Cronos Group Inc.
For the period ended Dec 31, 2025. Filed Feb 26, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 26, 2026
CRON$3.54-1.9%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001656472-25-000014
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-26.
0001656472-26-000016
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 327 previous paragraphs and 338 current paragraphs.
177 unchanged; 120 reworded; 34 added; 26 removed; 4 previous and 7 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
•Our acquisition strategy may not be successful, and we have in the past, and may in the future, write down goodwill and intangible assets recognized upon acquisitions.
Current report
•We may not be able to complete, or realize the expected benefits of, our planned acquisition of CanAdelaar.
Current report
•Our entry into new markets exposes us to market-specific regulatory, operational, and commercial risks, including unfamiliar regulatory regimes, changes in applicable laws, import and export restrictions, supply chain disruptions, currency fluctuations, and reliance on local partners and distributors.
Current report
•We have had multiple restatements and material weaknesses in our internal control over financial reporting in the past.
Current report
We may not be able to successfully manage changes in our business or sustain our growth.
Current report
Our acquisition strategy may not be successful, and we have in the past, and may in the future, need to write down goodwill and intangible assets recognized upon acquisition.
Current report
Our growth strategy has included, and may continue to include, acquisitions and strategic investments. These transactions involve significant risks and uncertainties, including challenges associated with integration, changes in market conditions, regulatory developments, and the performance of acquired businesses or investments. As a result, acquisitions and strategic investments may not produce the anticipated revenues, profits or other benefits.
Current report
We have in the past recorded significant impairment charges related to goodwill and intangible assets arising from prior acquisitions, and we may be required to record additional impairment charges in the future if the carrying value of such assets exceeds their estimated fair value. Any such impairment charges could have a material adverse effect on our results of operations and financial condition.
Current report
Consummation of our planned acquisition of CanAdelaar is subject to closing conditions and regulatory approvals, and the transaction may be delayed, incur additional costs, or fail to close. If completed, we may face integration challenges and future unforeseen obligations based on CanAdelaar’s operating performance following closing.
Current report
We entered into a definitive share sale and purchase agreement to acquire CanAdelaar, one of the licensed producers participating in the Netherlands’ Controlled Cannabis Supply Chain Experiment (the “Wietexperiment”). The completion of this transaction is subject to a number of closing conditions, including obtaining required regulatory clearances in the Netherlands, receipt of confirmations relating to CanAdelaar’s licenses and Bibob review (a background check conducted by Dutch authorities), the accuracy of representations and warranties, and the absence of certain regulatory orders. There can be no assurance that these closing conditions will be satisfied in a timely manner or at all. Failure to obtain required approvals or meet closing conditions could delay or prevent completion of the transaction, increase costs, or require us to modify or abandon the planned acquisition.
Current report
If the transaction does not close, we may not realize the anticipated strategic benefits associated with establishing a licensed production presence in the Netherlands. Additionally, we may suffer other consequences that could adversely affect our business, results of operations, and stock price, including an inability to benefit from or recover acquisition costs, negative publicity, and reputational damage. Even if completed, the transaction will require significant integration efforts, including integrating operations, technology, compliance systems, and personnel structures. Integration challenges could require greater-than-expected resources, divert significant management attention, or reduce the strategic benefits we expect to achieve. Further, the contingent consideration structure of the transaction may also give rise to future obligations based on CanAdelaar’s operating performance following closing. Any failure to close the transaction or to integrate CanAdelaar effectively could adversely affect our business, financial condition, and results of operations.
Current report
CanAdelaar has operated independently prior to the acquisition, and we may not identify all costs, liabilities, or operational challenges associated with CanAdelaar prior to completing the transaction. Following the acquisition, we may incur unanticipated expenses. In addition, assumptions made in evaluating the acquisition, including estimates of costs, synergies, operational efficiencies, or future performance, may prove to be inaccurate. Actual results may differ materially from our expectations due to factors beyond our control, including changes in market conditions, regulatory requirements, supplier or customer relationships, or the condition of the acquired business’s assets and operations.
Current report
Our production capacity strategy depends on our ability to efficiently operate, optimize, expand and maintain production at our facilities and joint ventures, including the Peace Naturals Campus, the Cronos Israel facility at Kibbutz Gan Shmuel and the Cronos GrowCo Facility. Although certain expansion initiatives have been completed, including expansion of the Cronos GrowCo Facility, there can be no assurance that we will be able to achieve or sustain the expected levels of output, quality, efficiency, or cost structure from these operations.
Current report
Continuing operations at these facilities is subject to maintaining the appropriate licenses from the relevant regulatory authorities in those jurisdictions, including Health Canada. Any failure to maintain required licenses or comply with applicable regulatory requirements could disrupt operations or limit production capacity or actual production.
Current report
We have implemented a series of significant operational and strategic changes in recent years, including our Realignment of functions and cost structure, changes to the nature of our operations at the Peace Naturals Campus, the exit of our U.S. operations, the cessation of our fermentation operations and sale of our fermentation and manufacturing facility in Winnipeg, Manitoba (the “Cronos Fermentation Facility”), and the Cronos GrowCo Transaction.
Current report
Our ability to compete also depends on the acceptance of our products by consumers and retail channels. If competing products are perceived to be safer, more effective, more consistently available, more effectively marketed, or less expensive than our products, or if our products do not achieve or sustain an adequate level of market acceptance, our revenues, margins, and profitability could be adversely affected.
Current report
In addition, competition in the Canadian adult-use market has intensified as certain retailers or retail groups have become vertically integrated with, or otherwise affiliated with or influenced by, licensed producers. Although applicable laws and regulations in certain provinces restrict certain forms of vertical integration between retailers and licensed producers, the interpretation and enforcement of these requirements may vary over time and by jurisdiction. To the extent retailers prioritize the sale, promotion, and shelf placement of their own or affiliated cannabis products over third-party brands such as ours, or if regulatory requirements are not enforced or are unevenly enforced, our ability to secure or maintain retail access, shelf space, and promotional visibility could be adversely affected, which could reduce sales volumes, increase pricing pressure, and harm our competitive position.
Current report
If we are unable to compete effectively in the legal adult-use cannabis market in Canada, we may not generate sufficient revenue from these products, our market share may decline, and our business, financial condition, and results of operations could be materially adversely affected.
Current report
PharmaCann Investment could be materially adversely affected. If we fail to realize the intended benefits of the PharmaCann Investment, or if market expectations regarding those benefits are not met, our stock price could decline.
Current report
If we complete our planned acquisition of CanAdelaar, we may face challenges integrating its operations into our existing organization, particularly given that CanAdelaar operates under the Netherlands’ Wietexperiment. The Wietexperiment is an experimental and highly regulated regime that imposes detailed requirements governing cultivation, production, quality control, distribution, reporting, and ongoing regulatory oversight. Complying with this framework may require operational practices, compliance systems, and regulatory expertise that differ from those used in our existing businesses. Any difficulties integrating CanAdelaar’s operations, maintaining compliance with applicable requirements, changes in the regulatory framework, delays in regulatory approvals, or modification, suspension, or termination of the Wietexperiment could disrupt operations, increase compliance costs, or prevent us from realizing the anticipated benefits of the CanAdelaar acquisition, which could materially and adversely affect our business, financial condition, and results of operations.
Current report
The Middle East Conflict has adversely affected transportation, logistics, and imports into Israel, and we may be unable to import materials into Israel on a timely basis, or at all. Further, our sales have been, and may continue to be, adversely affected, including as a result of reduced demand, supply disruptions, or regulatory or governmental actions taken in response to the Middle East Conflict.
Current report
On January 18, 2024, the Company was notified that the Trade Levies Commissioner of the Israel Ministry of Economy and Industry initiated a public investigation of alleged dumping of medical cannabis imports from Canada into Israel. On April 10, 2025, following the investigation, the Minister of Economy approved a duty of up to 165% on imports of cannabis from Canada, including the Company’s imports. On April 25, 2025, the Minister of Finance released a memorandum opposing the imposition of the duty, which acted as a veto of the Minister of Economy’s approval. On April 29, 2025, the Minister of Economy released a memorandum stating that notwithstanding the veto, he intended to proceed with the process of imposing the duty. On July 3, 2025, the Ministry of Justice issued a memorandum sustaining the Minister of Finance’s veto. Notwithstanding the government’s decision not to impose a tariff at this time, on June 12, 2025, a group of Israeli cannabis cultivators initiated an administrative proceeding against the government and certain importers, including the Company’s subsidiaries in Israel, asking the court to declare the Minister of Finance’s veto void and order the Minister of Economy to impose an anti-dumping duty. On December 18, 2025, the court denied the cultivators’ petition, effectively dismissing the case. The Company cannot predict further proceedings or determinations of the Ministers of Economy or Finance and cannot predict whether a duty will ultimately be imposed on its products.
