Cronos Group Inc

Current report

The Audit Committee of the Board has approved the engagement of Davidson & Company LLP (“D&C”) as our independent auditors and our shareholders approved that appointment at our 2024 Annual Meeting. D&C have advised us that they intend to complete the work necessary to review our third quarter financial statements. However, D&C have just commenced their work and there can be no assurance that they will be able to complete the required work on a timely basis to permit the filing of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 within the SEC’s required time-frame.

Current report

We are anticipating 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 report

Our production operations require that we obtain adequate supplies of raw materials, particularly biomass, on a timely basis and at commercially reasonable prices. From time to time, including presently, there have been and are now 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 report

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 on a timely and cost-effective basis from Cronos GrowCo. If Cronos GrowCo is unable to meet our needs for raw materials, we may be required to source additional supply from third parties.

Current report

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 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 report

If raw material shortages cause industry-wide prices of raw materials to rise, our costs would increase. To the extent that we are unable to offset such costs through higher prices of our products or other cost savings, our results of operations, financial condition, business and prospects could be materially and adversely affected.

Current report

The imposition of an anti-dumping duty on our imports into Israel could have a material adverse effect on our business, financial condition and results of operations.

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 July 9, 2024, the Commissioner announced a preliminary determination proposing to impose an anti-dumping duty on Canadian licensed producers. The Company would be subject to a proposed duty of 369%. If the Minister of Economy issues a final decision to impose an anti-dumping duty to which the Company’s imports would be subject, our ability to continue to import raw materials and cannabis products into Israel from Cronos GrowCo, the performance of our business in Israel, and our results of operations, financial condition, business and prospects could be materially and negatively impacted.

Previous report

KPMG LLP, our current independent registered public accounting firm, has informed us that it will not stand for re-appointment for the Company’s 2024 annual audit and that it will review our financial statements only for the first and second fiscal quarters of 2024. If our process to appoint a new auditor is delayed and we are unable to appoint a new auditor in time for the new auditor to review our financial statements for the third fiscal quarter of 2024, we will be unable to comply with our periodic reporting obligations under the Exchange Act and Canadian securities laws and timely file our public filings with the SEC and Canadian securities regulators. Our ability to timely retain a new auditor is not within our control; it depends on, among other things, how many auditors participate in our request for proposal process, the qualifications of the submitting firms and the amount of work the new auditor will need to perform to conduct a review of our third-quarter financial statements. No assurance can be given that we will retain an auditor in time to review our third-quarter financial statements.