents 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. Cronos maintains its 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, the Company 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. Recent Developments CanAdelaar Acquisition On December 9, 2025, the Company entered into a definitive share sale and purchase agreement (the “SPA”) to acquire all of the issued and outstanding shares of CanAdelaar, one of ten licensed cannabis producers participating in the Dutch Controlled Cannabis Supply Chain Experiment. On May 8, 2026, the Company entered into an amendment to the SPA pursuant to which the parties agreed to extend the Long Stop Date (as defined in the SPA) for closing of the acquisition from June 9, 2026 to September 9, 2026. The extension provides additional time to satisfy certain closing conditions, including obtaining required regulatory clearances in the Netherlands, receipt of confirmations relating to CanAdelaar’s licenses and completion of the Bibob review (a background check conducted by Dutch authorities). No other material changes were made to the terms of the transaction. The Company expects the acquisition to close in the summer of 2026. Conflict in Middle East The Middle East Conflict, including the recent escalation involving the United States, Israel and Iran, has contributed to increased energy and shipping costs. While the impact of these cost increases on the Company’s results for the three months ended March 31, 2026, was not material, the Company expects such cost pressures to have an adverse effect on gross margins in the second quarter of 2026. The Company is monitoring these impacts and pursuing mitigation efforts through supply chain optimization and cost reduction initiatives. U.S. Marijuana Scheduling Developments In April 2026, the DOJ announced a final rule placing certain FDA-approved marijuana products and marijuana products subject to qualifying state medical marijuana licenses in Schedule III of the U.S. Controlled Substances Act and announced a new administrative hearing process regarding the broader proposed rescheduling of marijuana. The Company continues to monitor these developments and assess whether they may have any implications for its business. 31 Table of Contents Consolidated Results of Operations The tables below set forth our condensed consolidated results of operations, expressed in thousands of U.S. dollars for the periods presented. Our condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods . Three months ended March 31, 2026 2025 Net revenue, before excise taxes $ 58,965 $ 41,898 Excise taxes (13,755) (9,636) Net revenue 45,210 32,262 Cost of sales 25,392 18,528 Inventory write-down 665 — Gross profit 19,153 13,734 Operating expenses Sales and marketing 5,615 4,565 Research and development 1,413 793 General and administrative 11,736 9,309 Restructuring costs 484 555 Share-based compensation 1,313 2,088 Depreciation and amortization 425 496 Total operating expenses 20,986 17,806 Operating loss (1,833) (4,072) Other income 19,972 11,340 Income tax provision (benefit) 2,428 (455) Net income 15,711 7,723 Net income attributable to non-controlling interest 1,959 1,601 Net income attributable to Cronos Group $ 13,752 $ 6,122 Summary of select financial results Three months ended March 31, Change 2026 2025 $ % Net revenue $ 45,210 $ 32,262 $ 12,948 40 % Cost of sales 25,392 18,528 6,864 37 % Inventory write-down 665 — 665 N/A Gross profit 19,153 $ 13,734 5,419 39 % Gross margin (i) 42 % 43 % N/A (1) pp (i) Gross margin is defined as gross profit divided by net revenue. Net revenue For the three months ended March 31, 2026, we reported consolidated net revenue of $45.2 million, representing an increase of $12.9 million from the three months ended March 31, 2025. The increase was primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract and flower sales in the Canadian market. Cost of sales For the three months ended March 31, 2026, we reported consolidated cost of sales of $25.4 million, representing an increase of $6.9 million from the three months ended March 31, 2025. The increase was primarily due to higher sales volumes in the period. 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, 2026. 32 Table of Contents Inventory write-down For the three months ended March 31, 2026, we reported inventory write-down of $0.7 million, representing an increase of $0.7 million from the three months ended March 31, 2025. The current year write-downs relate to unusable inventory that was scrapped in the period. There were no such write-downs for the three months ended March 31, 2025. Gross profit For the three months ended March 31, 2026, we reported gross profit of $19.2 million, representing an increase of $5.4 million from the three months ended March 31, 2025. The increase was primarily due to higher average sales prices, largely driven by a mix shift to Israel and other countries, which carry no excise taxes, and higher sales volumes. 