Core Insights - Cronos Group Inc. reported a 21% year-over-year increase in net revenue for Q2 2025, reaching $33.5 million, driven by strong sales in Israel and international markets [1][10] - The company maintains a robust balance sheet with $834 million in cash and cash equivalents, providing flexibility for future growth and expansion [1][3] - PEACE NATURALS remains the leading cannabis brand in Israel, achieving record revenue and sales volume due to high demand for medical cannabis [1][16] Financial Performance - Net revenue for Q2 2025 was $33.5 million, an increase of $5.7 million from Q2 2024, attributed to higher cannabis flower sales and the consolidation of Cronos GrowCo [10] - Gross profit for Q2 2025 was $14.5 million, up 130% from the previous year, reflecting improved sales prices and production efficiencies [10][6] - The net loss for Q2 2025 was $38.5 million, a significant increase from the previous year's loss, primarily due to foreign exchange losses [10][36] Market Position and Strategy - Cronos Group's international strategy has led to significant margin improvements, with strong performance in the Canadian market despite supply constraints [2][3] - The Spinach brand achieved a 4.7% market share in Canada, while Lord Jones and PEACE NATURALS continue to perform well in their respective segments [11][14][16] - The company is expanding its presence in international markets, launching PEACE NATURALS in Australia, Malta, and Switzerland [17] Operational Developments - The expansion of Cronos GrowCo is complete, with expected sales contributions beginning in Fall 2025, aimed at fueling growth in both domestic and international markets [18] - Cronos Group made a strategic investment of approximately $18.5 million in High Tide Inc., enhancing its competitive position in the Canadian cannabis retail market [21] Brand Performance - The Spinach brand's gummies maintained a 19.9% market share in the edibles category, showcasing strong consumer loyalty [12] - Lord Jones Chocolate Fusions™ captured a 10.2% market share, reinforcing its position as a leading brand in the chocolate cannabis edible segment [14] - PEACE NATURALS continues to thrive in Israel, supported by advanced cultivation techniques and a strong operational team [16]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) Presents Cronos Group Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q2 2025 and FY2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) Condensed Consolidated Balance Sheets | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :----------------------------------- | :-------------------- | | Total Assets | $1,175,227 | $1,166,312 | $8,915 | | Total Liabilities | $45,021 | $55,330 | $(10,309) | | Total Shareholders' Equity | $1,130,206 | $1,110,982 | $19,224 | [Condensed Consolidated Statements of Net Loss and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Net%20Loss%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Condensed Consolidated Statements of Net Loss and Comprehensive Income (Loss) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $33,455 | $27,762 | $5,693 | 20.5% | | Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Operating Loss | $(5,324) | $(15,561) | $10,237 | -65.8% | | Net Loss | $(38,482) | $(8,759) | $(29,723) | 339.3% | | Net Loss Attributable to Cronos Group | $(39,711) | $(8,757) | $(30,954) | 353.5% | | Basic Net Loss Per Share | $(0.10) | $(0.02) | $(0.08) | 400.0% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $65,717 | $53,050 | $12,667 | 23.9% | | Gross Profit | $28,238 | $10,780 | $17,458 | 161.9% | | Operating Loss | $(9,396) | $(31,509) | $22,113 | -70.2% | | Net Loss | $(30,759) | $(11,243) | $(19,516) | 173.6% | | Net Loss Attributable to Cronos Group | $(33,589) | $(10,998) | $(22,591) | 205.4% | | Basic Net Loss Per Share | $(0.09) | $(0.03) | $(0.06) | 200.0% | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Condensed Consolidated Statements of Changes in Equity | Metric | As of Dec 31, 2024 (in thousands) | As of Jun 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Total Shareholders' Equity | $1,110,982 | $1,130,206 | $19,224 | | Net Loss | N/A | $(39,711) | N/A | | Foreign Exchange Gain on Translation | N/A | $58,045 | N/A | | Share Repurchases | N/A | $(3,612) | N/A | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash provided by (used in) operating activities | $722 | $(460) | $1,182 | | Net cash provided by (used in) investing activities | $(56,339) | $180,999 | $(237,338) | | Net cash used in financing activities | $(10,616) | $(905) | $(9,711) | | Net change in cash and cash equivalents | $(64,389) | $178,898 | $(243,287) | | Cash and cash equivalents, end of period | $794,416 | $848,189 | $(53,773) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Background, Basis of Presentation, and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Background%2C%20Basis%20of%20Presentation%2C%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Cronos Group is an innovative global cannabinoid company focused on building disruptive intellectual property through cannabis research, technology, and product development, with brands like **Spinach®**, **PEACE NATURALS®**, and **Lord Jones®**[18](index=18&type=chunk) - The