Current report
International trade and diplomatic tensions, including trade disputes and tariffs, may impact our business and future opportunities. For example, in early 2025, the U.S. government announced tariffs affecting imports from certain countries, and retaliatory measures were subsequently announced by affected countries. Although certain measures were deferred or are subject to negotiation, the implementation, modification, or escalation of tariffs remains possible. Tariffs, trade restrictions, and related uncertainty could adversely affect our business, including through increased costs, supply chain disruptions, currency fluctuations, and reduced demand. The ultimate impact of such developments is uncertain and depends on various factors, such as negotiations between countries, exemptions or exclusions, availability and cost of alternative sources of supply, and broader economic conditions. Actions we take to adapt to tariffs or trade restrictions may cause us to modify our operations or forgo business opportunities.
Current report
Any fraudulent, malicious or accidental breach of our systems could result in unintended disclosure of, or unauthorized access to, third-party, customer, vendor, employee or other confidential information, and could require us to incur significant costs and devote substantial resources to repair or replace damaged systems, enhance security, or respond to or remediate occurrences, which in turn may require us to divert substantial resources from our business. Such incidents could disrupt our operations, harm our reputation, cause customers to lose confidence in our security practices, and result in lost sales, violations of applicable laws and regulations and subsequent penalties, fines, regulatory action or litigation. Moreover, we could be required or otherwise find it appropriate to expend significant capital and other resources to respond to, notify third parties of, and otherwise address the breach or incident and its root cause.
Current report
Additionally, upon the completion of our acquisition of CanAdelaar, we will become subject to the European Union’s General Data Protection Regulation (GDPR), as well as Dutch data protection laws and regulations, as a result of CanAdelaar’s ongoing business in the Netherlands. Completion of this acquisition would result in our operating a business in Europe for the first time. European data privacy laws impose significant obligations and restrictions on the collection, use, processing, storage, transfer, and security of personal data, including employee, customer, vendor, and business contact information, and we have limited experience complying with these legal and regulatory requirements. Compliance with these requirements may require us to implement new or enhanced policies, procedures, systems, controls, training programs, contractual arrangements, and technical safeguards, and to devote substantial management time and financial resources to compliance efforts. In addition, we may identify compliance gaps or legacy practices within the acquired business that require remediation, which could result in unanticipated costs, operational changes, or delays. We may also be required to engage external legal, technical, or compliance advisors to assist with ongoing compliance and oversight. Failure to comply with applicable European data privacy laws could result in regulatory investigations, fines, penalties, litigation, reputational harm, or restrictions on our ability to process personal data, any of which could materially and adversely affect our business, results of operations and financial condition.
Current report
Our expansion into the Netherlands exposes us to unique regulatory and commercial risks associated with the Dutch cannabis market.
Current report
The Netherlands operates under a highly regulated and evolving framework for adult-use cannabis. Participation in the Wietexperiment is limited to a small number of licensed producers and participating municipalities, and the program has a set expiration and is subject to change, extension or termination at the discretion of the Dutch government. Evaluation criteria of the Wietexperiment remain uncertain, and changes in government policy, enforcement priorities or political support could materially restrict our ability to operate or expand in the Dutch market. Regulatory requirements, interpretations, and operational requirements may evolve over time, increasing compliance costs, delaying commercialization plans, or limiting anticipated revenues.
Current report
The Dutch market also imposes structural and commercial constraints that may limit our expected return on investment. Under the Wietexperiment, licensed producers may supply only licensed retailers within designated municipalities, certain product formats are limited or prohibited, import and export are prohibited and distribution to unlicensed retailers or licensed retailers operating outside of the participating municipalities remain prohibited. These limitations may restrict market size, reduce economies of scale and make it difficult to achieve or maintain profitability. In addition, the experimental nature of the program may result in inconsistent or shifting regulatory expectations or logistical challenges in distribution and quality-control oversight. Consumer preferences and competitive dynamics in the Netherlands (including competition from the illicit market) may differ significantly from those in our existing markets, and our products may not gain the consumer acceptance we expect. Any of these factors could prevent us from realizing anticipated strategic benefits from our expansion efforts in the Netherlands and could adversely affect our business, financial condition and results of operations.
Current report
In August 2023, the U.S. Department of Health and Human Services recommended that the DEA move marijuana from Schedule I to Schedule III under the CSA. In May 2024, DEA published a notice of proposed rulemaking in the Federal Register agreeing with HHS’s recommendation and proposing to move marijuana from Schedule I to Schedule III. Later in 2024, the process slowed considerably. The proposed rule became the subject of a hearing before a DEA administrative law judge (“ALJ”), where it experienced significant procedural disputes. When the ALJ retired in August 2025, the rescheduling process effectively stalled. In December 2025, President Trump issued the Executive Order directing the Department of Justice to expedite the completion of the rescheduling of marijuana from Schedule I to Schedule III, among other things. There can be no assurances that the rulemaking process will continue, be completed or withstand legal challenges.
Current report
The legal and regulatory framework governing U.S. hemp and hemp-derived products is complex, evolving, and subject to significant uncertainty.
Current report
In November 2025, as part of the spending package to reopen U.S. the federal government (H.R. 5371), Congress enacted significant changes to the federal definition and regulation of U.S. hemp. The legislation narrows what qualifies as federally legal U.S. hemp, effectively prohibiting most intoxicating U.S. hemp products currently sold in the U.S. marketplace (e.g., U.S. hemp-derived THC gummies and beverages). The ban is scheduled to go into effect in November 2026. One of the many uncertainties regarding the ban is how, if at all, the Executive Order that President Trump issued in December 2025 related to marijuana rescheduling and the regulation of U.S. hemp will impact H.R. 5371. The Executive Order could lead to the establishment of guidance on an upper-limit of U.S. hemp-derived THC per serving in food and dietary supplements, and President Trump has directed the Assistant to the President and Deputy Chief of Staff for Legislative, Political, and Public Affairs to work with Congress to update the statutory definition of U.S. hemp-derived cannabinoid products.
Current report
Uncertainty regarding the interpretation, implementation, timing and interaction of these and other legislative and executive actions may result in inconsistent or delayed regulatory guidance, transitional disruption, or additional compliance obligations. Any such developments could adversely affect the broader cannabis and cannabinoid marketplace and indirectly affect our business, financial condition, results of operations, or the market price of our common shares, even if we do not directly participate in the U.S. hemp market.
Current report
Our business faces evolving and diverging expectations, requirements and demands from regulators, investors and other stakeholders, including with respect to environmental, social, governance and sustainability matters, which could expose us to numerous risks.
Removed paragraphs (26)
Previous report
•Our entry into new markets is subject to risks normally associated with the conduct of business in foreign countries.
Previous report
•We have had two restatements and seven material weaknesses in our internal control over financial reporting over the last six years.
Previous report
Our acquisition strategy may not be successful, and we have in the past, and may in the future, need to write down the goodwill and indefinite-lived intangible assets recognized upon the acquisitions.
Previous report
In the second quarter of 2021, we wrote off all of the goodwill and substantially all of the indefinite-lived intangible assets recognized upon the acquisition of our former U.S. operating subsidiaries, in the second quarter of 2023, we announced plans to cease our U.S. hemp operations and in the first quarter of 2024, the Company ceased operations at the Cronos Fermentation Facility. Acquisitions of companies or equity interests of companies operating in new markets are risky and speculative and may not produce the anticipated revenues and profits.
Previous report
Our acquisition of the PharmaCann Option (the “PharmaCann Investment”) presents significant risks. For example, in the second quarter of 2024, we reduced the net book value of the PharmaCann Option to zero. For more information on risks associated with the PharmaCann Investment, see “Risk Factors—Risks Relating to Our Growth Strategy—Our U.S. strategy in part depends on the success of the PharmaCann Investment and there is no guarantee that we will exercise the PharmaCann Option in the near term, or at all, and, even if exercised, that the PharmaCann Investment will achieve the expected benefits of the transaction.”
Previous report
As of the date of our settlement with the SEC (the “SEC Order”), October 24, 2022, and for a period of three years thereafter, we are unable to rely on the safe harbor provisions regarding forward-looking statements provided by the Securities Act and the Exchange Act. Our inability to rely on these safe harbor provisions may expose us to increased future litigation in connection with forward-looking statements in our public disclosures.
