Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38403 | |
Entity Registrant Name | CRONOS GROUP INC. | |
Entity Incorporation, State or Country Code | Z4 | |
Entity Address, Address Line One | 720 King St. W., Suite 320 | |
Entity Address, City or Town | Toronto | |
Entity Address, State or Province | ON | |
Entity Address, Postal Zip Code | M5V 2T3 | |
City Area Code | 416 | |
Local Phone Number | 504-0004 | |
Title of 12(b) Security | Common Shares, no par value | |
Trading Symbol | CRON | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 348,823,936 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001656472 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | |
Current assets | |||
Cash and cash equivalents | $ 1,128,396,000 | $ 1,199,693,000 | |
Short-term investments | 206,230,000 | 306,347,000 | |
Accounts receivable | [1] | 3,404,000 | 4,638,000 |
Other receivables | 7,642,000 | 7,232,000 | |
Current portion of loans receivable | 3,911,000 | 4,664,000 | |
Prepaids and other assets | 11,079,000 | 9,395,000 | |
Inventory | 43,118,000 | 38,043,000 | |
Total current assets | 1,403,780,000 | 1,570,012,000 | |
Investments in equity accounted investees | 1,089,000 | 557,000 | |
Advances to joint ventures | 17,079,000 | 19,437,000 | |
Loan receivable, net | 54,147,000 | 44,967,000 | |
Property, plant and equipment | 154,164,000 | 161,809,000 | |
Right-of-use assets | 10,379,000 | 6,546,000 | |
Intangible assets | 72,599,000 | 72,320,000 | |
Goodwill | 214,689,000 | 214,794,000 | |
Total assets | 1,927,926,000 | 2,090,442,000 | |
Current liabilities | |||
Accounts payable and other liabilities | 34,290,000 | 35,301,000 | |
Current portion of lease obligation | 1,057,000 | 427,000 | |
Derivative liabilities | 166,176,000 | 297,160,000 | |
Total current liabilities | 201,523,000 | 332,888,000 | |
Due to non-controlling interests | 1,681,000 | 1,844,000 | |
Lease obligation | 9,454,000 | 6,680,000 | |
Total liabilities | 212,658,000 | 341,412,000 | |
Commitments and contingencies (Notes 19 and 20) | |||
Shareholders’ equity | |||
Share capital | [2] | 563,165,000 | 561,165,000 |
Additional paid-in capital | 25,483,000 | 23,234,000 | |
Retained earnings (accumulated deficit) | 1,213,686,000 | 1,137,646,000 | |
Accumulated other comprehensive income (loss) | (85,877,000) | 27,838,000 | |
Total equity attributable to shareholders of Cronos Group | 1,716,457,000 | 1,749,883,000 | |
Non-controlling interests | (1,189,000) | (853,000) | |
Total shareholders’ equity | 1,715,268,000 | 1,749,030,000 | |
Total liabilities and shareholders’ equity | $ 1,927,926,000 | $ 2,090,442,000 | |
[1] | Authorized for issuance as of March, 31 2020: unlimited (December 31, 2019 – unlimited). Shares issued as of March 31, 2020: 348,817,472 (as of December 31, 2019: 348,817,472) | ||
[2] | Net of current expected credit loss (“CECL”) of $141 as of March 31, 2020 (December 31, 2019 – $136) |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Current expected credit loss | $ 141 | $ 136 |
Common stock, shares issued (in shares) | 348,817,472 | 348,817,472 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net revenue, before excise taxes | $ 9,344,000 | $ 3,391,000 |
Excise taxes | (912,000) | (387,000) |
Net revenue | 8,432,000 | 3,004,000 |
Cost of sales | 6,946,000 | 1,449,000 |
Inventory write-down | 7,962,000 | 0 |
Gross profit (loss) | (6,476,000) | 1,555,000 |
Operating expenses | ||
Sales and marketing | 7,112,000 | 1,128,000 |
Research and development | 4,590,000 | 1,171,000 |
General and administrative | 23,759,000 | 7,293,000 |
Share-based payments | 2,436,000 | 1,771,000 |
Depreciation and amortization | 687,000 | 318,000 |
Total operating expenses | 38,584,000 | 11,681,000 |
Operating loss | (45,060,000) | (10,126,000) |
Other income (expense) | ||
Interest income | 7,751,000 | 2,087,000 |
Share of loss from investments in equity accounted investees | (1,172,000) | (198,000) |
Gain on revaluation of derivative liabilities (Note 11) | 113,368,000 | 328,216,000 |
Financing and transaction costs | 0 | (22,233,000) |
Other income | 794,000 | 16,243,000 |
Total other income | 120,741,000 | 324,115,000 |
Income before income taxes | 75,681,000 | 313,989,000 |
Income tax recovery (expense) | 0 | 0 |
Net income | 75,681,000 | 313,989,000 |
Net income (loss) attributable to: | ||
Cronos Group | 76,040,000 | 314,092,000 |
Non-controlling interests | (359,000) | (103,000) |
Net income | 75,681,000 | 313,989,000 |
Other comprehensive income (loss) | ||
Foreign exchange gain (loss) on translation | (113,692,000) | 3,898,000 |
Total other comprehensive income (loss) | (113,692,000) | 3,898,000 |
Comprehensive income (loss) | (38,011,000) | 317,887,000 |
Comprehensive income (loss) attributable to: | ||
Cronos Group | (37,675,000) | 317,987,000 |
Non-controlling interests | (336,000) | (100,000) |
Comprehensive income (loss) | $ (38,011,000) | $ 317,887,000 |
Net income per share | ||
Basic (in dollars per share) | $ 0.22 | $ 1.43 |
Diluted (in dollars per share) | $ 0.20 | $ 0.33 |
Weighted average number of outstanding shares | ||
Basic (in shares) | 348,817,472 | 218,949,590 |
Diluted (in shares) | 375,574,354 | 271,086,575 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Share capital | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Non-controlling interests |
Beginning balance (in shares) at Dec. 31, 2018 | 178,720,022 | |||||
Beginning balance at Dec. 31, 2018 | $ 148,549 | $ 175,001 | $ 11,263 | $ (27,945) | $ (9,870) | $ 100 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued (in shares) | 149,831,154 | |||||
Shares issued | 248,302 | $ 248,302 | ||||
Share issuance costs | (3,642) | $ (3,642) | ||||
Warrants exercised (in shares) | 4,390,961 | |||||
Warrants exercised | 888 | $ 1,417 | (529) | |||
Vesting of options | $ 1,771 | 1,771 | ||||
Options exercised (in shares) | 125,715 | 78,240 | ||||
Options exercised | $ (410) | $ 262 | (261) | (411) | ||
Net income (loss) | 313,989 | 314,092 | (103) | |||
Other comprehensive income (loss) | 3,898 | 3,895 | 3 | |||
Ending balance (in shares) at Mar. 31, 2019 | 333,020,377 | |||||
Ending balance at Mar. 31, 2019 | 713,345 | $ 421,340 | 12,244 | 285,736 | (5,975) | 0 |
Beginning balance (in shares) at Dec. 31, 2019 | 348,817,472 | |||||
Beginning balance at Dec. 31, 2019 | 1,749,030 | $ 561,165 | 23,234 | 1,137,646 | 27,838 | (853) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Vesting of options | 1,730 | 1,730 | ||||
Vesting of restricted share units | $ 706 | 706 | ||||
Options exercised (in shares) | 0 | |||||
Vesting of common shares issued in connection with the use of certain publicity rights in brand development | $ 1,813 | $ 2,000 | (187) | |||
Net income (loss) | 75,681 | 76,040 | (359) | |||
Other comprehensive income (loss) | (113,692) | (113,715) | 23 | |||
Ending balance (in shares) at Mar. 31, 2020 | 348,817,472 | |||||
Ending balance at Mar. 31, 2020 | $ 1,715,268 | $ 563,165 | $ 25,483 | $ 1,213,686 | $ (85,877) | $ (1,189) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net income (loss) | $ 75,681,000 | $ 313,989,000 |
Items not affecting cash: | ||
Inventory write-down | 7,962,000 | 0 |
Share-based payments | 2,436,000 | 1,771,000 |
Depreciation and amortization | 1,162,000 | 494,000 |
Share of net loss from investments in equity accounted investees | 1,172,000 | 198,000 |
Gain on revaluation of derivative liabilities (Note 11) | (113,368,000) | (328,216,000) |
Gain on disposal of other investments | (781,000) | (15,498,000) |
Loss (gain) on unrealized foreign exchange | (412,000) | 51,000 |
Provision for doubtful accounts | 2,068,000 | 0 |
Non-cash sales and marketing | 1,821,000 | 0 |
Other, net | (1,157,000) | (745,000) |
Net changes in non-cash working capital | (15,482,000) | 14,118,000 |
Cash flows used in operating activities | (38,898,000) | (13,838,000) |
Investing activities | ||
Purchase of short-term investments | (126,514,000) | 0 |
Proceeds from disposal of short-term investments | 206,847,000 | 0 |
Investments in equity accounted investees | 0 | (1,658,000) |
Proceeds from sale of other investments | 781,000 | 19,614,000 |
Advances to joint ventures | 0 | (11,893,000) |
Purchase of property, plant and equipment | (6,411,000) | (10,119,000) |
Payment of accrued interest on construction loan payable | 0 | (89,000) |
Purchase of intangible assets | (1,105,000) | (38,000) |
Advances on loans receivable | (14,512,000) | 0 |
Cash flows provided (used) in investing activities | 59,086,000 | (4,183,000) |
Financing activities | ||
Increase in bank indebtedness | 0 | 316,000 |
Advance from non-controlling interests | 0 | 84,000 |
Repayment of lease obligations | (448,000) | (23,000) |
Proceeds from Altria Investment | 0 | 1,809,556,000 |
Proceeds from exercise of warrants and options | 0 | 889,000 |
Withholding taxes paid on share appreciation rights | 0 | (411,000) |
Share issuance costs | 0 | (3,642,000) |
Repayment of construction loan payable | 0 | (15,971,000) |
Advance under Credit Facility | 0 | 48,715,000 |
Repayment of Credit Facility | 0 | (48,309,000) |
Cash flows provided (used) by financing activities | (448,000) | 1,791,204,000 |
Effect of foreign currency translation on cash and cash equivalents | (91,037,000) | 14,421,000 |
Increase (decrease) in cash and cash equivalents | (71,297,000) | 1,787,604,000 |
Cash and cash equivalents, beginning of period | 1,199,693,000 | 23,927,000 |