company operates as a **single reportable segment**, encompassing operations in **Canada** and **Israel**, involved in cultivation, manufacture, and marketing of cannabis and cannabis-derived products[22](index=22&type=chunk) Product Category Revenue | Product Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Cannabis flower | $25,025 | $20,661 | $4,364 | 21.1% | | Cannabis extracts | $8,360 | $7,064 | $1,296 | 18.3% | | Other | $70 | $37 | $33 | 89.2% | | Net revenue | $33,455 | $27,762 | $5,693 | 20.5% | Geographic Region Revenue | Geographic Region | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Canada | $19,150 | $19,844 | $(694) | -3.5% | | Israel | $9,376 | $6,889 | $2,487 | 36.1% | | Other countries | $4,929 | $1,029 | $3,900 | 379.0% | | Net revenue | $33,455 | $27,762 | $5,693 | 20.5% | [2. Business Combination](index=11&type=section&id=2.%20Business%20Combination) - Cronos Group obtained **majority control of Cronos GrowCo in Q3 2024**, leading to its consolidation and effective settlement of pre-existing financial relationships[33](index=33&type=chunk)[34](index=34&type=chunk) - The business combination resulted in recording **$65,269 thousand in goodwill**, primarily attributed to expected synergies and enhanced supply capabilities[35](index=35&type=chunk)[37](index=37&type=chunk) Acquired Assets and Liabilities | Acquired Asset/Liability | Fair Value at Transaction Date (in thousands) | | :----------------------- | :------------------------------------------ | | Cash | $5,993 | | Accounts receivable | $2,437 | | Inventory | $15,754 | | Intangible assets | $8,008 | | Goodwill | $65,269 | | Property, plant and equipment | $87,630 | | Total Purchase Price | $178,879 | [3. Inventory, net](index=13&type=section&id=3.%20Inventory%2C%20net) Inventory by Category | Inventory Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------- | :--------------------------------- | :----------------------------------- | :-------------------- | :--------- | | Raw materials | $5,831 | $5,400 | $431 | 8.0% | | Work-in-progress | $23,707 | $14,350 | $9,357 | 65.2% | | Finished goods | $12,432 | $13,248 | $(816) | -6.1% | | Supplies and consumables | $172 | $151 | $21 | 13.9% | | Total | $42,142 | $33,149 | $8,993 | 27.1% | - The **$5,605 thousand inventory step-up** from the Cronos GrowCo Transaction has been **fully recognized in cost of sales by June 30, 2025**[38](index=38&type=chunk) [4. Investments](index=13&type=section&id=4.%20Investments) - The net book value of the **PharmaCann Option was nil** as of June 30, 2025, and December 31, 2024, following significant impairment charges in 2024[41](index=41&type=chunk)[42](index=42&type=chunk) - The company's ownership in Vitura Health Limited **decreased from approximately 10% to 8.3% in Q1 2025** due to additional share issuance[45](index=45&type=chunk) Vitura Investment | Investment | As of Dec 31, 2024 (in thousands) | Unrealized Loss (in thousands) | Foreign Exchange Effect (in thousands) | As of Jun 30, 2025 (in thousands) | | :--------- | :-------------------------------- | :----------------------------- | :------------------------------------- | :-------------------------------- | | Vitura | $2,813 | $(700) | $138 | $2,251 | [5. Loans Receivable, net](index=15&type=section&id=5.%20Loans%20Receivable%2C%20net) Loans Receivable | Loan Type | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :------------------------ | :--------------------------------- | :----------------------------------- | :-------------------- | | Mucci Promissory Note | $11,497 | $13,464 | $(1,967) | | Cannasoul Collaboration Loan | $1,874 | $1,736 | $138 | | Total loans receivable, net | $13,767 | $16,144 | $(2,377) | - The GrowCo Credit Facility loans were **remeasured at fair value and effectively settled** as a result of the Cronos GrowCo Transaction on July 1, 2024[50](index=50&type=chunk) - Mucci made **principal repayments of $2,855 thousand** and **interest payments of $1,003 thousand** on the Mucci Promissory Note for Q2 2025[51](index=51&type=chunk) [6. Property, Plant and Equipment, net](index=17&type=section&id=6.%20Property%2C%20Plant%20and%20Equipment%2C%20net) Property, Plant and Equipment | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------- | :--------------------------------- | :----------------------------------- | :-------------------- | | Land | $6,875 | $6,389 | $486 | | Building and leasehold improvements | $239,415 | $192,059 | $47,356 | | Machinery and Equipment | $45,420 | $36,741 | $8,679 | | Construction in progress | $634 | $28,710 | $(28,076) | | Accumulated depreciation | $(35,608) | $(29,798) | $(5,810) | | Accumulated impairment charges | $(109,145) | $(103,599) | $(5,546) | | Property, Plant and Equipment, net | $150,243 | $133,189 | $17,054 | - Depreciation expense for the six months ended June 30, 2025, was **$5,611 thousand**, significantly higher than **$1,308 thousand** in the same period of 2024[56](index=56&type=chunk) [7. Goodwill and Intangible Assets, net](index=17&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets%2C%20net) Goodwill and Intangible Assets | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :---------------- | :--------------------------------- | :----------------------------------- | :-------------------- | | Goodwill | $66,918 | $63,453 | $3,465 | | Intangible assets, net | $10,565 | $11,257 | $(692) | - **Goodwill increased** primarily due to the Cronos GrowCo Transaction, which added **$65,269 thousand in goodwill**, attributable to synergies and enhanced supply capabilities[37](index=37&type=chunk)[58](index=58&type=chunk) - **Know-how**, valued at **$8,008 thousand** at acquisition, was a key intangible asset acquired as part of the Cronos GrowCo Transaction, with an amortization period of **10 years**[36](index=36&type=chunk)[59](index=59&type=chunk) [8. Restructuring](index=19&type=section&id=8.