Previous report
In the case of the Ginkgo Strategic Partnership, we have, pursuant to the Ginkgo Collaboration Agreement, the exclusive right to use and commercialize the key patented intellectual property related to the production of the target cannabinoids globally (referred to herein as the “Ginkgo Exclusive Licenses”). We have determined, and may determine in the future, that the production of certain cannabinoids is not economically feasible and in our best interests, and we have abandoned production efforts at the Cronos Fermentation Facility. Even if we are able to commercialize cultured cannabinoids in the future, we may not be able to generate satisfactory returns on them or on the products that incorporate them, and there may not be demand for such cultured cannabinoid products. Furthermore, there can be no assurance that Ginkgo will be able to develop microorganisms that we will be able to commercialize or to obtain patents relating to production of the target cannabinoids, or that third parties will not develop similar microorganisms or obtain patents that may restrict our ability to commercialize the microorganisms developed by Ginkgo, and, as a result, there can be no assurance that we would be able to realize the expected benefits of or continue the Ginkgo Strategic Partnership.
Previous report
In addition, pursuant to the Ginkgo Collaboration Agreement, if we undergo a change of control that is approved by the Board, Ginkgo may elect to receive cash payments, which, given the number of Equity Milestone Events (as defined in the Ginkgo Collaboration Agreement) that have occurred to date, could total up to $15.8 million, in lieu of the common shares that would otherwise become issuable in connection with any Equity Milestone Events achieved following such election (the “Milestone Cash Election”). If we undergo a change in control that has not been approved by the Board, then Ginkgo will have the ability to terminate the Ginkgo Collaboration Agreement immediately, in which case, among other things: (i) all rights or licenses granted to us by Ginkgo under the Ginkgo Collaboration Agreement will terminate; (ii) certain expenses and costs incurred by Ginkgo will be accelerated and become due and payable by us; (iii) the then-outstanding and unpaid portion of all cash payments from us to Ginkgo for the achievement of R&D milestones by Ginkgo shall be due immediately as if all R&D milestones had been achieved; and (iv) a lump sum cash payment equal to the aggregate of all Milestone Cash Election amounts in respect of which the relevant Equity Milestone Events have not yet been achieved will be immediately due and payable by us. In addition, should Ginkgo terminate the Ginkgo Collaboration Agreement upon a change of control, we will no longer be able to use or commercialize the key patented intellectual property related to the production of the target cannabinoids, which could have a material adverse effect on our business, financial condition and results of operations. See “Description of Business—Research and Development Activities and Intellectual Property.”
Previous report
If additional equity milestones occur under the Ginkgo Collaboration Agreement, we are required by accounting rules to conduct an impairment analysis related to the new Ginkgo Exclusive Licenses. These analyses have in the past and may in the future, result in impairment charges. For a discussion of our most recent impairments of the Ginkgo Exclusive Licenses, see Note 8 “Goodwill and Intangible Assets, net” to the consolidated financial statements in Item 8 of this Annual Report.
Previous report
We may not be successful in executing our strategy to expand production capacity at certain of our facilities (including the Peace Naturals Campus) and joint ventures. Continuing and expanding operations at our facilities and joint ventures will be subject to obtaining and maintaining the appropriate licenses from the relevant regulatory agencies in those jurisdictions. In particular, continuing and expanding operations at Cronos GrowCo’s production facilities will be subject to obtaining and maintaining the appropriate licenses from Health Canada. Construction delays or cost over-runs in respect of such operations, howsoever caused, could have a material adverse effect on our business, financial condition and results of operations. There is no guarantee that Cronos GrowCo’s expansion strategy (including receiving such required Health Canada or other regulatory approvals, licenses and permits in a timely fashion, if at all) will be completed in the currently proposed form, or at all, or that Cronos GrowCo will be able to maintain its margins and efficiency as it expands.
Previous report
Moreover, as a result of changes in the nature of our operations at the Peace Naturals Campus, the continued operations of the Cronos GrowCo Facility has become more important to us. The Cronos GrowCo Facility is our principal source of raw materials.
Previous report
In the first quarter of 2022, we announced our Realignment to centralize functions under common leadership to increase efficient distribution of resources, improve strategic alignment and eliminate duplication of roles and costs; evaluate our global supply chain and perform product reviews and pricing and distribution optimization in order to reduce fixed expenses and reduce complexity; and implement an operating expense target to optimize cash deployment for activities such as margin accretive innovation and U.S. adult-use cannabis market entry in the future. Additionally, we announced a plan to leverage our strategic partnerships to improve supply chain efficiencies and reduce manufacturing overhead by partially exiting the Peace Naturals Campus. The sale and leaseback of the Peace Naturals Campus was ultimately terminated pursuant to its terms during the second quarter of 2024; we plan to continue and expand operations at the Peace Naturals Campus.
Previous report
In the second quarter of 2023, we announced the exit of our U.S. operations. In the third quarter of 2023, we announced the cessation of operations at the Cronos Fermentation Facility and our intention to list the Cronos Fermentation Facility for sale. During the first quarter of 2024, we ceased operations at the Cronos Fermentation Facility. There can be no assurance that we will be able to sell the Cronos Fermentation Facility within an acceptable time frame or for an acceptable price.
Previous report
In the second quarter of 2024, we announced the Cronos GrowCo Transaction. There can be no assurance that the Cronos GrowCo Transaction, including the expansion of Cronos GrowCo’s purpose-built cultivation and processing facilities, will be completed in an acceptable time frame or at a reasonable cost, nor that it will improve the cultivation operations, capacity and efficiency of Cronos GrowCo.
Previous report
For example, following the Cronos GrowCo Transaction, we consolidate the results of operations of Cronos GrowCo in our consolidated financial statements. We could face difficulty in integrating the systems and processes of Cronos GrowCo, including accounting systems, internal controls over financial reporting, and other financial and administrative functions. Likewise, Cronos GrowCo could experience challenges in conforming to our accounting standards, procedures and policies. Any of these items could adversely affect our business, financial condition and results of operations.
Previous report
Our employees, including certain members of our management, operate from our offices located in Gan Shmuel, Israel. While our facilities have not been damaged by the war, rocket, missile and drone attacks continue, and our facilities could be damaged or destroyed. Imports into Israel have been severely affected by the Middle East Conflict, and we may be unable to import materials into Israel. Further, our sales have been, and likely will continue to be, adversely affected by the Middle East Conflict.
Previous report
A period of sustained inflation across the markets in which we operate could result in higher operating costs and reduce our profitability. Despite efforts we may take to reduce the impact of inflation on our business across the markets in which we operate, it could become increasingly difficult to effectively mitigate the increases to our costs. In addition, the effects of inflation on consumers’ budgets could result in the reduction of our customers’ spending on our products.
Previous report
In addition, international trade and diplomatic tensions, including trade disputes and tariffs, may impact our existing business and future opportunities. For example, on February 1, 2025, the U.S. government announced a 25% tariff on product imports from Mexico and Canada and a 10% additional tariff on product imports from China. On February 3, 2025, the prospective tariffs on Canada and Mexico were deferred for 30 days, though the implementation of these additional tariffs remains possible beyond the current short-term reprieve. The 10% additional tariff on all imports from China went into effect, and on February 4, 2025, China retaliated with various levels of tariffs on certain products imported into that country from the U.S. If tariffs are implemented and maintained among countries in which we do business or source raw materials or product components (including the U.S.), tariffs and the potential escalation of trade disputes generally could pose a significant risk to our business and results of operations, including due to fluctuations in exchange rates. The resulting impact of tariffs on general economic conditions and exchange rates and on our business are uncertain and depend on various factors, such as negotiations between affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions we take to adapt to tariffs or trade restrictions may cause us to modify our operations or forgo business opportunities.
Previous report
We may experience breaches of security at our facilities, which may expose us to the loss of inventory and risks related to violations of applicable laws and regulations.
Previous report
Given the nature of our products and the concentration of inventory in our facilities and the Cronos GrowCo Facility, we are subject to the risk of theft. A security breach at one of our facilities could expose us to additional scrutiny from regulators, increased expenses and business disruptions relating to the resolution and future prevention of these breaches.
Previous report
Finally, we seek to protect our germplasm, hybrids and varieties from accidental release, theft, misappropriation and sabotage by maintaining physical security of our premises and through contractual rights with our employees and certain of our suppliers, independent contractors, consultants and licensees. However, such security measures may be insufficient or breached, and our employees, independent contractors, consultants and licensees may engage in the inadvertent disclosure, theft, misappropriation or sabotage. We may not have adequate remedies in the case of any such security breach, inadvertent disclosure, theft, misappropriation or sabotage.
Previous report
Should we or our joint ventures fail to comply with the requirements of the licenses, or should they not be extended or renewed by the applicable regulatory authorities, or should they be renewed on different terms (including not allowing for anticipated capacity increases) or should the licenses be revoked, the business, financial condition and results of our and our joint ventures’ operations will be materially adversely affected. There is no assurance that we or our joint ventures will be able to obtain necessary permits or licenses on commercially reasonable terms or within expected time periods, if at all.
