Cronos Group Inc. to Cease Hemp-Based CBD Operations in the U.S. and Focus on Cash Flow and Future THC Market Entry

TORONTO– Canadian cannabis company Cronos Group Inc. has revealed plans to discontinue its hemp-derived CBD operations in the United States by the end of the second quarter of this year. The decision is aimed at bolstering the company’s cash flow in the near term while positioning itself for direct entry into the U.S. THC market once regulatory conditions allow.

The move is part of a broader strategy by Cronos to enhance cash flow and streamline its operations. By focusing its resources on cost savings and process efficiencies, the company aims to become cash flow positive and further develop its borderless adult-use product offerings. Cronos’ chairman, president, and CEO, Mike Gorenstein, expressed the belief that the U.S. will eventually become one of the most significant cannabis markets globally.

As part of the restructuring, Cronos announced that starting in the second quarter of this year, it will consolidate its financial reporting under a single segment, no longer separating the U.S. and the rest of the world. This change reflects the company’s efforts to simplify its operations and align with its evolving business priorities.

Furthermore, Cronos has raised its operating expense savings target for 2023 from the initial range of $10 to $20 million to a new range of $20 to $25 million. This increase is partially attributed to the decision to wind down and exit its existing operations in the United States.

By strategically focusing on cash flow improvement and preparing for the potential opening of the U.S. THC market, Cronos Group Inc. aims to position itself for long-term success and capitalize on future opportunities in the rapidly evolving cannabis industry.