%20Restructuring) - The company continued its **Realignment initiatives in Q1 2025**, focusing on IT infrastructure and finance department transformation for cost efficiencies[60](index=60&type=chunk) - A **loss of $2,501 thousand on held-for-sale assets** was recognized in Q2 2025 due to a reassessment of the fair value of Cronos Fermentation assets[62](index=62&type=chunk)[144](index=144&type=chunk) Restructuring Costs | Restructuring Costs | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Restructuring Costs | $768 | $547 | $221 | 40.4% | | Restructuring Costs | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Restructuring Costs | $1,323 | $630 | $693 | 110.0% | [9. Share-based Compensation](index=20&type=section&id=9.%20Share-based%20Compensation) Share-based Compensation | Share-based Compensation | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Stock options | $79 | $33 | $46 | 139.4% | | RSUs | $1,302 | $2,203 | $(901) | -40.9% | | Total | $1,381 | $2,236 | $(855) | -38.2% | | Share-based Compensation | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Stock options | $154 | $67 | $87 | 129.9% | | RSUs | $3,315 | $4,184 | $(869) | -20.8% | | Total | $3,469 | $4,251 | $(782) | -18.4% | - For the six months ended June 30, 2025, **2,633,793 RSUs were granted**, and **4,844,056 RSUs vested and were issued**[69](index=69&type=chunk) [10. Share Repurchase Program](index=22&type=section&id=10.%20Share%20Repurchase%20Program) - The Board authorized a share repurchase program of up to **$50,000 thousand**, not exceeding **19,270,951 common shares**, commencing May 14, 2025[71](index=71&type=chunk) - As of June 30, 2025, the company repurchased **1,874,951 common shares for $3,612 thousand**, which were retired and cancelled[72](index=72&type=chunk)[173](index=173&type=chunk) [11. Commitments and Contingencies](index=22&type=section&id=11.%20Commitments%20and%20Contingencies) - A proposed **agreement-in-principle** has been reached to settle the U.S. class action complaint related to the restatement of 2019 interim financial statements[75](index=75&type=chunk) - The Israel Ministry of Justice sustained the Minister of Finance's veto of a proposed **165% anti-dumping duty** on Canadian medical cannabis imports[85](index=85&type=chunk)[86](index=86&type=chunk)[121](index=121&type=chunk) - The company expects litigation and regulatory proceedings related to the marketing, distribution, import, and sale of its products to **increase**[87](index=87&type=chunk) [12. Segment Information](index=25&type=section&id=12.%20Segment%20Information) - The company operates as a **single reportable segment**, with the CEO reviewing **Adjusted EBITDA** to evaluate performance and allocate resources[88](index=88&type=chunk) Adjusted EBITDA | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $1,688 | $(11,051) | $12,739 | N/M | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $3,977 | $(21,720) | $25,697 | N/M | - The improvement in **Adjusted EBITDA** was primarily driven by **higher revenue**, **lower cost of sales** due to Cronos GrowCo consolidation, and **reduced general and administrative costs**[155](index=155&type=chunk) [13. Loss per Share](index=30&type=section&id=13.%20Loss%20per%20Share) Loss per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Basic Net Loss Per Share Attributable to Cronos Group | $(0.10) | $(0.02) | $(0.08) | | Diluted Net Loss Per Share Attributable to Cronos Group | $(0.10) | $(0.02) | $(0.08) | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Basic Net Loss Per Share Attributable to Cronos Group | $(0.09) | $(0.03) | $(0.06) | | Diluted Net Loss Per Share Attributable to Cronos Group | $(0.09) | $(0.03) | $(0.06) | - Incremental common shares were **not considered** in the computation of diluted loss per share due to the net loss reported, as their inclusion would be anti-dilutive[96](index=96&type=chunk) [14. Fair Value Measurements](index=30&type=section&id=14.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into **Level 1** (quoted prices), **Level 2** (observable data), and **Level 3** (unobservable data)[97](index=97&type=chunk) Fair Value Measurements | Asset/Liability | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Cash and cash equivalents | $0 | $794,416 | $0 | $794,416 | | Other investments | $0 | $2,251 | $0 | $2,251 | | Derivative liabilities | $0 | $0 | $3 | $3 | [15. Related Party Transactions](index=31&type=section&id=15.