Previous report
In recent years, there has been an increase in private litigation that seeks, among other things, relief for consumers, class action certifications, class wide damages and recalls of products. We have been subject to such litigation and may be subject to additional private class action litigation. Any actions against us by governmental authorities or private litigants could have a material and adverse effect on our business, financial condition, operating results, liquidity, cash flow and operational performance.
Previous report
•our restating financial results twice in the last six years;
Previous report
We may be required to issue additional common shares pursuant to the Ginkgo Collaboration Agreement. Pursuant to the Ginkgo Collaboration Agreement, upon Ginkgo’s demonstration that the microorganisms they develop are capable of producing certain target cannabinoids above a minimum productivity level, we will issue to Ginkgo up to approximately 14.7 million common shares in the aggregate. To date, we have issued approximately 7.1 million common shares to Ginkgo in respect of certain Equity Milestone Events that have occurred. Additional tranches of common shares will be issued if and when additional Equity Milestone Events are reached. The issuance of such common shares, if any, would dilute holders of our common shares. In addition, Altria has pre-emptive rights to subscribe for additional common shares in us following any issuances we make to Ginkgo pursuant to the Ginkgo Collaboration Agreement, and the issuance of such common shares, if any, would further dilute holders of our common shares.
Previous report
Our business faces evolving and diverse expectations, requirements and demands from regulators, investors and other stakeholders, including with respect to environmental, social, governance and sustainability matters, which could expose us to numerous risks.
Reworded paragraphs (120)
Previous wording
An investment in us involves a number of risks. In addition to the other information contained in this Annual Report and in other filings we make, investors should give careful consideration to the following risk factors. Any of the matters highlighted in these risk factors could adversely affect our business, results of operations and financial condition, causing an investor to lose all, or part of, its, his or her investment. The risks and uncertainties described below are those we currently believe to be material, but they are not the only ones we face. If any of the following risks, or any other risks and uncertainties that we have not yet identified or that we currently consider not to be material, actually occur or become material risks, our business, prospects, financial condition, results of operations and cash flows and consequently the price of our securities could be materially and adversely affected.
Current wording
An investment in us involves a number of risks. In addition to the other information contained in this Annual Report and in other filings we make, investors should give careful consideration to the following risk factors. Any of the matters highlighted in these risk factors could adversely affect our business, results of operations and financial condition, causing an investor to lose all, or part of, its, his or her investment. The risks and uncertainties described below are those we currently believe to be material, but they are not the only ones we face. If any of the following risks, or any other risks and uncertainties that we have not yet identified or that we currently consider not to be material, actually occur or become material, our business, prospects, financial condition, results of operations and cash flows and consequently the price of our securities could be materially and adversely affected.
Previous wording
•The production and distribution of our products is subject to disruption, the risks of an agricultural business and the risk third-party suppliers and distributors may not perform their obligations to us.
Current wording
•The production and distribution of our products is subject to disruption as a result of risks inherent to agricultural operations and our reliance on third-party suppliers and distributors.
Previous wording
•Our businesses face highly competitive conditions, including from the illegal cannabis market and licensed cannabis competitors that fail to comply with applicable regulations.
Current wording
•Our business faces highly competitive conditions, including from the illegal cannabis market and licensed cannabis competitors that fail to comply with applicable regulations.
Previous wording
•Our business may be negatively impacted by the Middle East Conflict or the imposition of an anti-dumping duty on our imports into Israel.
Current wording
•Our business may be negatively impacted by the Middle East Conflict or the imposition of an anti-dumping duty or other restrictions on our imports into Israel.
Previous wording
We have incurred significant losses in recent periods and have had negative operating cash flow for five of the last six fiscal years. We may not be able to achieve or maintain profitability and may continue to incur significant losses in the future even in light of our Realignment, the change in the nature of operations at the Peace Naturals Campus, the exit of our U.S. operations, the cessation of our operations at the Cronos Fermentation Facility and the Cronos GrowCo Transaction. In addition, we expect to continue to incur significant operating expenses as we implement initiatives to continue to grow our business. If our revenues do not increase to offset these expected costs and operating expenses, we will not be profitable. If our revenue declines or fails to grow at a rate faster than our operating expenses, we will not be able to achieve and maintain profitability in future periods. As a result, we may continue to generate losses. We may not achieve profitability in the future and, even if we do become profitable, we might not be able to sustain that profitability.
Current wording
We have incurred significant losses in recent periods and have had negative operating cash flow for four of the last six fiscal years. We may not be able to achieve or maintain profitability and may continue to incur significant losses in the future. In addition, we expect to continue to incur significant costs and operating expenses as we implement initiatives to grow our business. If our revenue declines or fails to grow at a rate faster than our operating expenses, we will not be able to achieve and maintain profitability in future periods. As a result, we may continue to generate losses. We may not achieve profitability in the future and, even if we do become profitable, we might not be able to sustain that profitability.
Previous wording
We are currently in an early development stage and may be subject to growth-related risks, including capacity constraints and pressure on our internal systems and controls, which may place significant strain on our operational and managerial resources. While our revenue has generally grown in recent years, our ability to manage and sustain revenue growth will depend on a number of factors, many of which are beyond our control, including, but not limited to, changes in laws and regulations respecting the production of cannabis products, competition from other license holders, the size of the illegal market and the adult-use market in Canada and the other markets in which we sell, and our ability to produce sufficient volumes of our products to meet customer demand. Our ability to manage growth effectively will require us to continue to implement and improve our operational and financial systems and to expand, train and manage our employee base. There can be no assurances that we will be able to manage growth successfully. Any inability to manage growth successfully could have a material adverse effect on our business, financial condition and results of operations.
Current wording
Our business has evolved and may continue to evolve as we adjust our operating footprint, expand in select markets, and implement operational and strategic initiatives. Our ability to manage changes in our business and sustain our growth will depend on a number of factors, many of which are beyond our control, including, but not limited to, changes in laws and regulations respecting the production of cannabis products, competition from other license holders, the size of the illegal market and the adult-use market in Canada and the other markets in which we sell or distribute, our ability to produce sufficient volumes of our products to meet customer demand, our ability to continue to implement and improve our operational and financial systems and controls, and our ability to expand, train and manage our employee base. There can be no assurances that we will be able to manage changes in our business or sustain our growth successfully. Any inability to manage changes in our business or sustain our growth could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
Our use of joint ventures may expose us to risks associated with jointly owned investments.
Current wording
Our use of joint ventures exposes us to risks associated with jointly owned investments.
Previous wording
We currently operate parts of our business through joint ventures with other companies, and we may enter into additional joint ventures and strategic alliances in the future. Joint venture investments may involve risks not otherwise present for investments made solely by us, including: (i) we may not control the joint ventures, either by virtue of our economic or legal ownership share, or our ability to influence day-to-day operational decision-making; (ii) our joint venture partners may not agree to distributions that we believe are appropriate; (iii) where we do not have substantial decision-making authority, we may experience impasses or disputes with our joint venture partners on certain decisions, which could require us to expend additional resources to resolve such impasses or disputes, including litigation or arbitration; (iv) our joint venture partners may become insolvent or bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner; (v) the arrangements governing our joint ventures may contain certain conditions or milestone events that may never be satisfied or achieved; (vi) our joint venture partners may have business or economic interests that are inconsistent with ours and may take actions contrary to our interests; (vii) we may suffer losses as a result of actions taken by our joint venture partners with respect to our joint venture investments; (viii) it may be difficult for us to exit a joint venture if an impasse arises or if we desire to sell our interest for any reason; (ix) our joint venture partners may exercise termination rights under the relevant agreements and (x) conflicts of interest may arise between our joint ventures and Company personnel who are directors of our joint ventures because of the fact that such directors are employed by us. Certain of these risks have materialized in the past. In addition, we may, in certain circumstances, be liable for the actions of our joint ventures or joint venture partners. Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations, and the magnitude of these material adverse effects could be greater to the extent we decide to rely on such joint ventures for certain goods or services, such as the receipt of raw materials from Cronos GrowCo, or decide to outsource certain operating activities to such joint ventures.