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, 2026. Operating expenses Three months ended March 31, Change 2026 2025 $ % Sales and marketing $ 5,615 $ 4,565 $ 1,050 23 % Research and development 1,413 793 620 78 % General and administrative 11,736 9,309 2,427 26 % Restructuring costs 484 555 (71) (13) % Share-based compensation 1,313 2,088 (775) (37) % Depreciation and amortization 425 496 (71) (14) % Total operating expenses $ 20,986 $ 17,806 $ 3,180 18 % Sales and marketing For the three months ended March 31, 2026, sales and marketing expenses were $5.6 million, representing an increase of $1.1 million compared to the three months ended March 31, 2025. The increase was primarily due to higher marketing expenses and salaries and benefits. Research and development For the three months ended March 31, 2026, research and development expenses were $1.4 million, representing an increase of $0.6 million compared to the three months ended March 31, 2025. The increase was primarily due to higher product development costs and salaries and benefits. General and administrative For the three months ended March 31, 2026, general and administrative expenses were $11.7 million, representing an increase of $2.4 million from the three months ended March 31, 2025. The increase was primarily due to higher salaries and benefits, transaction costs related to the pending CanAdelaar acquisition, and restatement litigation costs, partially offset by lower anti-dumping costs. Restructuring costs For the three months ended March 31, 2026, restructuring costs were $0.5 million, representing a decrease of $0.1 million from the three months ended March 31, 2025. For further information, see Note 7 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report. Share-based compensation For the three months ended March 31, 2026, share-based compensation expense was $1.3 million, representing a decrease of $0.8 million from the three months ended March 31, 2025. The decrease was primarily due to lower average amounts of share-based compensation awards outstanding. Depreciation and amortization For the three months ended March 31, 2026, depreciation and amortization expenses were $0.4 million, representing a decrease of $0.1 million from the three months ended March 31, 2025. The decrease was primarily due to lower amortization of intangible assets, partially offset by higher depreciation of property, plant and equipment. 33 Table of Contents Other income and income tax expense (benefit) Three months ended March 31, Change 2026 2025 $ % Interest income, net $ 8,853 $ 9,665 $ (812) (8) % Gain (loss) on revaluation of financial instruments (2,484) 49 (2,533) N/M Foreign currency gain 13,699 1,583 12,116 765 % Change in allowance for credit loss on non-operating loan (106) — (106) N/A Other, net 10 43 (33) (77) % Total other income 19,972 11,340 8,632 76 % Income tax provision (benefit) 2,428 (455) 2,883 N/M Net income 15,711 $ 7,723 7,988 103 % (i) “N/M” is defined as not meaningful. Interest income, net For the three months ended March 31, 2026, interest income, net was $8.9 million, representing a decrease of $0.8 million from the three months ended March 31, 2025. The decrease in net interest income was primarily due to lower interest rates in the current period, partially offset by interest on our High Tide Loan. Gain (loss) on revaluation of financial instruments For the three months ended March 31, 2026, the loss on revaluation of financial instruments was $2.5 million, representing a deterioration of $2.5 million from the three months ended March 31, 2025. The change was primarily related to the change in fair value of our High Tide Warrant and our investment in Vitura Health Limited (“Vitura”). For further information, see Note 3 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report. Foreign currency gain For the three months ended March 31, 2026, foreign currency gain was $13.7 million, representing an improvement of $12.1 million from the three months ended March 31, 2025. The change was primarily due to the strengthening of the U.S. dollar compared to the Canadian dollar impacting the revaluation of certain foreign currency-denominated cash equivalents and short-term investments held in Canada, as well as the strengthening of the New Israeli Shekel compared to the Canadian dollar impacting the revaluation of certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future. Change in allowance for credit loss on non-operating loan For the three months ended March 31, 2026, change in allowance for credit loss on non-operating loan was $0.1 million. There was no such activity during the three months ended March 31, 2025. The expense relates to the change in the allowance for credit loss on the High Tide Loan. For further information, see Note 4 “ Loans Receivable, net .” Other, net For the three months ended March 31, 2026, other, net primarily related to non-operating rental income. For the three months ended March 31, 2025, other, net primarily related to gains and losses on the disposal of assets. Income tax provision (benefit) For the three months ended March 31, 2026, income tax provision was $2.4 million, compared to a benefit of $0.5 million for the three months ended March 31, 2025. The increased expense was primarily due to decreased net operating loss utilization compared to the three months ended March 31, 2025. Net income For the three months ended March 31, 2026, net income was $15.7 million, compared to net income of $7.7 million for the three months ended March 31, 2025. The improvement in net income was primarily due to higher gross profit and other income, partially offset by higher operating expenses. 