%20Related%20Party%20Transactions) - Cronos GrowCo, previously an equity method investment, is now an **intercompany relationship** due to Cronos obtaining majority control, with all intercompany activity eliminated upon consolidation[99](index=99&type=chunk) Related Party Transactions | Related Party Transaction | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Related party – purchases of products and services | $173 | $260 | $362 | $936 | - Cronos GrowCo paid a **dividend of $3,858 thousand** to its non-controlling shareholders on June 30, 2025, funded from excess operating cash flows[104](index=104&type=chunk) [16. Subsequent Events](index=32&type=section&id=16.%20Subsequent%20Events) - Cronos Group entered into a **C$30,000 thousand junior secured convertible debt agreement** with High Tide Inc. on July 16, 2025, with a **4% annual interest rate** and conversion option at **C$4.20 per common share**[105](index=105&type=chunk)[122](index=122&type=chunk) - The agreement with High Tide Inc. also includes a common share purchase warrant exercisable into up to **3,836,317 common shares at C$3.91 per share**[105](index=105&type=chunk)[122](index=122&type=chunk) - **Lloyd Wilson** was appointed as the company's **Principal Accounting Officer**, effective immediately after the 10-Q filing[106](index=106&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's discussion and analysis of financial condition and results of operations for Q2 2025, including non-GAAP measures [Forward-Looking Statements](index=33&type=section&id=Forward-Looking%20Statements) - Forward-looking statements are based on current expectations, estimates, projections, assumptions, and beliefs, covering topics like the **Anti-Dumping Investigation in Israel** and **Realignment initiatives**[109](index=109&type=chunk)[110](index=110&type=chunk) - Key assumptions include navigating regulatory developments, managing the **Middle East Conflict's impact**, realizing **cost-savings from Realignment**, and achieving benefits from business combinations[113](index=113&type=chunk) - Readers are cautioned that forward-looking statements are subject to **inherent risks and uncertainties**, including regulatory changes, market conditions, and operational challenges[113](index=113&type=chunk)[114](index=114&type=chunk) [Foreign currency exchange rates](index=37&type=section&id=Foreign%20currency%20exchange%20rates) - All currency amounts in the Quarterly Report are stated in U.S. dollars, the company's reporting currency[115](index=115&type=chunk) Canadian Dollar Exchange Rates | Currency | Exchange Rate (C$ per $) | As of June 30, 2025 | As of June 30, 2024 | As of December 31, 2024 | | :------- | :----------------------- | :------------------ | :------------------ | :---------------------- | | Canadian Dollar | Spot rate | 1.3608 | 1.3674 | 1.4351 | | Canadian Dollar | Average rate | 1.4094 | 1.3581 | N/A | Israeli Shekel Exchange Rates | Currency | Exchange Rate (ILS per $) | As of June 30, 2025 | As of June 30, 2024 | As of December 31, 2023 | | :------- | :----------------------- | :------------------ | :------------------ | :---------------------- | | Israeli Shekel | Spot rate | 3.3683 | 3.7742 | 3.6526 | | Israeli Shekel | Average rate | 3.5954 | 3.6950 | N/A | [Business Overview](index=37&type=section&id=Business%20Overview) - Cronos Group is an innovative global cannabinoid company committed to building **disruptive intellectual property** by advancing cannabis research, technology, and product development[117](index=117&type=chunk) - The company's core strategic priorities include growing **iconic brands**, developing a **diversified global sales and distribution network**, and creating **disruptive intellectual property**[119](index=119&type=chunk) - Cronos operates as **one consolidated segment** with operations in **Canada** (Peace Naturals, Cronos GrowCo) and **Israel**, holding relevant certifications for medical cannabis[118](index=118&type=chunk) [Recent Developments](index=38&type=section&id=Recent%20Developments) - The **Cronos GrowCo Phase 2 Expansion Area is complete**, with sales expected in **Fall 2025**, anticipated to fuel international and domestic Canadian market growth[120](index=120&type=chunk) - The Israel Ministry of Justice validated the Minister of Finance's veto of a proposed **165% anti-dumping duty** on Canadian medical cannabis imports[121](index=121&type=chunk) - Cronos Group entered a **C$30,000 thousand junior secured convertible debt agreement** with High Tide Inc. on July 16, 2025, including a common share purchase warrant[122](index=122&type=chunk) [Consolidated Results of Operations](index=38&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated Results of Operations | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $33,455 | $27,762 | $5,693 | 20.5% | | Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Operating Loss | $(5,324) | $(15,561) | $10,237 | -65.8% | | Net Loss | $(38,482) | $(8,759) | $(29,723) | 339.3% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $65,717 | $53,050 | $12,667 | 23.9% | | Gross Profit | $28,238 | $10,780 | $17,458 | 161.9% | | Operating Loss | $(9,396) | $(31,509) | $22,113 | -70.2% | | Net Loss | $(30,759) | $(11,243) | $(19,516) | 173.6% | - **Net revenue increase** was primarily due to **higher cannabis flower sales in Israel** and other countries, consolidation