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Plans to exit existing hemp-derived CBD operations in the United States
Intends to fire Lord Jones® brand in the Canadian adult market in the fourth quarter of 2023
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TORONTO, May 31, 2023 (GLOBE NEWSWIRE) — Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos” or the “Company”), a global innovator of cannabis, today announced its decision to structurally streamline its operation by winding down and exiting its existing operations focused on hemp-derived CBD in the States. United States by the end of the second quarter of 2023. Cronos has made this decision to optimize its cash flow in the near term and position itself to enter directly into the US THC market upon the necessary changes in US regulatory terms.
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Thus, beginning in the second quarter of 2023, the Company intends to report its financial results under one consolidated segment and will no longer report the United States and Rest of the World as separate segments. Cronos is also increasing its previously announced 2023 operating expense savings target from a range of $10-20 million to a new range of $20-25 million, in part because of its decision to discontinue and exit its current US operations.
In connection with the exit of its existing US operations, Cronos expects to incur expenses in the second quarter of 2023, amounting to $1.8 million consisting of inventory write-downs, termination and other employee costs, and asset impairment charges.
“We believe that one day the United States will be one of the most important cannabis markets in the world,” said Mike Gornstein, Chairman, President and CEO of Cronos. “But we also believe our resources are better spent on staying laser focused on becoming cash flow positive by driving cost savings and operational efficiencies for our Adult Infinitely Use products. We have the best balance sheet in the cannabis industry, with $836 million in cash and short-term investments.” and debt-free as of March 31, 2023. Meeting our goal of generating positive cash flow in 2024 will boost our industry-leading cash balance and put us in the best position to win in the US once regulatory conditions change.”
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The company is committed to maximizing the value of its globally branded product portfolio. Lord Jones is expected to be brought in® The brand has returned to its adult-use roots with a launch into the Canadian market in the fourth quarter of 2023. Cronos will continue to invest in R&D and product development in Canada to continue building our portfolio of products without borders across categories to prepare us for a time that opens up the US THC market.
“We look forward to carrying on the legacy and reputation of Lord Jones® “The brand is by taking it across the border into Canada,” said Jeff Jacobson, Cronos’ chief growth officer. Lord Jones® The brand will offer high quality and premium products for adult use, elevating the consumer experience by proposing its own original and unique brand.”
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Kronos Adult Brand Spinach®, is currently the No. 3 ranked cannabis brand in Canada and is currently the only cannabis brand in Canada to rank 10 in all categories it participates in, which includes the No. 1 ranking in the gum category, during the first quarter of 2023 according to HiFyre data. Cronos is looking to leverage its strength in building its brand across spinach® and Lord Jones® trademarks in Canada.
About Chronos
Kronos is a global innovator of cannabis committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion for responsibly elevating the consumer experience, Cronos is building a portfolio of iconic brands. Cronos’ diversified international brand portfolio includes spinach®natural peace® and Lord Jones®. For more information about Cronos and its brands, please visit: thecronosgroup.com.
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Forward-looking statements
This press release may contain information that may constitute “forward-looking information” or “forward-looking statements” within the meaning of applicable Canadian and US securities laws and court decisions (collectively, “forward-looking statements”). All information contained herein that is not clearly historical may constitute forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “plan,” “anticipate,” “intend,” “potential,” “estimate,” “believe,” or Negative these terms, or other similar expressions intended to identify forward-looking statements. Some of the forward-looking statements in this press release include statements regarding Cronos’ operations and business prospects in certain countries and regions, Cronos’ ability to improve cash flow, expected fees and costs to exit the US business, Cronos’ ability to continue to build a portfolio of products across Canada, and expectations About the release of Lord Jones® branding in Canada, expected cost savings and potential changes in regulatory conditions in the United States, and the ability for Cronos to enter directly into the US THC market when such changes occur. Forward-looking statements are necessarily based on a number of estimates and assumptions that, although considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, results, performance or achievements expressed or implied by those looking to the future. Statements and forward-looking statements are not guarantees of future performance. A discussion of certain material risks applicable to the Company can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which are filed on SEDAR and EDGAR and are accessible They are available at www.sedar.com and www.sec.gov/edgar, respectively. Any forward-looking statement included in this press release is being made as of the date of this press release, and, except as required by law, Cronos disclaims any obligation to update or revise any forward-looking statement. Readers are cautioned not to place undue reliance on any forward-looking statement.
Kronos contact group
Shane Laidlaw
investor relations
Phone: (416) 504-0004
Investor.relations@thecronosgroup.com
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