Cash and cash equivalents, end of period | 1,128,396,000 | 1,811,531,000 |
Supplemental cash flow information | ||
Interest paid | 7,000 | 507,000 |
Interest received | $ 7,758,000 | $ 0 |
Background
Background | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | Background Cronos Group Inc. (the “Cronos Group” or the “Company”) is a corporation incorporated on August 21, 2012 under the Business Corporations Act (Ontario) with principal executive offices at 720 King Street West, Suite 320, Toronto, Ontario, M5V 2T3. The Company’s common shares are currently listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.” Cronos Group is an innovative global cannabinoid company, with international production and distribution across five continents. The Company is committed to building disruptive intellectual property by advancing cannabis research, technology and product development and is building an iconic brand portfolio. Cronos Group’s brand portfolio includes PEACE NATURALS™, a global wellness platform; two adult-use brands, COVE™ and Spinach™; and two U.S hemp-derived consumer products brands, Lord Jones™ and PEACE+™. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Basis of Presentation The interim condensed consolidated financial statements of Cronos Group are unaudited. They have been prepared in accordance with U.S generally accepted accounting principles for interim financial information and with applicable rules and regulations of the Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any other quarterly period. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and related notes included in its Annual Report on Form 10-K/A for the year ended December 31, 2019 (the “Annual Financial Statements”). (b) Basis of Consolidation The accompanying financial statements include the accounts of the Company, and all entities in which the Company has a controlling voting interest and/or is the primary beneficiary of a variable interest as of and for the period presented. The Company consolidates the financial results of the following entities, which the Company controls: Subsidiaries Jurisdiction of Incorporation Incorporation Date Ownership Interest (ii) Cronos Israel G.S. Cultivations Ltd. (i) Israel February 4, 2018 70% Cronos Israel G.S. Manufacturing Ltd. (i) Israel September 4, 2018 90% Cronos Israel G.S. Store Ltd. (i) Israel June 28, 2018 90% Cronos Israel G.S. Pharmacies Ltd. (i) Israel February 15, 2018 90% (i) These Israeli entities are collectively referred to as “Cronos Israel.” (ii) “Ownership interest” is defined as the proportionate share of net income to which the Company is entitled; equity interest may differ from ownership interest as described herein. In the condensed consolidated statements of net income (loss) and comprehensive income (loss), the net income (loss) and comprehensive income (loss) are attributed to the equity holders of the Company and to the non-controlling interests. Non-controlling interests in the equity of Cronos Israel are presented separately in the shareholders’ equity (deficit) section of the condensed consolidated balance sheets and condensed consolidated statements of changes in equity (deficit). All intercompany transactions and balances are eliminated upon consolidation. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements (a) Adoption of new accounting pronouncements On January 1, 2020, the Company adopted ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU No. 2018-13”). ASU No. 2018-13 adds, modifies, and removes certain fair value measurement disclosure requirements. The adoption of this standard was applied prospectively and did not have a material impact on the Company’s condensed consolidated financial statements. On January 1, 2020, the Company adopted ASU No. 2018-15, Intangibles – Goodwill and Other Internal-use-software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU No. 2018-15”). ASU No. 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. The guidance in ASU No. 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The adoption of this standard was applied prospectively and did not have a material impact on the Company’s condensed consolidated financial statements. On January 1, 2020, the Company adopted ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”). ASU No. 2017-04 eliminates step 2 from the goodwill impairment test and instead requires an entity to measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceeds the reporting unit’s fair value. The guidance in ASU No. 2017-04 is effective for annual and interim goodwill tests completed by the Company beginning on January 1, 2020. The adoption of this standard was applied prospectively and the Company will follow a one-step model for goodwill impairment. (b) New accounting pronouncements not yet adopted In January 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). ASU No. 2020-01 clarifies the interaction of accounting for the transition into and out of the equity method. The new standard also clarifies the accounting for measuring certain purchased options and forward contracts to acquire investments. The guidance in ASU No. 2020-01 is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this ASU, but anticipates that the adoption will not have a material impact on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 eliminates certain exceptions and simplifies the application of U.S. GAAP-related to changes in enacted tax laws or rates and employee stock option plans. ASU No. 2019-12 is effective for annual and interim periods beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect of the adoption of this ASU, but anticipates that the adoption will not have a material impact on its condensed consolidated financial statements. |
Revenues from Contracts with Cu
Revenues from Contracts with Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts with Customers | Revenues from Contracts with Customers Cronos Group disaggregates net revenues based on product type. For further discussion, see Note 18. Receivables were $3,404 as of March 31, 2020 (December 31, 2019 – $4,638). The Company recorded a current expected credit loss allowance of $141 as of March 31, 2020 (December 31, 2019 – $136). Cronos Group offers discounts to customers for prompt payment and calculates cash discounts as a percentage of the list price based on historical experience and agreed-upon payment terms. Cronos Group records an allowance for cash discounts, which is included as a contra-asset against receivables on the Company’s condensed consolidated balance sheets. Revenue is measured net of returns. As a result, the Company is required to estimate the amount of returns based on the historical data by customer and product type, adjusted for forward-looking information. This is recorded as a provision against accounts receivable on the Company’s consolidated balance sheets. The Company estimates sales returns based principally on historical volume and return rates, as a reduction to revenues. The difference between actual sales and estimated sales returns is recorded in the period in which the actual amounts become known. These differences, if any, have not had a material impact on the Company’s condensed consolidated financial statements. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory is comprised of the following items: As of March 31, 2020 December 31, 2019 Raw materials $ 4,198 $ 2,469 Work-in-progress – dry cannabis 14,799 11,538 Work-in-progress – cannabis extracts 17,517 17,975 Finished goods – dry cannabis 3,312 1,798 Finished goods – cannabis extracts 2,564 2,624 Supplies and consumables 728 1,639 Total $ 43,118 $ 38,043 Inventory is written down for any obsolescence or when the net realizable value of inventory is less than the carrying value. For the three months ended March 31, 2020, the Company recorded write-downs related to inventory of $7,962. There were no inventory write-downs for the three months ended March 31, 2019. |
Investments and Advances to Joi