of **Cronos GrowCo**, and **higher cannabis extract sales in Canada**[126](index=126&type=chunk) - **Gross profit increased** due to **Cronos GrowCo consolidation**, higher average sales prices from a mix shift to Israel and other countries, increased sales volumes, and production efficiencies[129](index=129&type=chunk) - The **higher net loss** was primarily driven by an **unrealized foreign exchange loss** due to the Canadian dollar strengthening against the U.S. dollar[147](index=147&type=chunk) [Non-GAAP Measures](index=42&type=section&id=Non-GAAP%20Measures) - **Adjusted EBITDA** is defined as net income (loss) before interest, tax, depreciation, and amortization, adjusted for various non-cash and non-recurring items[149](index=149&type=chunk) - **Adjusted Gross Profit** and **Adjusted Gross Margin** exclude inventory-related purchase accounting adjustments from the Cronos GrowCo Transaction for clearer insight into business trends[156](index=156&type=chunk)[157](index=157&type=chunk) Non-GAAP Financial Metrics | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $1,688 | $(11,051) | $12,739 | N/M | | Adjusted Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Adjusted Gross Margin | 43% | 23% | 20 pp | N/A | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $3,977 | $(21,720) | $25,697 | N/M | | Adjusted Gross Profit | $28,755 | $10,780 | $17,975 | 166.7% | | Adjusted Gross Margin | 44% | 20% | 24 pp | N/A | [Constant Currency](index=45&type=section&id=Constant%20Currency) - **Constant currency measures** are used to assess underlying operational performance by converting foreign currency results using prior period exchange rates[159](index=159&type=chunk) Constant Currency Financial Metrics | Metric (Constant Currency) | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net revenue | $33,334 | $27,762 | $5,572 | 20% | | Gross profit | $14,421 | $6,297 | $8,124 | 129% | | Net loss | $(39,798) | $(8,759) | $(31,039) | 354% | | Adjusted EBITDA | $1,587 | $(11,051) | $12,638 | N/M | | Metric (Constant Currency) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net revenue | $66,956 | $53,050 | $13,906 | 26% | | Gross profit | $28,645 | $10,780 | $17,865 | 166% | | Net loss | $(32,477) | $(11,243) | $(21,234) | 189% | | Adjusted EBITDA | $3,920 | $(21,720) | $25,640 | N/M | - The **increased net loss on a constant currency basis** was primarily due to an **unrealized foreign exchange loss** on U.S. dollar-denominated cash and investments held in Canada[166](index=166&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company held **$794 million in cash and cash equivalents** and **$40 million in short-term investments**, deemed sufficient to fund operations for the next twelve months[169](index=169&type=chunk) Cash Flow Summary | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash provided by (used in) operating activities | $722 | $(460) | $1,182 | | Net cash provided by (used in) investing activities | $(56,339) | $180,999 | $(237,338) | | Net cash used in financing activities | $(10,616) | $(905) | $(9,711) | | Net change in cash | $(64,389) | $178,898 | $(243,287) | - The change in investing activities was driven by the **purchase of $40 million in short-term investments** and **higher capital expenditures in 2025**[171](index=171&type=chunk) - Financing activities used more cash due to **dividends paid to non-controlling interests**, **common stock repurchases**, and **increased withholding taxes on share-based awards**[172](index=172&type=chunk) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - **Critical accounting policies and estimates** remain consistent with those discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to market risks, primarily foreign currency exchange rate fluctuations and interest rate changes [Foreign currency risk](index=50&type=section&id=Foreign%20currency%20risk) - The company is exposed to **foreign currency risk** from net assets, liabilities, and revenue denominated in **Canadian dollars** and **Israeli new shekels**[177](index=177&type=chunk) - A **10% change in the Canadian dollar exchange rate** would affect the carrying amount of net assets by approximately **$39.0 million** as of June 30, 2025[178](index=178&type=chunk) - The company **does not historically engage in, nor currently contemplate, hedging transactions** to mitigate foreign exchange risks[178](index=178&type=chunk) Foreign Currency Gain (Loss) on Translation | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Foreign currency gain (loss) on translation | $60,228 | $(10,160) | $57,146 | $(32,521) | [Interest rate risk](index=50&type=section&id=Interest%20rate%20risk) - Fluctuations in **interest rates** can impact the income and expense recorded on cash equivalents and short-term investments[180](index=180&type=chunk) Interest Income, Net | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Interest income, net | $9,000 | $13,500 | $18,700 | $27,700 | - A **10% decrease in the interest rate** would reduce interest income, net, by **$0.9 million** for the three months and **$1.9 million** for the six months ended June 30, 2025[180](index=180&type=chunk) [Item 4. Controls and Procedures.](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with the CEO and CFO, concluded that **disclosure controls and procedures were effective** as of June 30, 2025[181](index=181&type=chunk) - These controls provide **reasonable assurance** that information required for SEC reports is recorded, processed, summarized, and reported within specified time periods[181](index=181&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No material changes in internal control over financial reporting** occurred during the three months ended June 30, 2025[182](index=182&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings.](index=52&type=section&id=Item%201.