34 Table of Contents Non-GAAP Measures Cronos reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). This Quarterly Report refers to measures not recognized under U.S. GAAP (“non-GAAP measures”). These non-GAAP measures do not have a standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these non-GAAP measures are provided as a supplement to corresponding U.S. GAAP measures to provide additional information regarding our results of operations from management’s perspective. Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this Quarterly Report are reconciled to their closest reported U.S. GAAP measure. Reconciliations of historical adjusted financial measures to corresponding U.S. GAAP measures are provided below. Adjusted EBITDA Management reviews Adjusted EBITDA, a non-GAAP measure, which excludes non-cash items and items that do not reflect management’s assessment of ongoing business performance. Management defines Adjusted EBITDA as net income (loss) before interest, tax expense (benefit), depreciation and amortization adjusted for: share of (income) loss from equity method investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; (gain) loss on revaluation of derivative liabilities; (gain) loss on revaluation of financial instruments; gain on revaluation of loan receivable; gain on revaluation of equity method investment; transaction costs related to strategic projects; loss on held-for-sale assets; impairment loss on other investments; foreign currency transaction (gain) loss; other, net; loss from discontinued operations; change in allowance for credit loss on non-operating loan; restructuring costs; inventory write-downs resulting from restructuring actions; 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 restatement litigation 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 Note 10(b) “Contingencies,” to the condensed consolidated financial statements under Item 1 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. Management believes that Adjusted EBITDA provides useful insight into underlying business trends and results and facilitates comparison of period-over-period results. Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. Beginning in 2025, the Company modified the composition of Adjusted EBITDA to exclude the impact of the provision for expected credit losses recognized under ASC 326 solely with respect to the High Tide Loan (see Note 4 “Loans Receivable, net” to the condensed consolidated financial statements under Item 1 of this Quarterly Report for further information). Management determined that excluding this non-cash provision provides investors with additional insight into period-over-period operating performance by isolating credit-risk movements unrelated to the Company’s core operations. Management believes that this change provides additional information regarding the Company’s ongoing operational results and enhances comparability with peers that do not routinely extend credit to third parties. This change does not affect the Company’s GAAP financial statements. 35 Table of Contents The following tables set forth a reconciliation of Net income as determined in accordance with U.S. GAAP to Adjusted EBITDA for the periods indicated: Three months ended March 31, 2026 Net income $ 15,711 Interest income, net (8,853) Income tax provision 2,428 Depreciation and amortization 3,727 EBITDA 13,013 Loss on revaluation of financial instruments (i) 2,484 Foreign currency transaction gain (13,699) Transaction costs (ii) 959 Other, net (iii) (10) Restructuring costs (iv) 484 Share-based compensation (v) 1,313 Restatement litigation costs (vi) 411 Israel Ministry of Economy and Industry dumping inquiry expense (vii) 18 Change in allowance for credit loss on non-operating loan (viii) 106 Adjusted EBITDA $ 5,079 Three months ended March 31, 2025 Net income $ 7,723 Interest income, net (9,665) Income tax benefit (455) Depreciation and amortization 2,840 EBITDA 443 Gain on revaluation of financial instruments (i) (49) Foreign currency transaction gain (1,583) Transaction costs (ii) 40 Other, net (iii) (43) Restructuring costs (iv) 555 Share-based compensation (v) 2,088 Restatement litigation costs (vi) 47 Israel Ministry of Economy and Industry dumping inquiry expense (vii) 274 Inventory step-up recorded to cost of sales (ix) 517 Adjusted EBITDA $ 2,289 (i) For the three months ended March 31, 2026, the loss on revaluation of financial instruments was driven by a loss related to the Company’s High Tide Warrant and the Company’s equity securities in Vitura. For the three months ended March 31, 2025, the gain on revaluation of financial instruments related primarily to the revaluation of the Company’s DSU liability, partially offset by a loss on the Company’s equity securities in Vitura. (ii) For the three months ended March 31, 2026, transaction costs represented fees related to the pending acquisition of CanAdelaar. 