Current wording
We currently operate parts of our business through joint ventures with other companies, and we may enter into additional joint ventures and strategic alliances in the future. Joint venture investments involve risks not otherwise present for investments made solely by us, including: (i) we may not control the joint ventures, either by virtue of our economic or legal ownership share, or our ability to influence day-to-day operational decision-making; (ii) our joint venture partners may not agree to distributions that we believe are appropriate; (iii) where we do not have substantial decision-making authority, we may experience impasses or disputes with our joint venture partners on certain decisions, which could require us to expend additional resources to resolve such impasses or disputes, including litigation or arbitration; (iv) our joint venture partners may become insolvent or bankrupt, fail to fund their share of required capital contributions or otherwise fail to fulfill their obligations as a joint venture partner; (v) the arrangements governing our joint ventures may contain certain conditions or milestone events that may never be satisfied or achieved; (vi) our joint venture partners may have business or economic interests that are inconsistent with ours and may take actions contrary to our interests; (vii) we may suffer losses as a result of actions taken by our joint venture partners with respect to our joint venture investments; (viii) it may be difficult for us to exit a joint venture if an impasse arises or if we desire to sell our interest for any reason; (ix) our joint venture partners may exercise termination rights under the relevant agreements and (x) conflicts of interest may arise between our joint ventures and Company personnel who are directors of our joint ventures because of the fact that such directors are employed by us. Certain of these risks have materialized in the past. In addition, we may, in certain circumstances, be liable for the actions of our joint ventures or joint venture partners. Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations, and the magnitude of these material adverse effects could be greater to the extent we decide to rely on such joint ventures for certain goods or services, such as the receipt of raw materials from Cronos GrowCo, or decide to outsource certain operating activities to such joint ventures.
Previous wording
While our revenue in Israel has experienced periods of significant growth, our prior performance is not indicative of any potential future results in Israel. The Middle East Conflict has created significant uncertainty with respect to our operations in Israel and may materially and adversely affect our sales and other activities in Israel. There can be no assurance that our growth in the Israeli market can be sustained or will continue. Our ability to manage and sustain revenue growth in Israel will depend on a number of factors, many of which are beyond our control, including, but not limited to, the impact of, and developments in, the Middle East Conflict on our operations, our ability to continue to import cannabis into Israel (including the outcome of the Anti-Dumping Investigation initiated by the Israel Ministry of Economy and Industry, see Part II, Note 12(b) “Contingencies” to the consolidated financial statements under Item 8 of this Annual Report for further details), changes in laws and regulations respecting the cultivation, production, marketing and sale of medical cannabis products in Israel, growth of the medical cannabis patient count in Israel, increased competition, our ability to produce sufficient volumes of our products to meet customer demand and our ability to maintain or grow our market share in Israel. Any of these factors could materially and negatively impact our growth in Israel.
Current wording
Our prior performance in Israel is not indicative of any potential future results in Israel. The Middle East Conflict has created significant uncertainty with respect to our operations in Israel and may materially and adversely affect our sales and other activities in Israel. There can be no assurance that our growth in the Israeli market can be sustained or will continue. Our ability to manage and sustain revenue growth in Israel will depend on a number of factors, many of which are beyond our control, including, but not limited to, the impact of, and developments in, the Middle East Conflict on our operations, our ability to continue to import cannabis into Israel (including the outcome of the Anti-Dumping Investigation initiated by the Israel Ministry of Economy and Industry, see Part II, Note 12(b) “Contingencies” to the consolidated financial statements under Item 8 of this Annual Report for further details), changes in laws and regulations respecting the cultivation, production, marketing and sale of medical cannabis products in Israel, growth of the medical cannabis patient count in Israel, increased competition, our ability to produce sufficient volumes of our products to meet customer demand and our ability to maintain or grow our market share in Israel. Any of these factors could materially and negatively impact our growth in Israel.
Previous wording
We have begun to further leverage our strategic joint venture with Cronos GrowCo. Our revised plans for the Peace Naturals Campus as well as the Company’s intention to pursue a sale of the Cronos Fermentation Facility, the completion of the Cronos GrowCo Transaction and entry into the Cronos GrowCo Supply Agreement have increased the importance of Cronos GrowCo to our business and operations. Cronos GrowCo’s production facilities are our principal source of raw materials. Therefore, our performance in Israel is reliant on our ability to acquire sufficient raw materials on a timely and cost-effective basis from Cronos GrowCo and to continue to import such raw materials and cannabis products to Israel from Cronos GrowCo’s production facilities. Though the Company provided an approximately $51 million secured non-revolving credit facility to Cronos GrowCo to fund the expansion of Cronos GrowCo’s cultivation and processing facilities (such area, the “Phase 2 Expansion Area”), there is no guarantee that we will be able to successfully execute our strategy to expand production at Cronos GrowCo or that we will be able to obtain the regulatory approvals, licenses and permits required for both the export of cannabis from Canada and the import of cannabis into Israel. Further, there can be no assurance that the Anti-Dumping Investigation will not result in the imposition of an anti-dumping duty on us or limit our imports into Israel, the impact of which could have a material adverse effect on our business in Israel.
Current wording
We have begun to further leverage our strategic joint venture with Cronos GrowCo. Our revised plans for the Peace Naturals Campus as well as the completion of the Cronos GrowCo Transaction and entry into the Cronos GrowCo Supply Agreement have increased the importance of Cronos GrowCo to our business and operations. Cronos GrowCo’s production facilities are our principal source of raw materials. Therefore, our performance in Israel is reliant on our ability to acquire sufficient raw materials on a timely and cost-effective basis from Cronos GrowCo and to continue to import such raw materials and cannabis products to Israel from Cronos GrowCo’s production facilities. There is no guarantee that we will be able to obtain the regulatory approvals, licenses and permits required for both the export of cannabis from Canada and the import of cannabis into Israel. Further, there can be no assurance that the Anti-Dumping Investigation will not result in the imposition of an anti-dumping duty on us or limit our imports into Israel, or that other trade restrictions will not limit our imports into Israel, the impact of which could have a material adverse effect on our business in Israel.
Previous wording
We have had two restatements and seven material weaknesses in our internal control over financial reporting over the last six years. We have experienced significant turnover, both voluntary and involuntary, in our accounting and financial reporting functions, as well as in our internal audit function. If we are unable to create and maintain an appropriate control environment, our business, results of operations, financial condition, cash flows and reputation will be adversely affected.
Current wording
We have had multiple restatements and material weaknesses in our internal control over financial reporting in the past. We have experienced significant turnover, both voluntary and involuntary, in our accounting and financial reporting functions, as well as in our internal audit function. If we are unable to create and maintain an appropriate control environment, our business, results of operations, financial condition, cash flows and reputation will be adversely affected.
Previous wording
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) and for evaluating and reporting on the effectiveness of our system of internal control. Effective internal control is necessary for us to provide timely, reliable and accurate financial reports, identify and proactively correct any deficiencies, material weaknesses or fraud and meet our reporting obligations. We had two restatements and seven material weaknesses in the last six years and have had significant turnover, both voluntary and involuntary, in our accounting and financial reporting functions as well as in our internal audit function. Moreover, we had a material weakness in our control environment existing as of December 31, 2022. Remediation efforts placed a significant burden on management and added increased pressure on our financial reporting resources and processes. The accuracy of our financial reporting and our ability to timely file with the SEC and the applicable securities regulatory authorities in Canada have in the past been, and may in the future be, adversely impacted if any additional material weaknesses in our internal control over financial reporting are identified. In addition, if additional material weaknesses or significant deficiencies in our internal control occur in the future, we could be required to restate our financial statements again, which could materially and adversely affect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weaknesses, subject us to regulatory investigations and penalties, harm our reputation, cause a decline in investor confidence or otherwise cause a decline in our stock price.
Current wording
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) and for evaluating and reporting on the effectiveness of our system of internal control. Effective internal control is necessary for us to provide timely, reliable and accurate financial reports, identify and proactively correct any deficiencies, material weaknesses or fraud and meet our reporting obligations. Our financial reporting processes also rely in part on third-party information technology systems and service providers, including systems used for accounting, consolidation and reporting. Disruptions, failures, delays, or deficiencies in these systems or in the performance of third-party service providers could impair our ability to maintain effective internal control over financial reporting or timely prepare and file our financial statements.
Previous wording
Further, as of the date of the SEC Order, we have lost our status as a “well-known seasoned issuer” for a period of three years, which places limitations on the manner in which we can market our securities to the public, and we are unable to rely on the private offering exemptions provided by Regulations A and D under the Securities Act for a period of five years, which could impair our ability to raise additional capital in the private market quickly in response to changing requirements and market conditions.
Current wording
As of the date of our settlement with the SEC (the “SEC Order”), October 24, 2022, and for a period of five years thereafter, we are unable to rely on the private offering exemptions provided by Regulations A and D under the Securities Act, which could impair our ability to raise additional capital in the private market quickly in response to changing requirements and market conditions.
Previous wording
There can be no assurance that our current and future strategic alliances or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations.
Current wording
There can be no assurance that our current and future strategic alliances or expansions of existing relationships will have a beneficial impact on our business, financial condition and results of operations.