Investments and Advances to Joint Ventures | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments and Advances to Joint Ventures | Investments and Advances to Joint Ventures Variable Interest Entities The Company holds variable interests in Cronos Growing Company Inc. (“Cronos GrowCo”), Natuera S.à.r.l (“Natuera”) and MedMen Canada Inc. (“MedMen Canada”). Cronos GrowCo is a joint venture incorporated under the Canada Business Corporations Act (“CBCA”) on June 14, 2018 with the objective of building a cannabis production greenhouse, applying for cannabis licenses under the Cannabis Act (Canada), and growing, cultivating, extracting, producing and selling cannabis in accordance with such licenses. Cronos Group holds variable interests in Cronos GrowCo through its ownership of 50% of Cronos GrowCo’s common shares and senior secured debt in Cronos GrowCo. The Company has also agreed to purchase a minimum amount of Cronos GrowCo’s cannabis product annually, subject to Cronos GrowCo’s receipt of all applicable licenses and permits. Cronos GrowCo’s economic performance is driven by the quantity and strains of cannabis grown. The joint venture partners mutually determine the quantity and strains of cannabis grown. MedMen Canada is a joint venture incorporated under the CBCA on March 13, 2018, with the objective of the retail sale and marketing of cannabis products in Canada. MedMen Canada holds the exclusive license to the MedMen brand in Canada for a minimum term of 20 years. Cronos holds variable interests in MedMen Canada through its ownership of 50% of MedMen Canada’s common shares and other subordinated debt in the entity. MedMen Canada’s economic performance is driven by the quantity and strains of cannabis sold. Subject to applicable law, the joint venture partners mutually determine the quantity and strains of cannabis to be sold in MedMen Canada’s retail stores, if and when stores are opened. Natuera is a joint venture registered in Luxembourg with the objective of cultivating and commercializing medical cannabis to serve the export market. Cronos holds variable interests in Natuera through its ownership of 50% of Natuera’s common shares and other debt in the entity. Natuera’s economic performance is driven by the quantity and strains of cannabis to be grown. The joint venture partners mutually determine the quantity and strains of cannabis grown. The Company’s investments in Cronos GrowCo, Natuera and MedMen Canada are exposed to economic variability from each entity’s performance, however the Company does not consolidate the entities as it does not have the power to direct the activities that most significantly impact the joint ventures’ economic performance; thus, Cronos Group is not considered the primary beneficiary of the entity. These investments are accounted for as equity method investments classified as Investments in Equity Accounted Investees in the consolidated balance sheets. (a) Net investment in equity accounted investees A reconciliation of the carrying amount of the investments in associates and joint ventures is as follows: Carrying Amount Ownership % March 31, 2020 December 31, 2019 Whistler Medicinal Marijuana Company (“Whistler”) (i) N/A $ — $ — Cronos Australia (ii) 31% — (346) Cronos GrowCo 50% 1,089 1,501 MedMen Canada 50% — — Natuera 50% — (598) $ 1,089 $ 557 (i) Whistler was incorporated in British Columbia, Canada and is a license holder under the Cannabis Act (Canada) with production facilities in British Columbia, Canada. Although the Company held less than 20% of the ownership interest and voting control of Whistler, the Company had the ability to exercise significant influence through its power to elect board members. The Company fully divested its investment in Whistler during the three months ended March 31, 2019. (ii) On October 25, 2019, Cronos Australia issued 40 million new shares in an initial public offering at an offering price of A$0.50 per share. Cronos’ ownership in Cronos Australia decreased from 50% to 31% on November 7, 2019 when Cronos Australia began trading on the Australian Securities Exchange. This resulted in a reconsideration event, which required the reassessment of the Company’s VIE conclusion. Upon reconsideration, the Company determined that the entity was no longer a VIE as of December 31, 2019 and is now reported under the equity method. The Company’s share of net earnings (losses) from equity investments accounted for under the equity method of accounting: For the three months ended March 31, 2020 2019 Whistler $ — $ 29 Cronos Australia (i) — (244) Cronos GrowCo (311) 11 MedMen Canada — 6 Natuera (ii) (861) — $ (1,172) $ (198) (i) The Company’s share of accumulated net losses in excess of its equity investment and advances in Cronos Australia were $515 for the three months ended March 31, 2020 (March 31, 2019 – $nil). (ii) The Company’s share of accumulated net losses in excess of its equity investment in Natuera has been applied as a loss allowance on the loan receivable. See Note 6(b) and Note 10. (b) Advances to Joint Venture MedMen Canada (i) Cronos GrowCo Cronos Australia (ii) Natuera Total As of January 1, 2020 $ 471 $ 18,966 $ — $ — $ 19,437 Credit loss allowance — (917) — — (917) Effect from foreign exchange (36) (1,405) — — (1,441) As of March 31, 2020 $ 435 $ 16,644 $ — $ — $ 17,079 As of January 1, 2019 1,244 2,970 475 — 4,689 Advances (repayment) (852) 15,494 274 219 15,135 Advances to joint ventures recovered from (applied to) carrying amount of investments 35 22 (779) (224) (946) Effect from foreign exchange 44 480 30 5 559 As of December 31, 2019 $ 471 $ 18,966 $ — $ — $ 19,437 (i) Advance is unsecured, non-interest bearing, and there are no terms of repayment. |
Other Investments
Other Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Other Investments | Other Investments Other investments consist of investments in common shares and warrants of several companies in the cannabis industry. As of March 31, 2020, the Company did not hold any other investments. During the three months ended March 31, 2020, in respect to one of two milestones achieved related to the Whistler transaction described below, the Company received 578,101 shares of Aurora Cannabis Inc. (“Aurora”). The Company subsequently sold all of the Aurora shares on March 6, 2020 for gross proceeds of $781 recorded as an other item in other income (expenses). The Company expects to further receive Aurora common shares upon the satisfaction of one milestone remaining, which has not been recognized in these condensed consolidated financial statements. The exact number of Aurora common shares to be issued to the Company following the satisfaction of each such milestone will be determined in reference to the five-day volume weighted average price of Aurora common shares immediately prior to the achievement of the applicable milestone. On March 4, 2019, the Company sold all 2,563 shares of Whistler, representing approximately 19.0% of Whistler's issued and outstanding common shares, to Aurora, in connection with Aurora's acquisition of Whistler (the "Whistler Transaction"). As a result of the closing of the Whistler Transaction, the Company received 2,524,341 Aurora common shares. During the three months ended March 31, 2019, The Company sold all 2,524,341 common shares of Aurora, for gross proceeds of $19,259 recorded as an other item in other income (expenses). During the three months ended March 31, 2019, the Company sold all remaining 11,062 common shares of Canopy Growth Corporation (“Canopy”) for gross proceeds of $355. The gains and losses on the Canopy investment were reclassified from fair value through other comprehensive income to fair value through net income. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following is a continuity schedule of accumulated other comprehensive income (loss): Three months ended March 31, 2020 2019 Net unrealized gain (loss) on revaluation and disposal of other investments Balance at January 1 $ 5 $ 5 Cumulative effect from adoption of ASU 2016-01 — — Balance as of March 31 5 5 Net foreign exchange gain (loss) on translation Balance at January 1 27,833 (9,875) Net unrealized (loss) gain (113,715) 3,895 Balance as of March 31 (85,882) (5,980) Total accumulated other comprehensive income (loss) $ (85,877) $ (5,975) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has entered into leases primarily for the land-use rights, office premises and equipment used in the production of cannabis and related products. The Company’s leases have terms which range from three nine Operating leases greater than one year are included in right-of-use assets and operating lease liabilities. Finance leases are included in property, plant and equipment on the Company’s consolidated balance sheet. During the period, the Company entered into a new operating lease for office premises which is included within the lease liability and right of use asset on the condensed consolidated balance sheet. The Company’s finance leases were not material as of March 31, 2020 and December 31, 2019. |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Loans Receivable, Net | Loans Receivable, net As of March 31, 2020 December 31, 2019 Current portion Natuera Series A loan (i) $ 3,200 $ 4,575 Cronos GrowCo Credit Facility (ii) 711 — Add: Accrued interest — 89 Total current portion of loans receivable 3,911 4,664 Long term portion Cronos GrowCo Credit Facility (ii) 41,557 31,678 2645485 Ontario Inc. ( “ Mucci ” ) Promissory Note (iii) 11,394 12,587 Add: Accrued interest 1,196 702 Total long term portion of loans receivable 54,147 44,967 Total loans receivable $ 58,058 $ 49,631 (i) On September 27, 2019, the Company entered into a master loan agreement (the “Series A Loan”) for $4,575 with Natuera with effect as of August 29, 2019. The total aggregate principal amount of the Series A Loan is $9,150, of which the Company has committed to fund 50% and its joint venture partner has committed to fund the remaining 50%. Outstanding principal amounts bear interest at a fixed annual rate of 5.67% with a maturity date of August 29, 2020. As of March 31, 2020, accrued interest is recorded in other receivables. For the three months ended March 31, 2020, a loss allowance of $1,439 was recorded against the Natuera Series A loan related to the Company’s share of net loss from Natuera in excess of the carrying value of the equity method investment. Refer to Note 6. (ii) On August 23, 2019, the Company entered into a credit agreement with Cronos GrowCo in respect of a C$100,000 ($71,114) secured non-revolving term loan credit facility (the “GrowCo Credit Facility”). The GrowCo Credit Facility will mature on March 31, 2031 and will bear interest at