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 statements of net income (loss) and comprehensive income (loss). (iii) For the three months ended March 31, 2026, other, net related to rental income. For the three months ended March 31, 2025 other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities. (iv) For the three months ended March 31, 2026 and 2025, restructuring costs related to employee-related severance costs and IT infrastructure and finance transformation costs associated with the Realignment, as described in Note 7 “ Restructuring .” (v) For the three months ended March 31, 2026, share-based compensation related to the expenses of share-based compensation awarded to employees and DSUs issued to our Board of Directors, each under the Company’s share-based award plans, as described in Note 8 “ Share-based Compensation. ” For the three months ended March 31, 2025, share-based compensation related to the expenses of share-based compensation awarded to employees under the Company’s share-based award plans, as described in Note 8 “ Share-based Compensation. ” 36 Table of Contents (vi) For the three months ended March 31, 2026 and 2025, restatement litigation costs included legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement. (vii) For the three months ended March 31, 2026 and 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. (viii) For the three months ended March 31, 2026, change in allowance for credit loss on non-operating loan represents the allowance recognized on the High Tide loan receivable, as described in Note 4, “Loans Receivable, net.” (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). For the three months ended March 31, 2026, Adjusted EBITDA was $5.1 million, representing an improvement of $2.8 million from the three months ended March 31, 2025. The improvement was primarily due to higher gross profit, partially offset by higher operating expenses due to higher sales and marketing, general and administrative, and research and development costs. Adjusted Gross Profit and Adjusted Gross Margin To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented Adjusted Gross Profit and Adjusted Gross Margin, non-GAAP measures that exclude the impacts of inventory-related purchase accounting adjustments from the calculations of gross profit and gross margin, which resulted from the Cronos GrowCo Transaction. Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment. Management believes that Adjusted Gross Profit and Adjusted Gross Margin provide useful insight into underlying business trends to facilitate comparisons of period-over-period results by removing the impacts of inventory-related purchase accounting adjustments resulting from the Cronos GrowCo Transaction, which reflect a one-time event and do not reflect management’s assessment of ongoing business performance. The following table sets forth a reconciliation of Gross profit and Gross margin, each as determined in accordance with U.S. GAAP, to Adjusted Gross Profit and Adjusted Gross Margin, respectively, for the periods indicated: (in thousands of USD) Three months ended March 31, Change 2026 2025 $ % Net revenue $ 45,210 $ 32,262 $ 12,948 40 % Gross profit $ 19,153 $ 13,734 $ 5,419 39 % Inventory step-up recorded to cost of sales — 517 (517) N/A Adjusted Gross Profit $ 19,153 $ 14,251 $ 4,902 34 % Gross margin (i) 42 % 43 % N/A (1) pp Adjusted Gross Margin (ii) 42 % 44 % N/A (2) pp (i) Gross margin is defined as gross profit divided by net revenue. (ii) Adjusted Gross Margin is defined as Adjusted Gross Profit divided by net revenue. For the three months ended March 31, 2026, Adjusted Gross Profit was $19.2 million, representing an increase of $4.9 million from the three months ended March 31, 2025. The increase was primarily due to higher average sales prices, largely driven by a mix shift to Israel and other countries, which carry no excise taxes, and higher sales volumes. Constant Currency 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 months ended March 31, 2026, as well as cash and cash equivalents and short-term investment balances as of March 31, 2026 compared to December 31, 2025, 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. To present this information, current and comparative prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the three month comparative period in 2025, 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. All growth comparisons relate to the corresponding period in 2025. