Cronos Group announces streamlined operating structure to improve cash flow
June 1, 2023 By Grow Opportunity Staff
(Globe Newswire) — Cronos Group Inc., an innovative global cannabinoid company, announced its decision to streamline its operating structure by winding down and exiting its existing U.S. hemp-derived CBD-focused operations by the end of the second quarter of 2023. Cronos has made this decision to improve its cash flow in the near term and position itself to directly enter the U.S. THC market when the necessary changes in U.S. regulatory conditions occur.
Consequently, beginning with the second quarter of 2023, the company intends to report its financial results under one consolidated segment and will no longer report the U.S. and Rest of World as separate segments. Cronos is also increasing its previously announced 2023 operating expense savings target from a range of $10 to $20 million to a new range of $20 to $25 million, partially due to its decision to wind down and exit its existing U.S. operations.
In connection with the exit of its existing U.S. operations, Cronos expects to incur expenses in the second quarter of 2023, of up to $1.8 million comprised of inventory write-offs, severance and other employee costs, and asset impairment charges.
“We believe that one day, the U.S. will be one of the most important cannabis markets in the world. But we also believe our resources are best spent on staying laser-focused on becoming cash flow positive by driving cost savings and process efficiencies for our borderless adult-use products. We have the best balance sheet in the cannabis industry, with $836 million in cash and short-term investments and zero debt as of March 31, 2023. Achieving our goal to generate positive cash flow in 2024 will advance our industry-leading cash balance and put us in the best position to win in the U.S. once regulatory conditions change.” — Mike Gorenstein, chairman, president and CEO, Cronos
The company is committed to maximizing the value of its global branded product portfolio. It anticipates bringing the Lord Jones® brand back to its adult-use roots by launching it in the Canadian market in the fourth quarter of 2023. Cronos will continue to invest in R&D and product development in Canada to keep building our portfolio of borderless products across categories to equip us for when the U.S. THC market opens.
“We’re looking forward to continuing the legacy and reputation of the Lord Jones® brand by bringing it across the border to Canada. The Lord Jones® brand will offer high-quality, differentiated adult-use products, elevating the consumer experience through its original and unique brand proposition.” — Jeff Jacobson, chief growth officer, Cronos
Cronos’ adult-use brand, Spinach®, is currently the number-3 ranked cannabis brand in Canada and is currently the only cannabis brand in Canada that is top-10 in all categories it participates in, which includes the number-1 ranking in the gummies category, during the first quarter of 2023 according to HiFyre data. Cronos looks forward to utilizing its brand-building strength across both the Spinach® and Lord Jones® brands in Canada.
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