varying rates based on the Canadian prime rate as announced by the Bank of Montreal. Interest began to accrue as of the closing date of the GrowCo Credit Facility and is payable on a quarterly basis until maturity, except that any interest accrued prior to March 31, 2021 will be payable not later than December 31, 2021. Repayment of principal will be made on a quarterly basis commencing on March 31, 2021. The credit facility is secured by substantially all present and after acquired property of Cronos GrowCo and its subsidiaries. Mucci, the other 50% shareholder of Cronos GrowCo, has provided a limited recourse guarantee in favor of Cronos GrowCo, secured by Mucci’s shares in Cronos GrowCo. As of March 31, 2020, Cronos GrowCo had drawn C$60,650 ($43,131) from the Cronos GrowCo Credit Facility. For the three months ended March 31, 2020, a current expected credit loss allowance of $903 was recorded against the GrowCo Facility. (iii) On June 28, 2019, the Company entered into a promissory note receivable agreement (the “Mucci Promissory Note”) for C$16,350 ($11,627) with Mucci. The outstanding principal amount of the Mucci Promissory Note bears interest at 3.95% annually and is due within 90 days of demand. The Company does not intend to demand the loan within 12 months. Interest accrued under the Mucci Promissory Note until July 1, 2021 is payable by way of capitalization on the principal amount and interest thereafter must be paid in cash on a quarterly basis. The Mucci Promissory Note is secured by a general security agreement covering all the assets of Mucci. For the three months ended March 31, 2020, a current expected credit loss allowance of $243 has been recorded against the Mucci loan. |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | Derivative Liabilities On March 8, 2019, the Company closed the previously announced investment in the Company (the “Altria Investment”) by Altria, pursuant to a subscription agreement dated December 7, 2018. As of the closing date of the Altria Investment, the Altria Investment consisted of 149,831,154 common shares of the Company as of the closing date, issued to a wholly owned subsidiary of Altria and one warrant of the Company (the “Altria Warrant”), refer to Note 15(a), issued to a wholly owned subsidiary of Altria. As of the closing date of the Altria Investment, Altria beneficially held an approximate 45% ownership interest in the Company (calculated on a non-diluted basis). As summarized in this note, if exercised in full on such date, the exercise of the Altria Warrant would have resulted in Altria holding a total ownership interest in the Company of approximately 55% (calculated on a non-diluted basis). Pursuant to the investor rights agreement between the Company and Altria, entered into in connection with the closing of the Altria Investment (the “Investor Rights Agreement”), the Company granted Altria certain rights, among others, summarized in this note. The summaries below are qualified entirely by the terms and conditions fully set out in the Investor Rights Agreement and the Altria Warrant, as applicable. a. The Altria Warrant entitles the holder, subject to certain qualifications and limitations, to subscribe for and purchase up to an additional 10% of the common shares of Cronos (approximately 77.5 million common shares at March 31, 2020) at a per share exercise price of C$19.00 which expires on March 8, 2023. b. The Company granted to Altria, subject to certain qualifications and limitations, upon the occurrence of certain issuances of common shares of the Company executed by the Company (including issuances pursuant to the R&D partnership with Ginkgo Bioworks Inc. (“Ginkgo”) (the “Ginkgo Agreement”), which is discussed in Note 19(a)(i) below, the right to purchase up to such number of common shares of the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any issuance of shares by the Company (“Pre-emptive Rights”), at the same price per common share of the Company at which the common shares are sold in the relevant issuance. The price per common share of the Company to be paid by Altria pursuant to its exercise of its Pre-emptive Rights related to the Ginkgo Agreement will be C$16.25 per common share. These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20%. c. In addition to (and without duplication of) the Pre-emptive Rights, the Company granted to Altria, subject to certain qualifications and limitations, the right to subscribe for common shares of the Company issuable in connection with the exercise, conversion or exchange of convertible securities of the Company issued prior to March 8, 2019 or thereafter (excluding any convertible securities of the Company owned by Altria or any of its subsidiaries), a share incentive plan of the Company, the exercise of any right granted by the Company pro rata to all shareholders of the Company to purchase additional common shares and/or securities of the Company, bona fide bank debt, equipment financing or non-equity interim financing transactions that contemplate an equity component or bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures involving the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any such transactions (“Top-up Rights”). The price per common share to be paid by Altria pursuant to the exercise of its Top-up Rights will be, subject to certain limited exceptions, the 10-day volume-weighted average price of the common shares of the Company on the TSX for the ten full days preceding such exercise by Altria; provided that the price per common share of the Company to be paid by Altria pursuant to the exercise of its Top-up Rights in connection with the issuance of common shares of the Company pursuant to the exercise of options or warrants that were outstanding as of March 8, 2019 will be C$16.25 per common share without any set off, counterclaim, deduction, or withholding. These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20%. The Altria Warrant, Pre-emptive Rights, and fixed price Top-up Rights have been classified as derivative liabilities; related transaction costs of $22,355 were expensed as financing costs during the year ended December 31, 2019. A reconciliation of the carrying amounts of the derivative liability is presented below: January 1, 2020 (Gain) / Loss on revaluation Exercise of Rights Effect from foreign exchange As of March 31, 2020 (a) Altria Warrant $ 234,428 $ (88,104) $ — $ (13,958) $ 132,366 (b) Pre-emptive Rights 12,787 1,315 — (1,032) 13,070 (c) Top-up Rights 49,945 (26,579) — (2,626) 20,740 $ 297,160 $ (113,368) $ — $ (17,616) $ 166,176 Fluctuations in the Company’s share price are a primary driver for the changes in the derivative valuations during each reporting period. As the share price decreases for each of the related derivative instruments, the liability of the instrument generally decreases. Share price is one of the significant observable inputs used in the fair value measurement of each of the Company’s derivative instruments. During the period ended March 31, 2020, the Company’s share price decreased from December 31, 2019 resulting in the gain on revaluation of $113,368. The fair values of the derivative liabilities were determined using the Black-Scholes pricing model as of December 31, 2019 and March 31, 2020, applying the following inputs: December 31, 2019 As of March 31, 2020 Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights Share price at valuation date (per share in C$) $9.97 $9.97 $9.97 $7.99 $7.99 $7.99 Subscription price (per share in C$) $19.00 $16.25 $16.25 $19.00 $16.25 $16.25 Weighted average risk-free interest rate (i) 1.69% 1.73% 1.71% 0.49% 0.44% 0.36% Weighted average expected life (in years) (ii) 3.18 1.25 1.66 2.93 2.25 1.29 Expected annualized volatility (iii) 82% 82% 82% 80% 80% 80% Expected dividend yield —% —% —% —% —% —% (i) The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities. The risk-free interest rate uses a range of approximately 0.21% to 0.62% as of March 31, 2020 (December 31, 2019 – 1.66% to 1.73%) for the Pre-emptive rights and Top-up rights. (ii) The expected life in years represents the period of time that the derivative liabilities are expected to be outstanding. The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked. The expected life uses a range of approximately 0.25 year to 5.75 years as of March 31, 2020 (December 31, 2019 – 0.25 year to 6 years). (iii) Volatility was based on an equally weighted blended historical volatility level of the underlying equity securities of the Company and peer companies. The following table quantifies each of the significant inputs described above and provides a sensitivity analysis of the impact on the reported values of the derivative liabilities. The sensitivity analysis for each significant input is performed by assuming a 10% decrease in the input while other significant inputs remain constant at management’s best estimate as of the respective dates. A decrease in the inputs noted below would cause a decrease in derivative liability and as of March 31, 2020, there would be an equal but opposite impact on net income (loss). Decrease as of December 31, 2019 Decrease as of March 31, 2020 Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights Share price $ 36,436 $ 2,743 $ 9,577 $ 22,448 $ 2,385 $ 4,550 Weighted average expected life 17,471 2,366 2,178 12,478 1,351 1,439 Expected annualized volatility 33,343 2,180 7,714 24,031 2,329 4,331 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment, net consisted of the following As of March 31, 2020 December 31, 2019 Cost Land $ 3,509 $ 3,727 Building 142,038 150,324 Furniture and equipment 10,457 10,156 Computer equipment 684 687 Leasehold improvements 2,787 2,789 Construction in progress 5,800 3,569 Less: accumulated depreciation (11,111) (9,443) Total $ 154,164 $ 161,809 Depreciation expense included in cost of sales relating to manufacturing equipment and production facilities for the three months ended March 31, 2020 was $223 (March 31, 2019 – $176). Depreciation expense included in operating expenses related to general office space and equipment for three months ended March 31, 2020 was $507 (March 31, 2019 – $169). The remaining depreciation is included in inventory. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill (a) Intangible Assets Intangible assets are comprised of the following items: Weighted Average Amortization Period (in years) As of March 31, 2020 Cost Accumulated Amortization Net Software (i) N/A $ 478 $ (238) $ 240 ERP system (ii) 5 983 — 983 Health Canada licenses 17 7,970 (1,014) 6,956 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 138 — 138 Israeli Codes (iii) 25 290 (8) 282 $ 73,859 $ (1,260) $ 72,599 (i) Software amortizes using a double declining method. (ii) During the three months ended March 31, 2020, the Company capitalized costs for the new ERP system. As at March 31, 2020, the system is not yet available for use, resulting in no amortization being recorded against the asset. (iii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. Weighted Average Amortization Period (in years) As of December 31, 2019 Cost Accumulated Amortization Net Software (i) N/A $ 541 $ (202) $ 339 Health Canada licenses 17 8,627 (976) 7,651 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 36 — 36 Israeli Codes (ii) 25 298 (4) 294 $ 73,502 $ (1,182) $ 72,320 (i) Software amortizes using a double declining method. (ii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. The aggregate amortization for the three months ended March 31, 2020 was $180 (March 31, 2019 – $149). Intangible asset additions in 2020 included the ERP system for $983. There was $67 related to disposals of software in during three months ended March 31, 2020. The amortization expense for the next five years on intangible assets in use is estimated to be as follows: 2021 – $609; 2022 – $553; 2023: $509; 2024 – $481; 2025 – $472. (b) Goodwill As of December 31, 2019 Additions Effect of foreign exchange As of March 31, 2020 OGBC $ 302 $ — $ (23) $ 279 Peace Naturals 1,078 — (82) 996 Redwood (as defined herein) 213,414 — — 213,414 $ 214,794 $ — $ (105) $ 214,689 |
General and Administrative Expe
General and Administrative Expenses | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General and Administrative Expenses | General and Administrative Expenses General and administrative expense are comprised of the following items: Three months ended March 31, 2020 2019 Salaries and wages $ 7,466 $ 1,994 Professional and consulting 5,586 2,203 Office and general 3,075 2,901 Internal review costs related to restatement of 2019 interim financial statements 4,407 — Other 3,225 195 Total $ 23,759 $ 7,293 |
Share-based Payments
Share-based Payments | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Payments | Share-based Payments (a) Warrants The following is a summary of the changes in warrants during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of warrants Balance as of January 1, 2020 $ 0.26 18,066,662 Exercise of warrants — — Expiry of warrants — — Balance as of March 31, 2020 $ 0.26 18,066,662 Balance as of January 1, 2019 $ 0.26 25,457,623 Exercise of warrants 0.27 (4,390,961) Expiry of warrants — — Balance at March 31, 2019 $ 0.26 21,066,662 As of March 31, 2020, the Company had outstanding warrants as follows. For a description of the Altria Warrant, see Note 11. Grant Date Expiry date Weighted average exercise price (C$) Number of warrants October 8 – 28, 2015 October 8 – 28, 2020 $ 0.31 2,976,610 May 13 – 27, 2016 May 13 – 27, 2021 0.25 15,090,052 As of March 31, 2020 $ 0.26 18,066,662 (b) Stock options (i) Stock option plans The Company adopted an amended and restated stock option plan dated May 26, 2015 (the “2015 Stock Option Plan”) which was approved by shareholders of the Company at the annual general meeting of shareholders held on June 28, 2017. The 2015 Stock Option Plan allowed the Board to award options to purchase shares to directors, officers, key employees and service providers of the Company. As of June 28, 2018, no further awards will be granted under the 2015 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2015 Stock Option Plan. As of March 31, 2020, options to purchase 12,319,230 Company common shares were outstanding under the 2015 Stock Option Plan. On June 28, 2018, the shareholders of the Company approved a new stock option plan (the “2018 Stock Option Plan”) under the terms and valuation methods detailed in the Annual Financial Statements. Upon approval of the 2020 Omnibus Plan (as defined below) by the shareholders of the Company, no further awards will be granted under the 2018 Stock Option Plan; however, shares may be purchased via option exercise by the holders of any outstanding options previously issued under the 2018 Stock Option Plan. As of March 31, 2020, options to purchase 1,787,383 Company common shares were outstanding under the 2018 Stock Option Plan. On March 29, 2020, the Company’s Board of Directors adopted a new omnibus equity incentive plan (the “2020 Omnibus Plan”), subject to approval by the shareholders of the Company. As of March 31, 2020, no grants have been made under the 2020 Omnibus Plan. For the three months ended March 31, 2020, the total stock-based compensation expense associated with the stock option plans was $1,730 (March 31, 2019 – $1,771). (ii) Summary of changes The following is a summary of the changes during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of options Weighted average remaining contractual term (years) Balance as of January 1, 2020 $ 4.84 14,149,502 2.56 Cancellation, forfeiture and expiry of options 17.17 (42,889) Balance as of March 31, 2020 $ 4.80 14,106,613 2.06 Exercisable at March 31, 2020 3.11 9,783,544 1.66 Balance as of January 1, 2019 $ 2.99 12,902,995 3.35 Issuance of options 24.75 51,830 Exercise of options 5.60 (125,715) Cancellation, forfeiture and expiry of options 1.40 (2,500) Balance at March 31, 2019 $ 3.06 12,826,610 3.11 Exercisable at March 31, 2019 2.28 5,838,386 2.91 No stock options were exercised during the three months ended March 31, 2020. The weighted average share price at the dates the options were exercised during the three months ended March 31, 2019 was C$26.12 per share. (iii) Fair value of options issued The fair value of the options issued was determined using the Black-Scholes option pricing model, using the following inputs: For the three months ended March 31, 2019 Share price at grant date (per share) $24.75 Exercise price (per option) $24.75 Risk-free interest rate 1.51% Expected life of options (in years) 5 Expected annualized volatility 80% Expected dividend yield —% Weighted average Black-Scholes value at grant date (per option) $15.91 Forfeiture rate —% No stock options were granted under the 2018 Stock Option Plan during the three months ended March 31, 2020. The expected life of the awards represents the period of time stock options are expected to be outstanding and is estimated considering vesting terms and employees’ and non-employees’ historical exercise and post-vesting employment termination behavior. Volatility was estimated by using the historical volatility of the Company, adjusted for the Company’s expectation of volatility going forward. The risk-free interest rate was based on the Bank of Canada government bonds with a remaining term equal to the expected life of the options at the grant date. (c) Restricted share units On September 5, 2019, the Company issued an aggregate of 732,972 restricted stock units (“RSUs”) to certain employees in connection with the acquisition of four Redwood Holding Group, LLC subsidiaries (collectively, “Redwood”) and pursuant to Employment Inducement Award Plan. Each RSU entitles the holder to receive upon vesting one common share of the Company. The fair value of these RSUs has been determined based on the quoted market price on the date of issuance of C$15.34 per share. The RSUs vest over a three The following is a summary of the changes in RSUs from January 1, 2020 to March 31, 2020: Number of RSUs Share-based reserve Balance as of January 1, 2020 732,972 $ 889 Vesting of issued RSUs — 706 Balance as of March 31, 2020 732,972 $ 1,595 No RSUs were granted or outstanding during three months ended March 31, 2019. (d) Deferred share units On August 10, 2019, the Company established a cash-settled deferred share unit plan (“DSU Plan”) pursuant to which its non-executive directors receive deferred share units (“DSUs”). The DSU Plan is designed to promote a greater alignment of long-term interests between non-executive directors and shareholders. The number of DSUs granted under the DSU Plan (including fractional DSUs) is determined by dividing the amount of remuneration payable by the closing price as reported by the TSX on the trading day immediately preceding the day of grant. DSUs are payable at the time a non-executive director ceases to hold the office of director for any reason and are settled by a lump-sum cash payment, in accordance with the terms of the DSU Plan, based on the fair value of the DSUs at such time. The fair value of the cash payout is determined by multiplying the number of DSUs vested at the payout date by the closing price as reported by the TSX on the trading day immediately preceding the payout date. The fair value of the cash payout is determined at each reporting date based on the fair value of the Company’s common shares at the reporting date and is recorded within other liabilities. The following is a summary of the changes in DSUs from January 1, 2020 to March 31, 2020: Number of DSUs Financial liability Balance as of January 1, 2020 33,397 $ 255 Gain on revaluation — (50) Balance as of March 31, 2020 33,397 $ 205 No DSUs were granted or outstanding during the three months ended March 31, 2019. |