%20Legal%20Proceedings.) Legal proceedings, including class action complaints and regulatory inquiries, are incorporated by reference from Note 11(b) - Information on legal proceedings is **incorporated by reference from Note 11(b)**, "Contingencies," in the condensed consolidated interim financial statements[185](index=185&type=chunk) [Item 1A. Risk Factors.](index=52&type=section&id=Item%201A.%20Risk%20Factors.) Investment in the company involves various risks detailed in the Annual Report, potentially affecting business and financial condition - A detailed discussion of the company's **risk factors** is available in Part I, Item 1A, "Risk Factors" of the Annual Report[186](index=186&type=chunk) - Any identified or unidentified risks could **materially and adversely affect** the company's business, results of operations, financial condition, and the price of its securities[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) Company repurchased 1.87 million common shares for $3.6 million under its $50 million share repurchase program Share Repurchase Program Activity | Period | Number of shares purchased | Weighted average price per share | Purchased as part of publicly announced repurchase plan (in thousands) | Approximate dollar value of shares that may yet be purchased on repurchase plan (in thousands) | | :------------------------- | :------------------------- | :------------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------------------------------- | | June 1, 2025 to June 30, 2025 | 1,874,951 | $1.92 | $3,612 | $46,388 | - The share repurchase program, authorized for up to **$50,000 thousand**, commenced on **May 14, 2025**, and is expected to terminate on **May 13, 2026**[187](index=187&type=chunk) [Item 3. Defaults upon Senior Securities.](index=52&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reported no defaults upon senior securities - There were **no defaults upon senior securities**[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures.](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - **Mine Safety Disclosures are not applicable**[189](index=189&type=chunk) [Item 5. Other Information.](index=52&type=section&id=Item%205.%20Other%20Information.) No directors or executive officers entered into, modified, or terminated Rule 10b5-1 trading plans during Q2 2025 - **No directors or executive officers entered into, modified, or terminated Rule 10b5-1 trading plans** during the three months ended June 30, 2025[190](index=190&type=chunk) - Officers and directors may elect to have shares withheld for taxes or option exercise, potentially under **Rule 10b5-1 conditions**[191](index=191&type=chunk) [Item 6. Exhibits.](index=54&type=section&id=Item%206.%20Exhibits.) Lists exhibits filed as part of the Quarterly Report, including certifications, XBRL documents, and other agreements - The exhibits listed in the Exhibit Index are filed as part of this **Quarterly Report**[193](index=193&type=chunk) - Exhibits include **certifications** from the Principal Executive Officer and Principal Financial Officer, as well as **XBRL Instance, Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents**[194](index=194&type=chunk)

Industry Overview - Canadian cannabis stocks are gaining momentum as the U.S. cannabis market is projected to reach nearly $45 billion by 2025, with legal sales expanding in over 20 states [1] - Renewed interest in federal reform is evident, with lawmakers pushing for rescheduling and broader legalization, despite local regulatory challenges [1] - Canadian firms with U.S. exposure are expected to benefit from these developments, leading to increased investor optimism [1] Company Highlights - **Sundial Growers Inc. (SNDL)** has transformed into a diversified cannabis and liquor operator, expanding its retail presence in the Southeastern U.S. and managing dozens of dispensaries [5][8] - For Q1 2025, Sundial reported net revenue exceeding $200 million, with significant gross profit growth and improved operational efficiency, despite still reporting an operating loss [8] - **Cronos Group Inc. (CRON)** has adopted a partnership strategy to gain U.S. exposure, allowing it to distribute branded products without direct ownership of retail stores [9] - In Q1 2025, Cronos saw a meaningful revenue increase, with gross profit more than doubling year-over-year and adjusted earnings turning positive for the first time in several quarters [11] - **High Tide Inc. (HITI)** operates the largest non-franchised cannabis retail chain in Canada and has a strong e-commerce presence in the U.S. [12] - The company reported over 10% revenue growth in Q2 2025, maintaining positive adjusted EBITDA for 21 consecutive quarters and expanding its store count to over 200 [14] Investment Outlook - August 2025 brings renewed interest in the cannabis sector, with Sundial, Cronos, and High Tide showing distinct strengths and operational momentum [15] - Each company demonstrates resilience and strategic growth, making them worthy of consideration for investors looking to tap into North America's cannabis potential [16]