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our operations. The non-GAAP financial measures presented in this Quarterly Report should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. See further discussion on foreign currency risk as noted in Item 3 “Quantitative and Qualitative Disclosures About Market Risk.” 37 Table of Contents 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, 2026 compared to the three months ended March 31, 2025 as well as cash and cash equivalents and short-term investments as of March 31, 2026 and December 31, 2025, both on an as-reported and constant currency basis (in thousands): As Reported As Adjusted for Constant Currency Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change 2026 2025 $ % 2026 $ % Net revenue $ 45,210 $ 32,262 $ 12,948 40 % $ 41,913 $ 9,651 30 % Gross profit 19,153 13,734 5,419 39 % 17,588 3,854 28 % Gross margin 42 % 43 % N/A (1) pp 42 % N/A (1) pp Operating expenses 20,986 17,806 3,180 18 % 20,005 2,199 12 % Net income 15,711 7,723 7,988 103 % 14,809 7,086 92 % Adjusted EBITDA $ 5,079 $ 2,289 $ 2,790 122 % $ 4,153 $ 1,864 81 % As of March 31, As of December 31, As Reported Change As of March 31, Constant Currency Change 2026 2025 $ % 2026 $ % Cash and cash equivalents $ 821,856 $ 791,794 $ 30,062 4 % $ 822,316 $ 30,522 4 % Short-term investments — 40,000 (40,000) N/A — (40,000) N/A Total cash and cash equivalents and short-term investments $ 821,856 $ 831,794 $ (9,938) (1) % $ 822,316 $ (9,478) (1) % Net revenue As Reported As Adjusted for Constant Currency Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change 2026 2025 $ % 2026 $ % Cannabis flower $ 33,734 $ 23,344 $ 10,390 45 % $ 30,972 $ 7,628 33 % Cannabis extracts 11,457 8,608 2,849 33 % 10,923 2,315 27 % Other 19 310 (291) (94) % 18 (292) (94) % Net revenue $ 45,210 $ 32,262 $ 12,948 40 % $ 41,913 $ 9,651 30 % As Reported As Adjusted for Constant Currency Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change 2026 2025 $ % 2026 $ % Canada $ 25,351 $ 20,130 $ 5,221 26 % $ 24,221 $ 4,091 20 % Israel 14,151 9,229 4,922 53 % 12,240 3,011 33 % Other countries 5,708 2,903 2,805 97 % 5,452 2,549 88 % Net revenue $ 45,210 $ 32,262 $ 12,948 40 % $ 41,913 $ 9,651 30 % For the three months ended March 31, 2026, net revenue on a constant currency basis was $41.9 million, representing a 30% increase from the three months ended March 31, 2025. On a constant currency basis, net revenue increased for the three months ended March 31, 2026, primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract and flower sales in the Canadian market. 38 Table of Contents Gross profit For the three months ended March 31, 2026, gross profit on a constant currency basis was $17.6 million, representing a 28% increase from the three months ended March 31, 2025. On a constant currency basis, gross profit increased for the three months ended March 31, 2026, primarily due to higher average sales prices, largely driven by a mix shift to Israel and other countries, which carry no excise tax, higher sales volumes, and the impact of the inventory step-up from the Cronos GrowCo Transaction recognized in the three months ended March 31, 2025. For the three months ended March 31, 2025, we recognized $0.5 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, 2026. Operating expenses For the three months ended March 31, 2026, operating expenses on a constant currency basis were $20.0 million, representing a 12% increase from the three months ended March 31, 2025. On a constant currency basis, operating expenses increased for the three months ended March 31, 2026, primarily due to higher salaries and benefits, transaction costs and product development costs, partially offset by lower share-based compensation expense. Net income For the three months ended March 31, 2026, net income on a constant currency basis was $14.8 million, representing an increase in net income of $7.1 million from the three months ended March 31, 2025. On a constant currency basis, the improvement in net income for the three months ended March 31, 2026, was primarily due to higher gross profit and other income, partially offset by higher operating expenses. Adjusted EBITDA For the three months ended March 31, 2026, Adjusted EBITDA on a constant currency basis was $4.2 million, representing a $1.9 million improvement from the three months ended March 31, 2025. The improvement in Adjusted EBITDA for the three months ended March 31, 2026 on a constant currency basis was driven by higher gross profit, partially offset by higher operating expenses due to higher sales and marketing, general and administrative, and research and development costs. Cash and cash equivalents & short-term investments Cash and cash equivalents and short-term investments on a constant currency basis decreased 1% to $822.3 million as of March 31, 2026, from $831.8 million as of December 31, 2025. The decrease in cash and cash equivalents and short-term investments on a constant currency basis is primarily due to repurchases of common stock, purchases of property, plant and equipment, and withholding taxes paid on share-based awards, partially offset by positive cash from operating activities. Liquidity and Capital Resources As of March 31, 2026, we had $822 million in cash and cash equivalents and no short-term investments. We believe that the existing cash and cash equivalents will be sufficient to fund the business operations and capital expenditures over the next twelve months. The following table summarizes the cash flows from operating, investing and financing activities: (In thousands of U.S. dollars) Three months ended March 31, 2026 2025 Net cash provided by (used in) operating