Previous wording
We currently have, and may in the future enter into additional, strategic alliances with third parties that we believe will complement or augment our existing business. Our ability to complete strategic alliances is dependent upon, and may be limited by, the availability of suitable candidates and capital. In addition, strategic alliances could present unforeseen integration or operational obstacles or costs, could lead to or exacerbate product or supply shortages that could impact other markets in which we operate, may not enhance our business and may involve risks that could adversely affect us, including significant amounts of management time that may be diverted from operations in order to pursue and complete such transactions or maintain such strategic alliances. Future strategic alliances could result in the incurrence of debt, costs and contingent liabilities, and there can be no assurance that future strategic alliances will achieve, or that our existing strategic alliances will achieve, the expected benefits to our business or that we will be able to consummate future strategic alliances on satisfactory terms, or at all. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
Current wording
We currently have, and may in the future enter into, strategic alliances with third parties that we believe will complement or augment our existing business. Our ability to complete strategic alliances is dependent upon, and may be limited by, the availability of suitable candidates and capital. In addition, strategic alliances could present unforeseen integration or operational obstacles or costs, could lead to or exacerbate product or supply shortages that could impact other markets in which we operate, may not enhance our business and may involve risks that could adversely affect us, including significant amounts of management time that may be diverted from operations in order to pursue and complete such transactions or maintain such strategic alliances. Future strategic alliances could result in the incurrence of debt, costs and liabilities, and there can be no assurance that strategic alliances will achieve the expected benefits to our business or that we will be able to consummate future strategic alliances on satisfactory terms or at all. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
Under the Cronos GrowCo Supply Agreement, which governs our commercial arrangement with Cronos GrowCo, our option to purchase cannabis biomass from Cronos GrowCo is subject to fixed pricing. In the event of a decline in the wholesale market price of cannabis biomass, we may choose not to exercise our option to purchase biomass from Cronos GrowCo at the fixed prices set forth in the Cronos GrowCo Supply Agreement. Instead, we may attempt to purchase such biomass at the prevailing market price from Cronos GrowCo or third parties. If we decline to exercise our option to purchase biomass from Cronos GrowCo, Cronos GrowCo would be under no obligation to sell to us at such lower market prices. Additionally, if we attempt to purchase biomass from third parties, there can be no assurance that we will be able to do so on a consistent basis or in the quantities, strains, grades and qualities we require.
Current wording
Under the Cronos GrowCo Supply Agreement, which governs our commercial arrangement with Cronos GrowCo, our option to purchase cannabis biomass from Cronos GrowCo is subject to fixed pricing. If wholesale market prices decline, we may choose not to exercise our option to purchase biomass at the fixed prices and instead seek to purchase such biomass at the prevailing market price from Cronos GrowCo or third parties. However, if we do not exercise our option, Cronos GrowCo would be under no obligation to sell to us at such lower market prices, and there can be no assurance that third-party suppliers will be able to provide biomass on a consistent basis or in the quantities, strains, grades and qualities we require. Similarly, if wholesale cannabis prices increase materially, our fixed-price purchasing arrangement with Cronos GrowCo may negatively impact the results of its operations, create economic misalignment between Cronos and Cronos GrowCo, and adversely affect long-term supply availability, reliability, and our consolidated financial results. As a result, wholesale price volatility could adversely affect our cost structure, supply reliability, and results of operations.
Previous wording
We are anticipating further shortages in raw materials and may be unable to obtain adequate supplies of raw materials in a timely manner and at commercially reasonable prices.
Current wording
We may be unable to obtain adequate supplies of raw materials in a timely manner and at commercially reasonable prices.
Previous wording
Our production operations require that we obtain adequate supplies of raw materials, particularly biomass, on a timely basis, at commercially reasonable prices and in the quantities, strains, grades and qualities that we require. From time to time, including presently, there have been shortages of raw materials. Industry-wide shortages in the supply of raw materials could result in industry-wide raw material price adjustments and shortages.
Current wording
Our production operations require that we obtain adequate supplies of raw materials, particularly biomass, on a timely basis, at commercially reasonable prices and in the quantities, strains, grades and qualities that we require. From time to time there have been shortages of raw materials. Industry-wide shortages in the supply of raw materials could result in industry-wide raw material price adjustments and shortages.
Previous wording
Cronos GrowCo’s production facilities are our principal source of raw materials. Therefore, our production operations are reliant on our ability to acquire such raw materials from Cronos GrowCo on a timely, cost-effective basis and in the quantities, strains, grades and qualities we require. If Cronos GrowCo is unable to meet our needs for raw materials (including by not producing the quantities, strains, grades and qualities of biomass that we anticipate in our forecasts, as well as being unable to meet demand in excess of our previous forecasts), we may be, and have in the past been, required to source additional supply from third parties.
Current wording
Cronos GrowCo’s production facilities are our principal source of raw materials. Therefore, our production operations are reliant on our ability to acquire such raw materials from Cronos GrowCo on a timely, cost-effective basis and in the quantities, strains, grades and qualities we require. If Cronos GrowCo is unable to meet our needs for raw materials on a timely, cost-effective basis and in the quantities, strains, grades and qualities we require (which may exceed forecasts), we may be, and have in the past been, required to source additional supply from third parties, and we may not be able to do so on a timely basis at commercially reasonable prices or in the quantities, strains, grades and qualities we require.
Previous wording
We may not be able to find third-party suppliers capable of supplying raw materials on a timely basis at commercially reasonable prices or in the quantities, strains, grades and qualities we require. If we are unable to secure the necessary raw materials, we may experience product shortages and delays, we may be unable to launch new products and we may be required to discontinue certain products, which could have a material adverse effect on our business, financial condition and results of operations. Product shortages, discontinuations or delays could result in customers listing fewer of our products, our failure to maintain or grow our market share and reputational damage, which could materially and adversely affect our results of operations, financial condition, business and prospects.
Current wording
If we are unable to secure the raw materials we require, we may experience product shortages and delays, be unable to launch new products, and be required to discontinue certain products. Any such disruptions could result in fewer product listings, impact our market share, and cause reputational damage, which could materially and adversely affect our results of operations, financial condition, business and prospects.
Previous wording
Cronos GrowCo’s production facilities are our principal source of raw materials. In addition to various termination rights under the Cronos GrowCo Supply Agreement, following an initial four-year term, the Cronos GrowCo Supply Agreement is subject to automatic renewal for successive one-year periods unless either party provides notice of non-renewal. In the event of non-renewal or termination of the Cronos GrowCo Supply Agreement, we would be required to source cannabis biomass from third parties or negotiate a new supply agreement with Cronos GrowCo, and we may not be able to do so on a timely basis at commercially reasonable prices or in the quantities we require. If we are unable to secure the necessary raw materials, we may experience product shortages and delays, we may be unable to launch new products and we may be required to discontinue certain products, which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
Cronos GrowCo’s production facilities are our principal source of raw materials. In addition to various termination rights under the Cronos GrowCo Supply Agreement, following an initial four-year term, the Cronos GrowCo Supply Agreement is subject to automatic renewal for successive one-year periods unless either party provides notice of non-renewal. In the event of non-renewal or termination of the Cronos GrowCo Supply Agreement, we would be required to source cannabis biomass from third parties or negotiate a new supply agreement with Cronos GrowCo, and we may not be able to do so on a timely basis at commercially reasonable prices or in the quantities, strains, grades and qualities we require. Any disruption to our access to raw materials could result in product shortages, delays, and discontinuations and limitations on product launches, which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
We may not successfully execute our production capacity strategy.
Current wording
We may not successfully execute or sustain our production capacity strategy.
Previous wording
Cronos GrowCo’s ability to continue the cultivation of cannabis biomass at its current rate or at all, and its ability to increase its cultivation capacity and production, including in connection with the construction of its Phase 2 Expansion Area, may be affected by a number of factors, including plant design errors, non-performance by third party contractors, increases in material or labor costs, cost overruns, construction delays and challenges, performance falling below expected levels of output or efficiency, weather conditions, contractor or operator errors or disruption, breakdowns, aging or failure of equipment or processes, labor disputes, as well as factors specifically related to indoor agricultural and processing practices, such as reliance on provision of energy and utilities to the facility. Such factors may also affect Cronos GrowCo’s cost of cultivation and production.
Current wording
Cronos GrowCo’s ability to operate at its current production levels and optimize output, margins and efficiency following expansion may be affected by a number of factors, including regulatory requirements, labor availability and costs, weather conditions, operational errors, aging or failure of equipment or processes and labor disputes, as well as factors specifically related to indoor agricultural and processing practices, such as reliance on provision of energy and utilities to the facility, and other factors beyond our control. These factors may adversely affect yields, quality, operating costs, or supply reliability.