Core Viewpoint - Cronos Group Inc. is set to hold its second quarter earnings conference call on August 7, 2025, at 8:30 a.m. ET, where senior management will discuss financial results and answer questions from the investment community [1]. Group 1 - The conference call will be accessible via online registration, and participants are encouraged to join fifteen minutes early to avoid delays [2]. - Cronos is described as an innovative global cannabinoid company focused on advancing cannabis research, technology, and product development [3]. - The company aims to build a diverse and iconic brand portfolio, which includes brands like Spinach, PEACE NATURALS, and Lord Jones [3].

Industry Overview - The Canadian cannabis market is gaining investor attention as the U.S. cannabis industry continues to grow rapidly, with legal cannabis sales projected to reach nearly $39 billion in 2024 and potentially exceed $44 billion in 2025 [1] - Despite the growth, federal legalization in the U.S. remains stalled, but several states are advancing their own reform efforts, which is attracting interest in Canadian companies with U.S. exposure [1] Company Highlights - **Tilray Brands Inc. (TLRY)**: - Tilray has expanded significantly in the U.S., owning over 150 dispensaries in key markets like California and Michigan, and has diversified into the wellness and THC-infused beverage sectors [4][7] - The company reported a 13% increase in net revenue to $200 million, with its cannabis segment generating $61 million at a 40% gross margin, and a 132% year-over-year growth in the beverage segment [7] - Although Tilray posted a net loss, it narrowed that loss and achieved an adjusted EBITDA of $9 million, indicating improving fundamentals [7] - **Canopy Growth Corporation (CGC)**: - Canopy operates approximately 120 dispensaries in the U.S. and owns the vaporizer company Storz & Bickel, focusing on both recreational and medical markets [8][10] - The latest quarterly report showed net revenue of around C$66 million, a slight decrease from the previous year, but gross profit rose over 65% to achieve a 35% gross margin [10] - Canopy has cut its total debt by nearly 50% over the fiscal year, reflecting a strong focus on long-term sustainability and operational efficiency [10] - **Cronos Group Inc. (CRON)**: - Cronos has a growing presence in the U.S. with distribution deals supplying products to around 80 dispensaries, focusing on cannabinoid innovation [11][13] - The company reported net revenue of over $32 million, reflecting year-over-year growth, and gross profit rose to $13.7 million due to better cost management [13] - Cronos is investing in research and development to position itself for long-term success in the competitive U.S. market [13] Strategic Insights - The three Canadian cannabis companies—Tilray, Canopy Growth, and Cronos—are strategically expanding their U.S. footprint and improving financial health, making them key players to watch as U.S. legalization discussions continue [14]

Core Viewpoint - High Tide Inc. has secured a $30 million convertible debt loan from a subsidiary of Cronos Group to fund future acquisitions and expand its cannabis retail operations in Canada, aiming to grow its store network beyond 300 locations [1][2][3]. Group 1: Loan Agreement Details - The Junior Secured Loan has a principal amount of $30 million, secured by a third priority lien on certain assets of High Tide, and bears an interest rate of 4% per annum [4]. - The loan has a 5-year term and can be repaid at any time without penalty, with the option for Cronos to convert the loan into common shares at a price of $4.20 per share [4]. - Cronos also received a warrant to purchase up to 3,836,317 common shares at an exercise price of $3.91 per share, representing a 25% premium to the 30-day volume weighted average price [5]. Group 2: Company Growth and Strategy - High Tide aims to utilize the working capital from the loan to enhance its business operations and expand its retail presence, reinforcing its position as a key player in the legal cannabis ecosystem [2][3]. - The company has been recognized as one of Canada's Top Growing Companies and ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023 [11]. - High Tide operates the largest cannabis retail chain in Canada, Canna Cabana, with 202 locations and continues to innovate in retail technology and consumer products [7][8]. Group 3: Industry Context - The investment from Cronos reflects a belief in the importance of a competitive retail environment that benefits producers, retailers, and consumers alike [3]. - High Tide's integrated operations across various components of cannabis, including retail, consumption accessories, and CBD, position it well within the growing cannabis market [7][10].

