Mr. Mike Gorenstein reports

CRONOS GROUP REPORTS 2023 FIRST QUARTER RESULTS

Cronos Group Inc. has released its 2023 first quarter business results. "I am encouraged by our results across categories in Canada as we are defending our leading position in edibles and climbing market share ranks in other critical product categories," said Mike Gorenstein, Chairman, President and CEO, Cronos. "We intend to build off the strength of our number one position in edibles and utilize our borderless gummy platform for new innovative introductions, including additional rare cannabinoids and flavor profiles throughout 2023. The pre-roll category is a top focus for our team this year, and we are pleased by the early results of our infused pre-rolls and the encouraging progression of our base business. What you see on the market today from us in pre-rolls is just the beginning."

"Optimizing the returns of our industry-leading cash balance has also been a priority for us as we are in a great position to take advantage of the higher rate environment, especially given we have no debt," continued Mr. Gorenstein. "You are now starting to see the higher interest income flow through our income statement, which is an underappreciated component of our company. Additionally, looking forward to the balance of 2023, we are on track to achieve the high end of the projected $10 to $20 million in cash operating expense savings we announced in February and are committed to further improvements as we target to be cash flow positive in 2024."

First Quarter 2023

Net revenue of $20.1 million in Q1 2023 decreased by $4.9 million from Q1 2022. The decrease was primarily due to lower cannabis flower sales in the Rest of World ("ROW") segment and a decline in revenue in the U.S. segment. ROW segment net revenue was also impacted by the weakened Canadian dollar and Israeli Shekel against the U.S. dollar. Higher cannabis extract sales in Canada partially offset these results.

Gross profit of $2.4 million in Q1 2023 decreased by $4.5 million from Q1 2022. The decrease was primarily driven by reduced gross profit in the ROW segment due to lower cannabis flower sales in Israel, an adverse price/mix shift in cannabis flower sales in Canada, increased returns, and a reduction in gross profit in the U.S. segment. Higher cannabis extract sales in Canada with a higher margin profile than other product categories and lower cannabis biomass costs partially offset these results.

Adjusted EBITDA of $(16.8) million in Q1 2023 improved by $2.1 million from Q1 2022. The improvement year-over-year was primarily driven by decreases in general and administrative expenses and research and development expenses due to the Company's cost savings initiatives.

Business Updates

Guidance and Outlook

Net revenue for full-year 2023 is expected to be between $100 to $110 million. Additionally, the Company is on track to achieve the high-end of the previously identified $10 to $20 million in operating expense savings for 2023, primarily driven by savings in sales and marketing, general and administrative, and research and development.

Cronos anticipates that cash flow, defined as the net change in cash and cash equivalents, excluding the impact of the purchase or proceeds of short-term investments, for the last nine months of fiscal year 2023 will decline less than $25 million. The Company also expects that cash flow will be positive in 2024.

This guidance assumes: (i) the Company will experience relatively consistent foreign exchange and interest rates; (ii) the general economic conditions and regulatory environment in the markets in which Cronos participates will not materially change; (iii) timely receipt of interest and principal payments on the GrowCo senior secured credit facility; (iv) anticipated interest income of approximately $30 million for the last nine months of fiscal year 2023; (v) continued gross margin improvement; and (vi) continued reductions in operating expenses.

These statements are forward-looking and actual results may differ materially. Refer to "Forward-Looking Statements" below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Brand and Product Portfolio

The Spinach(TM) brand continued to hold its number one market share position in the edibles category in Canada in Q1 2023. According to Hifyre data, Spinach(TM) products held an approximate 15.3% market share in the edibles category expanding to approximately 21.9% within the gummy category alone across the SOURZ by Spinach(TM) and Spinach FEELZ(TM) sub-brands.

Cronos bolstered its infused pre-roll portfolio under the Spinach FEELZ(TM) sub-brand with two new rare cannabinoid infused pre-rolls: (i) the Spinach FEELZ(TM) Mango Kiwi Haze THC:CBC pre-roll infused with high potency cold filtered extract with 32% THC and 5% CBC for a clean and uplifting high; and (ii) the Spinach FEELZ(TM) Blackberry Kush THC:CBN (Deep Dreamz) pre-roll, infused with high potency cold filtered extract with 32% THC and 5% CBN for a mellow and dreamy high.