Earnings (loss) per Share
Earnings (loss) per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per Share | Earnings (loss) Per Share Basic and diluted earnings (loss) per share are calculated using the following numerators and denominators: For the three months ended March 31, 2020 2019 Basic earnings per share computation Net income attributable to common shareholders of Cronos Group $ 76,040 $ 314,092 Weighted average number of common shares outstanding 348,817,472 218,949,590 Basic earnings per share $ 0.22 $ 1.43 Diluted earnings per share computation Net income used in the computation of basic earnings per share $ 76,040 $ 314,092 Adjustment for gain on revaluation of derivative liabilities — (224,726) Net income used in the computation of diluted income per share $ 76,040 $ 89,366 Weighted average number of common shares outstanding used in the computation of basic earnings per share 348,817,472 218,949,590 Dilutive effect of warrants 17,550,444 23,294,663 Dilutive effect of stock options and share appreciation rights 8,473,466 11,351,671 Dilutive effect of restricted share units 732,972 — Dilutive effect of Altria Warrant — 17,472,990 Dilutive effect of Top-up Rights – exercised and exercisable fixed price — 17,661 Weighted average number of common shares for computation of diluted income (loss) per share 375,574,354 271,086,575 Diluted earnings per share $ 0.20 $ 0.33 The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because conditions for contingently issuable shares were not satisfied at the end of the reporting periods. Three months ended March 31, 2020 2019 Ginkgo Equity Milestones 14,674,904 14,674,903 Pre-emptive Rights 12,006,740 12,006,739 Top-up Rights – fixed price 25,111,456 27,730,859 Top-up Rights – market price 1,941,349 — Altria warrant 77,514,993 — Stock options 1,729,242 — Total anti-dilutive securities 132,978,684 54,412,501 |
Related Party Transactions and
Related Party Transactions and Balances | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Balances | Related Party Transactions and Balances On March 8, 2019, in connection with the Altria Investment, Altria Group Inc. (“Altria”), through certain of its wholly owned subsidiaries, purchased a 45% equity interest in the Company. During the three months ended March 31, 2020, the Company incurred $672 (March 31, 2019 – $0) for consulting services from Altria Pinnacle LLC, a subsidiary of Altria (“Altria Pinnacle”). As of March 31, 2020, the accrual for these consulting services was $672 (December 31, 2019 – $1,152). During 2019, the Company purchased machinery and equipment amounting to $1,258 from a subsidiary of Altria. Refer to Note 19 for additional information. Refer to Note 11 for further information on the derivative liabilities related to the Altria investment. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Segment reporting is prepared on the same basis that the Company’s chief operating decision makers (the “CODMs”) manage the business, make operating decisions and assess the Company’s performance. The Company determined that it has the following two reportable segments: United States and Rest of World. The United States operating segment consists of the manufacture and distribution of hemp-derived CBD infused products. The Rest of World operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets . These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region. The results of each segment are regularly reviewed by the CODMs to assess the performance of the segment and make decisions regarding the allocation of resources. The CODMs review operating income (loss) as the measure of segment profit or loss to evaluate performance of and allocate resources for its reportable segments. Operating income (loss) is defined as net revenue less cost of sales and operating expenses. Reporting by operating segments follows the same accounting policies as those used to prepare the consolidated financial statements. The operating segments are presented in accordance with the same criteria used for internal reporting prepared for the CODMs. Intersegment transactions are recorded at the stated values as agreed to by the segments. Segment data was as follows for the three months ended March 31, 2020: Three months ended March 31, 2020 United States Rest of World Corporate Total Consolidated statements of net income and comprehensive income (loss) Net revenue Cannabis flower $ — $ 2,741 $ — $ 2,741 Cannabis extracts 2,176 3,400 — 5,576 Other — 115 — 115 Net revenue $ 2,176 $ 6,256 $ — $ 8,432 Equity loss (income) $ — $ 1,172 $ — $ 1,172 Interest revenue 5 7,751 2 7,758 Interest expense — (7) — (7) Net interest income $ 5 $ 7,744 $ 2 $ 7,751 Depreciation and amortization $ (33) $ (648) $ (6) $ (687) Income tax (benefit) expense — — — — Net income (loss) (9,805) 92,156 (6,670) 75,681 Consolidated balance sheets Total assets $ 292,723 $ 316,216 $ 1,318,987 $ 1,927,926 Investments in equity accounted investees — 1,089 — 1,089 Goodwill 213,414 1,275 — 214,689 Purchase of property, plant and equipment, net 180 6,231 — 6,411 Sources of net revenue for the three months ended March 31, 2020 were as follows: Three months ended March 31, 2020 2019 Cannabis flower $ 2,741 $ 1,825 Cannabis extracts 5,576 1,103 Other 115 76 Net revenue $ 8,432 $ 3,004 Net revenue attributed to a geographic region based on the location of the customer were as follows: Three months ended March 31, 2020 2019 Canada $ 6,091 $ 2,983 United States 2,176 — Other countries 165 21 Total $ 8,432 $ 3,004 Property, plant and equipment assets were physically located in the following geographic regions: As of March 31, 2020 As of December 31, 2019 Canada $ 132,640 $ 141,021 United States 2,251 2,103 Other countries 19,273 18,685 Total $ 154,164 $ 161,809 The Company sells products through a limited number of major customers. Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenues and greater than 10% of accounts receivable. United States During the three months ended March 31, 2020, the U.S segment had no major customers. As of March 31, 2020, $107 (December 31, 2019 – $12) in expected credit losses has been recognized on receivables from contracts with customers. Rest of World During the three months ended March 31, 2020, the Rest of World segment earned a total net revenue before excise taxes of $4,121 from three major customers, BC Liquor Distribution Branch, Alberta Gaming, Liquor & Cannabis and Ontario Cannabis Store, accounting for 19%, 16% and 14% of the Company’s total revenues, respectively (March 31, 2019 – $1,002 from one major customer accounting for 33%). |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments (a) R&D Commitments (i) Ginkgo. On September 4, 2018, the Company announced a R&D partnership with Ginkgo to develop scalable and consistent production of eight target cannabinoids, including THC, CBD and a variety of other lesser known and rarer cannabinoids. As part of this partnership, Cronos Group has agreed to issue up to 14,674,903 common shares of the Company (aggregate value of approximately $100,000 as of July 17, 2018 assuming all milestones are met, collectively the “Ginkgo Equity Milestones”) in tranches and $22,000 in cash subject to Ginkgo’s achievement of certain milestones and to fund certain R&D expenses, including foundry access fees. (ii) Technion. On October 15, 2018, the Company announced a sponsored research agreement with the Technion Research and Development Foundation of the Technion – Israel Institute of Technology (“Technion”). Research will be focused on the use of cannabinoids and their role in regulating skin health and skin disorders. The Company has committed to $1,784 of research funding over a period of three (b) Altria Consulting Services On February 18, 2019, the Company entered into an agreement with a wholly owned subsidiary of Altria (which agreement was subsequently amended and restated to substitute Altria Pinnacle as a party thereto), to receive strategic advisory and project management services from Altria Pinnacle (the “Services Agreement”). Pursuant to the Services Agreement, the Company will pay Altria Pinnacle a monthly fee equal to the product of one hundred and five percent (105%) and the sum of: (i) all costs directly associated with the services incurred during the monthly period, and (ii) a reasonable and