Core Insights - Cronos Group Inc. is expanding its distribution of the PEACE NATURALS medical cannabis brand in Switzerland through a partnership with Dascoli Pharma AG, a Swiss company specializing in medical cannabis supply and distribution [1][2] - The partnership aims to provide high-quality medical cannabis to Swiss patients and aligns with Cronos' mission to offer borderless cannabis products in European medical markets [2] - Cronos will supply PEACE NATURALS-branded cannabis flower to Dascoli for distribution across its established medical network in Switzerland, marking a significant step in Cronos' international growth strategy [2] Company Overview - Cronos Group Inc. is a global cannabinoid company focused on advancing cannabis research, technology, and product development, with a diverse international brand portfolio including Spinach, PEACE NATURALS, and Lord Jones [4] - The company is committed to building disruptive intellectual property and enhancing the consumer experience through its iconic brand portfolio [4] Partner Overview - Dascoli Pharma AG is a Swiss pharmaceutical firm that focuses on medical cannabis manufacturing and distribution across wholesale and retail channels, providing compliant cannabinoid therapies to patients, pharmacies, and clinics [5] - Dascoli is recognized as a leading cannabinoid retailer in Switzerland, offering next-day home delivery services for patients [5] Product Availability - PEACE NATURALS medical cannabis products are now available in multiple countries, including Australia, Canada, Germany, Israel, Malta, Switzerland, and the UK [3]

Group 1 - Cronos Group Inc. held its Annual Meeting of Shareholders on June 20, 2025, with 276,989,452 common shares voted, representing 71.87% of total outstanding shares [1] - All nominated directors were elected, each receiving over 92.3% of the votes in favor of their election, with specific percentages for each director ranging from 92.38% to 96.94% [2] - An advisory resolution on the compensation of named executive officers was approved with 94.13% of votes in favor, and Davidson & Company LLP was appointed as the independent auditor for fiscal year 2025 [2] Group 2 - Cronos is a global cannabinoid company focused on cannabis research, technology, and product development, aiming to build a strong brand portfolio including Spinach®, PEACE NATURALS®, and Lord Jones® [4]

Industry Overview - The cannabis sector has shifted from a short-term investment focus to a promising long-term investment opportunity, driven by the success of the legal market [1][2] - Despite the volatility and uncertainty in the market, the growth of the legal cannabis industry provides optimism for future investments [2][3] Key Companies to Watch - **Tilray Brands, Inc.** engages in the research, cultivation, processing, and distribution of medical cannabis products across multiple regions including Canada, the U.S., and Europe [4][6] - **SNDL Inc.** focuses on the production, distribution, and sale of cannabis products for the adult-use market, operating through various segments including Cannabis Retail and Investments [8][10] - **Cronos Group Inc.** is involved in the cultivation, production, distribution, and marketing of cannabis products internationally, with a focus on cannabinoid products [12][13] Financial Performance - **Tilray Brands, Inc.** reported a net revenue of $204.9 million for Q1 2025, reflecting a growth rate of +3.6% and a gross profit of $56.6 million, marking a growth of +12.4% with a gross margin of 27.6% [10][12] - The operating loss for Tilray in Q1 2025 was $(12.1) million, indicating challenges despite revenue growth [12]

Core Points - Cronos Group Inc. is an innovative global cannabinoid company focused on advancing cannabis research, technology, and product development [2] - The company is committed to building a diverse international brand portfolio, which includes brands like Spinach, PEACE NATURALS, and Lord Jones [2] - Mike Gorenstein, the Chairman, President, and CEO of Cronos, will speak at the TD Cowen 9th Annual Future of the Consumer Conference on June 4, 2025 [1] Company Overview - Cronos Group is dedicated to creating disruptive intellectual property in the cannabis sector [2] - The company aims to responsibly enhance the consumer experience through its brand portfolio [2] - More information about Cronos and its brands can be found on their official website [2]