Cronos' strong breeding program and portfolio of genetics continued to drive growth. In April 2023, Cronos built on the early success of its Sonic Lemon Fuel strain by expanding it into the pre-roll category with a 3x0.5g 20-26% THC offering under the Spinach(TM) brand. In addition to the pre-rolls, Sonic Lemon Fuel is available in 28g and 3.5g flower formats. The Spinach(TM) brand rose to 8th place in the pre-roll category, capturing a 2.5% market share in Q1 2023, up from 16th place and a 1.4% market share in Q4 2022.

Expanding on the success with CBC in edibles and the recent launch in pre-rolls, the Spinach FEELZ(TM) sub-brand added CBC to its vape portfolio with the introduction of Spinach FEELZ(TM) Mango Kiwi Haze 7:1 THC:CBC 1-gram vape.

The Israeli medical market has recently been challenged by competitive activity, a slowdown in patient permit authorizations, and geopolitical unrest. Despite these near-term challenges, Cronos remains committed and optimistic about the future in this important cannabis market. While patient permit authorization growth has been relatively stagnant for the last quarter, the Company believes there is a high likelihood for regulatory change that can accelerate the growth of the patient count in Israel. Cronos continues to invest in its operation, distribution, and marketing efforts to deliver the best-in-class genetics and products under the PEACE NATURALS(TM) brand.

Global Supply Chain

In April 2023, Cronos released its first cannabinoid life cycle study highlighting sustainable fermentation practices. The third-party reviewed results showed that the environmental footprint of growing plants indoors is high, and using innovative fermentation processes is a solution that dramatically lowers the environmental impact of cannabinoid production. On average, the carbon footprint savings of using Cronos' fermentation method is 99.8% compared to traditional extraction methods.

Cronos Growing Company Inc. ("Cronos GrowCo") reported to the Company preliminary unaudited net revenue to licensed producers, excluding sales to the Company, of approximately $3.2 million in the first quarter of 2023. Cronos previously provided GrowCo with a senior secured credit facility, which currently has approximately $73.2 million outstanding following a principal repayment of $0.7 million by GrowCo in Q1 2023. In addition to principal repayment, Cronos also received $5.5 million in interest payments from GrowCo in Q1 2023, totaling approximately $6.2 million in cash payments to Cronos in Q1 2023.

Rest of World Results

Cronos' ROW reporting segment includes results of the Company's operations for all markets outside of the U.S.

First Quarter 2023

Net revenue of $19.5 million in Q1 2023 decreased by $3.2 million from Q1 2022. The decrease was primarily due to lower cannabis flower sales in Israel due to competitive activity, the slowdown in patient permit authorizations, and geopolitical unrest. Net revenue in Canada was impacted by adverse price/mix in the flower category driving increased excise tax payments as a percent of revenue, and increased returns. The weakened Canadian dollar and Israeli Shekel against the U.S. dollar also impacted ROW net revenue. Higher cannabis extract sales in Canada partially offset these results.

Gross profit of $2.9 million in Q1 2023 decreased by $3.8 million from Q1 2022. The decrease was primarily due to lower cannabis flower sales in Israel, an adverse price/mix shift in cannabis flower sales in Canada due to the higher mix of 28-gram offerings and increased returns. Increased cannabis extract sales in Canada with a higher margin profile than other product categories and lower cannabis biomass costs partially offset these results.

United States Results

Cronos' U.S. reporting segment includes results of the Company's operations for all brands and products in the U.S.

First Quarter 2023

Net revenue of $0.6 million in Q1 2023 decreased by $1.7 million from Q1 2022. The decrease was primarily driven by a reduction in sales as a result of a decrease in promotional spending and SKU rationalization efforts as the Company implemented the Realignment in the U.S. segment.

Gross profit of $(0.5) million in Q1 2023 decreased by $0.8 million from Q1 2022. The decrease was primarily due to lower sales volumes and higher inventory reserves.

Conference Call

The Company will host a conference call and live audio webcast on Tuesday, May 9, 2023, at 8:30 a.m. ET to discuss 2023 First Quarter business results. An audio replay of the call will be archived on the Company's website for replay. Instructions for the live audio webcast are provided on the Company's website at https://ir.thecronosgroup.com/events-presentations .

About Cronos

Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos is building an iconic brand portfolio. Cronos' diverse international brand portfolio includes Spinach(TM), PEACE NATURALS(TM) and Lord Jones(TM). For more information about Cronos and its brands, please visit: thecronosgroup.com.

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