appropriate allocation of indirect costs incurred during the monthly period. The Company will also pay all third-party direct charges incurred during the monthly period in connection with the services, including any reasonable and documented costs, fees and expenses associated with obtaining any consent, license or permit. The Services Agreement will remain in effect until terminated by either party. (c) Use of Publicity Rights in Brand Development On December 23, 2019, the Company issued 856,017 restricted common shares to an accredited investor in a private placement (“Private Placement – 2019”) in reliance on Section 4(a)(2) of the Securities Act of 1933 in connection with the use of certain publicity rights in brand development. One-third of such common shares vested on January 31, 2020 with the remaining shares vesting in to equal installments on (a) June 23, 2021, and (b) December 23, 2022. The issuance did not involve a public offering and was made without general solicitation or advertising. The total fair value of the consideration paid for the issuance of such common shares was approximately $6,000. The fair value of the shares was calculated using the ten-day volume weighted average price per share of the Company’s common shares on Nasdaq. Additional restricted common shares are issued when certain performance milestones are achieved: (i) First Performance Issuance: if, prior to December 23, 2022, the product line generates at least $50,000 in net revenue, additional common shares with an aggregate value of $1,000 will be issued. (ii) Second Performance Issuance: if, prior to December 23, 2022, the product line generates at least $100,000 in net revenue, additional common shares with an aggregate value of $1,000 will be issued (together with the First Performance Issuance noted above). The number of common shares that would be issued upon achieving the foregoing milestones will be determined based on the ten-day volume weighted average price per share of the Company’s common shares on Nasdaq as of the trading day immediately prior to the date of filing with the SEC of the Company’s audited year-end financial statements for the first fiscal year during which such milestones are achieved. (d) Take or Pay In January 2020, the Company entered into a take or pay supply agreement with a supplier of dried cannabis flower. The Company agreed to purchase a minimum of approximately C$1,734 ($1,290) of dried cannabis flower over 6 months from the date of the agreement and, subject to the supplier’s satisfaction of certain conditions and the availability of additional product, potentially up to a maximum of approximately C$4,284 ($3,188) over 6 months from the date of the agreement. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Loss Contingency [Abstract] | |
Contingencies | Contingencies The Company is party to a number of lawsuits (and has been threatened with lawsuits arising) in the ordinary course of business and in connection with its marketing, distribution and sale of its products. Although the outcome of these matters cannot be predicted with certainty, management does not believe that resolution of these matters will have a material adverse effect on the Company’s consolidated financial condition but may be material to the Company’s operating results for any particular reporting period depending, in part, on the results from that period. (a) U.S Securities Class Action Complaints On March 11 and 12, 2020, two alleged shareholders of the Company separately filed two putative class action complaints in the U.S. District Court for the Eastern District of New York against the Company and its Chief Executive Officer and Chief Financial Officer alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants, and Section 20(a) of the Exchange Act against the individual defendants. The complaints generally allege that certain of the Company’s prior public statements about revenues and internal controls were incorrect based on the Company’s March 2, 2020, disclosure that the Audit Committee of its Board of Directors was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel. The complaints do not quantify a damage request. Defendants have not yet responded to the complaints. (b) Regulatory Reviews Relating to Restatements The Company has been responding to requests for information from various regulatory authorities relating to its previously disclosed restatement of its financial statements for the first three quarters of 2019. The Company is responding to all such requests for information and cooperating with all regulatory authorities. The Company cannot predict the outcome of any such regulatory review or investigation and it is possible that one or more formal investigations or proceedings may be commenced against the Company and its current and former officers and directors in connection with these regulatory reviews. (c) U.S Hemp Business Litigation On April 8, 2020 a putative class action complaint was filed in the U.S. District Court for the Central District of California against Redwood, alleging violations of California’s Unfair Competition Law, False Advertising Law, Consumers Legal Remedies Act, breaches of the California Commercial Code for breach of express warranties and implied warranty of merchantability with respect to Redwood’s marketing and sale of U.S. hemp products. The complaint does not quantify a damage request. On April 14, 2020, the class action complaint was dismissed for certain pleading deficiencies and the plaintiff was granted leave until April 24, 2020 to amend the complaint to establish federal subject matter jurisdiction. As of the date of this Quarterly Report, the plaintiff has not refiled the complaint and the complaint has been dismissed without prejudice. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Financial Instruments | Financial Instruments The Company’s activities expose it to a variety of financial risks, including credit risk, liquidity risk, and market risk (including interest rate risk) and foreign currency risk. (a) Credit Risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, loan receivable, and advances to joint ventures. The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $1,420,809 as of March 31, 2020 (December 31, 2019 – $1,586,978). (i) Accounts receivable An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the failure of a debtor to engage in a repayment plan, and a failure to make contractual payments for a period of greater than 120 days past due. For the year ended March 31, 2020, the Company recorded a current expected credit loss allowance of $141 (December 31, 2019 – $136). The Company has assessed that there is a concentration of credit risk, as 73% of the Company’s accounts receivable were due from 5 customers as of March 31, 2020 (December 31, 2019 – 56% due from two customers) with an established credit history with the Company. (ii) C ash and cash equivalents, short-term investments, and other receivables The Company held cash and cash equivalents of $1,128,396 as of March 31, 2020 (December 31, 2019 – $1,199,693). The short-term investments and related interest receivable of $206,230 (December 31, 2019 – $306,347) represents short-term investments with a maturity of less than a year and accrued interest as of period end. The cash and cash equivalents and short-term investments, including guaranteed investment certificates and bankers’ acceptances, are held with central banks and financial institutions that are highly rated. In addition to interest receivable, other receivables includes sales taxes receivable from the government. As such, the Company has assessed an insignificant loss allowance on these financial instruments. (iii) Advances to joint ventures The Company has assessed the credit risk of these advances based on the financial position of the borrowers, and the regulatory and economic environment of the borrowers. Based on historical information, and adjusted for forward-looking expectations, the Company has assessed an expected credit loss allowance on these advances as of March 31, 2020 of $917 (December 31, 2019 – $nil). (b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due and arises principally from the Company’s accounts payable and other liabilities, holdbacks payable, government remittances payable and construction loan payable. The Company’s policy is to review liquidity resources and ensure that sufficient funds are available to meet financial obligations as they become due. Further, the Company’s management is responsible for ensuring funds exist and are readily accessible to support business opportunities as they arise. The Company’s funding is primarily provided in the form of capital raised through the issuance of common shares and warrants. As of March 31, 2020, 17% of the Company’s payables were due to one vendor (December 31, 2019 – 42% due to three vendors). (c) Market risk Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in market prices. The value of financial instruments can be affected by changes in interest rates, market and economic conditions, and equity and commodity prices. The Company is exposed to market risk in divesting its investments, such that, unfavorable market conditions could result in dispositions of investments at less than their carrying values. Further, the revaluation of securities classified as fair