activities $ 10,898 $ (2,096) Net cash provided by (used in) investing activities 38,029 (55,356) Net cash used in financing activities (18,268) (2,930) Effect of foreign currency translation on cash and cash equivalents (597) (604) Net change in cash $ 30,062 $ (60,986) Comparison of cash flows between the three months ended March 31, 2026 and the three months ended March 31, 2025 Operating activities During the three months ended March 31, 2026, we generated $10.9 million of cash from operating activities as compared to $2.1 million of cash used in the three months ended March 31, 2025, representing an increase in cash generated of $13.0 million. This change is primarily driven by decreases in accounts receivable, prepaids and other current assets, and other receivables, as well as a lower decrease in accrued liabilities compared to the three months ended March 31, 2025. These were partially offset by a $1.8 million decrease in net income after adjusting for non-cash items during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and a lower decrease to interest receivable. 39 Table of Contents Investing activities During the three months ended March 31, 2026, we generated $38.0 million of cash from investing activities, compared to $55.4 million of cash used in investing activities during the three months ended March 31, 2025, representing a change of $93.4 million. This change was driven by the maturity of $40.0 million of short-term investments and lower capital expenditures during the three months ended March 31, 2026, compared to the purchase of $40.0 million of short-term investments during the three months ended March 31, 2025. Financing activities During the three months ended March 31, 2026, cash used in financing activities was $18.3 million, compared to $2.9 million of cash used in financing activities during the three months ended March 31, 2025, representing an increase in cash used of $15.3 million. This change is primarily driven by $16.7 million of share repurchases, partially offset by a decrease in withholding taxes paid on share-based awards during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Share Repurchase Program On May 7, 2025, the Company’s Board of Directors (the “Board”) authorized a share repurchase program of up to $50 million, but not to exceed 19,270,951 common shares, being 5% of the outstanding common shares as of May 7, 2025. The repurchase program commenced on May 14, 2025 and is expected to terminate on May 13, 2026 unless earlier terminated. In the three months ended March 31, 2026, we repurchased 6,365,700 common shares at costs of approximately $16.7 million, inclusive of commissions and excise taxes. As of March 31, 2026, the Company has repurchased a total of 10,785,181 common shares at costs of approximately $26.5 million, inclusive of commissions and excise taxes, under the repurchase program. Commissions and excise taxes do not reduce the Company’s remaining repurchase authorization. Accordingly, the Company has remaining authorization to repurchase up to $23.9 million of additional common shares, not to exceed the remaining 8,485,770 common shares authorized by the Board. Subsequent to March 31, 2026, the Board authorized a new share repurchase program intended to succeed the Company’s existing share repurchase program. See Note 15, “Subsequent Events.” Cash Requirements The Company’s cash requirements have not changed significantly since the filing of the Annual Report. Cronos GrowCo Credit Facility On August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$100.0 million (as amended, the “GrowCo Credit Facility”). The GrowCo Credit Facility is secured by substantially all present and after-acquired personal and real property of Cronos GrowCo. In August 2021, the GrowCo Credit Facility was amended to increase the aggregate principal amount available to C$105.0 million, and in June 2024, the GrowCo Credit Facility was amended to increase the aggregate principal amount available by C$70.0 million to C$175.0 million by providing a second secured non-revolving credit facility. As a result of the Cronos GrowCo Transaction on July 1, 2024, the existing loans receivable under the GrowCo Credit Facility were remeasured at their fair value and effectively settled for accounting purposes. Beginning in the third quarter of 2024, the GrowCo Credit Facility has been treated as an intercompany loan and eliminated upon consolidation. For the three months ended March 31, 2026, Cronos GrowCo repaid an aggregate C$3.4 million ($2.5 million) and C$1.8 million ($1.3 million) in principal and interest, respectively, under the terms of the GrowCo Credit Facility. As of March 31, 2026, Cronos GrowCo had repaid an aggregate C$39.3 million ($28.6 million) and C$38.2 million ($27.8 million) in principal and interest, respectively, under the terms of the GrowCo Credit Facility. As of March 31, 2026, the closing balance of the GrowCo Credit Facility was C$127.7 million ($91.8 million). Critical Accounting Policies and Estimates 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. Our critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.