Previous wording
In addition, we may not be successful in obtaining the necessary approvals required to export or import our products to or from the jurisdictions in which we or our joint ventures operate. If we are unable to secure necessary production licenses in respect of our facilities and those of our joint ventures, the expectations of management with respect to the increased future cultivation and growing capacity may not be borne out, which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
In addition, our ability to realize the benefits of our production capacity strategy may be affected by our ability to obtain the necessary approvals required to export or import our products to or from the jurisdictions in which we or our joint ventures operate. If we are unable to secure necessary approvals or permits, our production capacity strategy may not be realized, which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
As a result of our decision to cease operations at the Cronos Fermentation Facility, we no longer have the internal capacity to produce rare cannabinoids through the fermentation process developed with Ginkgo. To the extent we continue to utilize rare cannabinoids in our products, we may be required to engage third-party suppliers and we may not be able to find third-party suppliers capable of producing rare cannabinoids at commercially viable prices or in the quantities we require. If we are unable to secure the necessary rare cannabinoids, we may experience product shortages and delays and we may be unable to launch new products, which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
We no longer have the internal capacity to produce rare cannabinoids through the fermentation process developed with Ginkgo. As we continue to utilize rare cannabinoids in our products, we are engaged with third-party suppliers capable of producing rare cannabinoids at commercially viable prices or in the quantities we require. If we are unable to secure the necessary rare cannabinoids from third-party suppliers, we may experience product shortages and delays and we may be unable to launch new products, which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
There can be no assurance that the Realignment, the modification of our operations at the Peace Naturals Campus, the exit of our U.S. operations, the cessation of operations at the Cronos Fermentation Facility and the Cronos GrowCo Transaction will have a beneficial impact on our business, financial condition and results of operations. The timing, costs and benefits thereof cannot be guaranteed.
Current wording
There can be no assurance that recent operational and strategic initiatives will have a beneficial impact on our business, financial condition and results of operations. The timing, costs and benefits thereof cannot be guaranteed.
Previous wording
There can be no assurance that these initiatives will achieve the expected benefits to our business or reduce costs or grow our revenue as intended and, if achieved at all, the timing thereof. The execution and implementation of these initiatives involve risk, including that significant amounts of management’s time and Company resources could be diverted from our core operations in order to complete such initiatives. Some risks, are outside of our control. In addition, these initiatives could present unforeseen obstacles, lead to operating inefficiencies and negatively disrupt our corporate culture, which could lead to further employee attrition, any of which would have a material adverse effect on our business, financial condition and results of operations. We have and will continue to incur costs to implement these initiatives, and we could be subject to litigation risks and expenses. Our projected costs and expenses associated with the changes in operations described above may turn out to be too low by a material amount.
Current wording
There can be no assurance that these initiatives will achieve the expected benefits on a timely basis or at all. The execution and implementation of these initiatives involve risk, including that significant amounts of management’s time and Company resources could be diverted from our core operations and other risks, some of which are outside of our control. In addition, these initiatives could present unforeseen obstacles, lead to operating inefficiencies, negatively disrupt our corporate culture and lead to further employee attrition, which could have a material adverse effect on our business, financial condition and results of operations. We have and may continue to incur costs to implement these initiatives (including costs in excess of projections), and we could be subject to litigation risks and expenses related to these initiatives.
Previous wording
The industries and markets in which we operate are relatively new, and these industries and markets may not continue to exist or grow as anticipated or we may ultimately be unable to succeed in these industries and markets.
Current wording
The industries and markets in which we operate are relatively new and may not continue to exist or grow as anticipated, and we may ultimately be unable to succeed in these industries and markets.
Previous wording
The medical and adult-use cannabis industries and markets in which we operate are relatively new, are highly speculative, are rapidly expanding and may ultimately not be successful. In addition to being subject to general business risks, we need to continue to build brand awareness in these markets through significant investments in our strategy, our production capacity, quality assurance and compliance with regulations. These activities may not promote our brands and products as effectively as intended, or at all. Competitive conditions (including competition from the illicit market) and consumer tastes, as applicable, and spending patterns in these new industries and markets are relatively unknown and may have unique circumstances that differ from existing industries and markets. We are subject to all of the business risks associated with a new business in a niche market, including risks of unforeseen capital requirements, failure of widespread market acceptance of our products, failure to establish business relationships and competitive disadvantages against larger and more established competitors.
Current wording
The medical and adult-use cannabis industries and markets in which we operate are relatively new, highly speculative, rapidly expanding, and may ultimately not continue to exist or grow. We build brand awareness in these markets through significant investments in our strategy, production capacity, quality assurance, and compliance with regulations. These activities may not promote our brands and products as effectively as intended, or at all. Competitive conditions (including from the illicit market), consumer preferences and behavior in these industries and markets are relatively unpredictable and may differ from existing industries and markets. We are subject to all of the business risks associated with a niche market, including unforeseen capital requirements, market acceptance of our products, business relationship risks, and competitive disadvantages against larger and more established competitors.
Previous wording
Accordingly, there are no assurances that these markets will continue to exist or grow as currently anticipated, or function and evolve in a manner consistent with management’s expectations and assumptions, and a failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Current wording
Accordingly, there are no assurances that these markets will continue to exist, grow, function, and evolve as currently anticipated, and a failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
We may not be able to supply the purchasers in various provinces and territories of Canada with our products in the quantities or prices anticipated, or at all.
Current wording
We may not be able to supply the purchasers in various provinces and territories of Canada with our products in the quantities or prices anticipated, or at all, due to the discretion such purchasers have over purchasing, pricing, and product listings.
Previous wording
We have entered into supply arrangements with all provinces in Canada (where the relevant provincial body is the sole wholesale distributor of cannabis products in the province, except for Manitoba where we have also entered into a distribution agreement with a MBLL authorized cannabis distributor) and the Yukon territory and with private retailers in Saskatchewan. Our supply arrangements with provincial and territorial purchasers do not contain any binding minimum purchase obligations on the part of the relevant provincial or territorial purchaser.
Current wording
We have entered into supply arrangements with all provinces in Canada (where the relevant provincial body is the sole wholesale distributor of cannabis products in the province, except for Manitoba where we have also entered into a distribution agreement with a Manitoba Liquor & Lotteries Corporation authorized cannabis distributor) and the Yukon territory and with private retailers in Saskatchewan.
Previous wording
We expect purchase orders to be primarily driven by end-consumer demand for our products and the relevant provincial, territorial or private purchaser supply at the relevant time. Accordingly, we cannot predict the quantities of our products that will be purchased by the provincial, territorial and private purchasers, or if our products will be purchased at all. Provincial and territorial purchasers may change the terms of the supply agreements at any time during the supply relationship including pricing, have broad rights of return of products and are under no obligation to purchase our products or maintain any listings of our products for sale. As a result, provincial and territorial purchasers have a significant amount of control over the terms of the supply arrangements. Furthermore, provincial and territorial purchasers may also decide to ban, limit or implement new guidance on the types of cannabis products permitted for sale in each of their jurisdictions (including in response to Health Canada’s guidance on intoxicating cannabinoids) which may result in some or all of our products being viewed as non-compliant with law or non-binding policy guidance.
Current wording
These supply arrangements do not contain any binding minimum purchase obligations on the part of the relevant provincial or territorial purchaser. Purchase orders are primarily driven by end-consumer demand for our products and the relevant purchaser’s supply. Accordingly, we cannot predict the quantities of our products that will be purchased by the provincial, territorial and private purchasers, or if our products will be purchased at all.
Previous wording
Numerous additional cannabis producers have and may continue to enter the Canadian adult-use market. We and such other cannabis producers have in the past produced and may in the future produce more cannabis than is needed to satisfy aggregate demand of the Canadian medical and adult-use markets, and we have in the past, and may in the future, be unable to export that over-supply into other markets. As a result, the available supply of cannabis could exceed demand, which has in the past, and may in the future, result in significant inventory write downs and decreases in market prices.
Current wording
Numerous cannabis producers operate in the Canadian adult-use market. Cannabis producers have in the past produced and may in the future produce more cannabis than is needed to satisfy aggregate demand of the Canadian medical and adult-use markets, and we have in the past, and may in the future, be unable to export that over-supply into other markets. As a result, the available supply of cannabis could exceed demand, which has in the past, and may in the future, result in significant inventory write downs and decreases in market prices.
Previous wording
We face competition from existing license holders under the Cannabis Act. Certain of these competitors may have significantly greater financial, production, marketing, R&D and technical and human resources than we do. As a result, our competitors may be more successful than us in gaining market share. Our commercial opportunity could be reduced or eliminated if our competitors produce and commercialize products that, among other things, are safer, more effective, more convenient or less expensive than the products that we may produce, have greater sales, marketing and distribution support than our products, enjoy enhanced timing of market introduction and perceived effectiveness advantages over our products and receive more favorable publicity than our products. If our products do not achieve an adequate level of acceptance by the market, we may not generate sufficient revenue from these products, and our business may not become profitable.
Current wording
We face competition from existing license holders under the Cannabis Act. Certain of these competitors may have significantly greater financial, production, marketing, R&D, technical and human resources than we do, which may allow them to achieve greater economies of scale, invest more heavily in brand development, and respond more quickly to changing consumer preferences. As a result, our competitors may be more successful than us in gaining or maintaining market share.
Previous wording
We are exposed to the risk that our employees, independent contractors, manufacturers and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or engaging in unauthorized activities that violate: (i) applicable laws and regulations; (ii) manufacturing standards; (iii) federal and provincial healthcare fraud and abuse of federal, state and provincial laws and regulations; or (iv) laws and regulations that require the true, complete and accurate reporting of financial information or data. It is not always possible for us to identify and deter misconduct by our employees and other third parties, and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are brought against us, and we are not successful in defending them, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, loss or suspension of licenses and the curtailment of our operations, any of which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
We are exposed to the risk that our employees, independent contractors, manufacturers and consultants may engage in fraudulent, improper or otherwise illegal activity. Such misconduct could include intentional, reckless and/or negligent violations of: (i) applicable laws and regulations; (ii) manufacturing standards; (iii) federal and provincial healthcare fraud and abuse of federal, state and provincial laws and regulations; or (iv) laws and regulations that require the true, complete and accurate reporting of financial information or data. It is not always possible for us to identify and deter such misconduct within a reasonable time or at all, and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are brought against us, and we are not successful in defending them, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, loss or suspension of licenses and the curtailment of our operations, any of which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
Our U.S. strategy in part depends on the success of the PharmaCann Investment and there is no guarantee that we will exercise the PharmaCann Option in the near term, or at all, and, even if exercised, that the PharmaCann Investment will achieve the expected benefits of the transaction.
Current wording
Our U.S. strategy in part depends on the success of the PharmaCann Investment and there is no guarantee that we will exercise the PharmaCann Option in the near term, or at all, and, even if exercised, that the PharmaCann Investment will achieve the expected benefits of the PharmaCann Investment.
Previous wording
In addition, the regulatory approval processes in connection with the exercise of the PharmaCann Option may take a prolonged period of time to complete, which could significantly delay our ability to exercise the PharmaCann Option and realize the benefits of the PharmaCann Investment or result in our not being able to exercise all or part of the PharmaCann Option. Furthermore, in connection with obtaining approvals from or otherwise satisfying the requests of the state regulators or applicable laws, we may be required to divest all or a portion of the PharmaCann Option, or if after the exercise of the PharmaCann Option, our shares of PharmaCann.
Current wording
In addition, the regulatory approval processes in connection with the exercise of the PharmaCann Option may take a prolonged period of time to complete, which could significantly delay our ability to exercise the PharmaCann Option and realize the benefits of the PharmaCann Investment or result in our not being able to exercise all or part of the PharmaCann Option. Furthermore, in connection with obtaining approvals from or otherwise satisfying the requests of the state regulators or applicable laws, we may be required to divest all or a portion of the PharmaCann Option (or shares from the exercise thereof).
Previous wording
Even if we are able to and do exercise the PharmaCann Option, the intended benefits of the PharmaCann Investment may not be realized. We cannot assure you that the PharmaCann Investment will be accretive to us in the near term or at all. For example, if entered into, the commercial arrangements between us and PharmaCann may not be successful or beneficial to us. In December 2024, Innovative Industrial Properties, Inc. (“IIP”) disclosed that PharmaCann had defaulted on its obligations to pay rent under several lease agreements with IIP. If PharmaCann’s financial condition does not improve, it will have a material adverse impact on the value of the PharmaCann investment. If we fail to realize the intended benefits of the PharmaCann Investment, our stock price could decline to the extent that the market price anticipates those benefits.
Current wording
Even if we are able to and do exercise the PharmaCann Option, the intended benefits of the PharmaCann Investment may not be realized within the expected timeframe or at all. There can be no assurance that the PharmaCann Investment will be accretive to us in the near term or at all. Any commercial arrangements between us and PharmaCann may not be successful or beneficial. For example, in December 2024 and March 2025, Innovative Industrial Properties, Inc. (“IIP”) disclosed that PharmaCann had defaulted on its obligations to pay rent under several lease agreements with IIP. Though certain of the defaults have since been resolved, PharmaCann’s financial condition and results of operations may not improve or may continue to deteriorate, and the value of the
Previous wording
We are entitled to certain limited governance rights with respect to PharmaCann, including limited information rights and board observer rights. Therefore, we will have little to no ability to influence the strategy and material decisions of PharmaCann’s business. Furthermore, until such time as we exercise the PharmaCann Option, we will not have the ability to vote on matters requiring the vote of PharmaCann’s shareholders. In addition, we are subject to certain standstill restrictions, both prior to and after the exercise of the PharmaCann Option, which restrictions further limit our ability to influence decisions of PharmaCann.
Current wording
We have only limited governance, information and board observer rights with respect to PharmaCann. As a result, we will have little to no ability to influence PharmaCann’s strategy, operations, or other material business decisions. Furthermore, until such time as we exercise the PharmaCann Option, we will not have the ability to vote on matters requiring the vote of PharmaCann’s shareholders, and even following any exercise of the PharmaCann Option, our ability to influence PharmaCann may remain limited. In addition, we are subject to certain standstill restrictions, both prior to and after the exercise of the PharmaCann Option, which limit our ability to influence decisions of PharmaCann.
Showing the first 40 of 120 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
We have had multiple restatements and material weaknesses in the past and significant turnover, both voluntary and involuntary, in our accounting, financial reporting and internal audit functions. Remediation efforts placed a significant burden on management and added increased pressure on our financial reporting resources and processes.
Current report — wording carried from elsewhere
The accuracy of our financial reporting and our ability to timely file with the SEC and the applicable securities regulatory authorities in Canada have in the past been, and may in the future be, adversely impacted by material weaknesses or significant deficiencies in our internal control over financial reporting. Restatement of our financial statements due to material weaknesses or significant deficiencies could materially and adversely affect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weaknesses or significant deficiencies, subject us to regulatory investigations and penalties, harm our reputation, cause a decline in investor confidence or otherwise cause a decline in our stock price.
Current report — wording carried from elsewhere
Provincial and territorial purchasers may change the terms of the supply agreements at any time during the supply relationship, including pricing, may terminate such supply agreements at their election, have broad rights of order cancellation and return of products, and are under no obligation to purchase our products or maintain any listings of our products for sale. As a result, provincial and territorial purchasers have a significant amount of control over the terms of the supply arrangements. Provincial and territorial purchasers have in the past and may in the future choose to stop purchasing Cronos products.
Current report — wording carried from elsewhere
Furthermore, provincial and territorial purchasers may decide to ban, limit or implement new guidance on the types of cannabis products permitted for sale in each of their jurisdictions (including in response to Health Canada’s guidance on intoxicating cannabinoids) which may result in some or all of our products being viewed as non-compliant with law or non-binding policy guidance.
Current report — wording carried from elsewhere
Our intellectual property that has not yet been applied for or registered may otherwise become known to, be independently developed by or be the subject of applications for intellectual property registrations filed by our competitors, which could have a material adverse effect on our ability to protect or enforce our rights.
Current report — wording carried from elsewhere
Public speculation regarding the likelihood, timing or effects of rescheduling has contributed to, and may continue to contribute to, significant volatility in the market for our common stock. To the extent that market speculation results in an increase in the price of our stock, our stock price could decline significantly thereafter if market expectations are not realized or regulatory developments are delayed, modified or reversed or investor optimism fades.
Current report — wording carried from elsewhere
Canada or any province thereof, or investing in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
We may not be able to successfully manage our growth.
Previous report — wording carried elsewhere
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including changes in inflation, interest rates, trade policy and overall economic conditions.
Previous report — wording carried elsewhere
There can be no assurance that our systems and processes for overseeing and identifying cybersecurity risks will prevent or timely detect a cybersecurity incident. We rely on third-party service providers to assist with these measures. We and our third-party service providers may not have the resources or technical sophistication to anticipate, prevent, respond to, or mitigate cyberattacks or cybersecurity breaches or incidents, and we or they may face difficulties or delays in identifying and responding to cyberattacks, cybersecurity breaches and incidents.
Previous report — wording carried elsewhere
We may be unable to attract or retain employees with sufficient experience in the cannabis industry, and may prove unable to attract, develop and retain additional employees required for our development and future success.