value through net income, could result in significant write-downs of the Company’s investments, which would have an adverse impact on the Company’s financial position, unless these would flow through other comprehensive income. The Company manages market risk by having a portfolio of securities from multiple issuers, such that the Company was not materially exposed to any one issuer. (d) Currency rate risk Currency rate risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in foreign exchange rates. The Company is exposed to this risk on advances to joint ventures denominated in A$ and C$. The Company is further exposed to this risk through subsidiaries operating in Israel and the U.S as the Company’s functional currency is in Canadian dollars. The Company does not currently use foreign exchange contracts to hedge its exposure to currency rate risk. As such, the Company’s financial position and financial results may be adversely affected by the unfavorable fluctuations in currency exchange rates. As of March 31, 2020, the Company had foreign currency gain (loss) on translation of $(113,692) (March 31, 2019 – $3,898). A 10% change in the exchange rates for the U.S dollar would affect the carrying value of net assets by approximately $171,503 as of March 31, 2020 (December 31, 2019 – $174,902). |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The Company complies with ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. In general, fair values are determined by: • Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. • Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability. The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2020 and December 31 2019, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. March 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,128,396 $ — $ — $ 1,128,396 Short-term investments 206,230 — — 206,230 Derivative liabilities — — 166,176 166,176 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,199,693 $ — $ — $ 1,199,693 Short-term investments 306,347 — — 306,347 Derivative liabilities — — 297,160 297,160 There were no transfers between categories during the periods presented. |
Supplementary Cash Flow Informa
Supplementary Cash Flow Information | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplementary Cash Flow Information | Supplementary Cash Flow Information The net changes in non-cash working capital items are as follow: For the three months ended March 31, 2020 2019 Accounts receivable $ 1,234 $ 984 Other receivables (410) (3,763) Prepaids and other assets (1,684) (973) Inventory (11,270) (3,737) Accounts payable and other liabilities (1,011) 20,845 Cumulative effect from foreign exchange (2,341) 762 Total $ (15,482) $ 14,118 |
Non-monetary Transactions
Non-monetary Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Nonmonetary Transactions [Abstract] | |
Non-monetary Transactions | Non-monetary Transactions During the three months ended March 31, 2020, the Company had no non-monetary transactions. On March 28, 2019, the Company entered into two transactions to simultaneously purchase and sell inventory to a third party. The Company purchased cannabis resin from the third party and in turn sold cannabis dry flower to the third party. The transactions involved the exchange of work in progress inventory and were accounted for at the carrying value of inventory transferred by the Company, which equaled the value of the cannabis resin received. No revenue was recognized as a result of this transaction and no gain or loss was recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events (a) On April 8, 2020 a putative class action complaint was filed in the U.S. District Court for the Central District of California against Redwood, alleging violations of California’s Unfair Competition Law, False Advertising Law, Consumers Legal Remedies Act, breaches of the California Commercial Code for breach of express warranties and implied warranty of merchantability with respect to Redwood’s marketing and sale of U.S. hemp products. The complaint does not quantify a damage request. On April 14, 2020, the class action complaint was dismissed for certain pleading deficiencies and the plaintiff was granted leave until April 24, 2020 to amend the complaint to establish federal subject matter jurisdiction. As of the date of this Quarterly Report, the plaintiff has not refiled the complaint and the complaint has been dismissed without prejudice. (b) In April 2020, Cronos Israel entered into a collaboration agreement with Cannasoul Analytics Ltd. (“Cannasoul”) for the establishment of a commercial cannabis analytical testing laboratory located at the premises of Cronos Israel (the “Cannasoul Collaboration”). Pursuant to the Cannasoul Collaboration, Cronos Israel has agreed to advance approximately ILS 8,300 (approximately $2,341) by a non-recourse loan to a subsidiary of Cannasoul over a period of two years for the capital and operating expenditures of the laboratory. The loan will bear simple interest at 3.5%. Cronos Israel will receive 70% of the profits of the laboratory until such time as it has recovered 150% of the amounts advanced to the subsidiary of Cannasoul, after which time it will receive 50% of the laboratory profits. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements of Cronos Group are unaudited. They have been prepared in accordance with U.S generally accepted accounting principles for interim financial information and with applicable rules and regulations of the Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any other quarterly period. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and related notes included in its Annual Report on Form 10-K/A for the year ended December 31, 2019 (the “Annual Financial Statements”). |
Basis of Consolidation | Basis of ConsolidationThe accompanying financial statements include the accounts of the Company, and all entities in which the Company has a controlling voting interest and/or is the primary beneficiary of a variable interest as of and for the period presented. In the condensed consolidated statements of net income (loss) and comprehensive income (loss), the net income (loss) and comprehensive income (loss) are attributed to the equity holders of the Company and to the non-controlling interests. Non-controlling interests in the equity of Cronos Israel are presented separately in the shareholders’ equity (deficit) section of the condensed consolidated balance sheets and condensed consolidated statements of changes in equity (deficit). All intercompany transactions and balances are eliminated upon consolidation. |
New Accounting Pronouncements | Adoption of new accounting pronouncements On January 1, 2020, the Company adopted ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU No. 2018-13”). ASU No. 2018-13 adds, modifies, and removes certain fair value measurement disclosure requirements. The adoption of this standard was applied prospectively and did not have a material impact on the Company’s condensed consolidated financial statements. On January 1, 2020, the Company adopted ASU No. 2018-15, Intangibles – Goodwill and Other Internal-use-software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU No. 2018-15”). ASU No. 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. The guidance in ASU No. 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The adoption of this standard was applied prospectively and did not have a material impact on the Company’s condensed consolidated financial statements. On January 1, 2020, the Company adopted ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”). ASU No. 2017-04 eliminates step 2 from the goodwill impairment test and instead requires an entity to measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceeds the reporting unit’s fair value. The guidance in ASU No. 2017-04 is effective for annual and interim goodwill tests completed by the Company beginning on January 1, 2020. The adoption of this standard was applied prospectively and the Company will follow a one-step model for goodwill impairment. (b) New accounting pronouncements not yet adopted In January 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). ASU No. 2020-01 clarifies the interaction of accounting for the transition into and out of the equity method. The new standard also clarifies the accounting for measuring certain purchased options and forward contracts to acquire investments. The guidance in ASU No. 2020-01 is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this ASU, but anticipates that the adoption will not have a material impact on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 eliminates certain exceptions and simplifies the application of U.S. GAAP-related to changes in enacted tax laws or rates and employee stock option plans. ASU No. 2019-12 is effective for annual and interim periods beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect of the adoption of this ASU, but anticipates that the adoption will not have a material impact on its condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Consolidated Entities | The Company consolidates the financial results of the following entities, which the Company controls: Subsidiaries Jurisdiction of Incorporation Incorporation Date Ownership Interest (ii) Cronos Israel G.S. Cultivations Ltd. (i) Israel February 4, 2018 70% Cronos Israel G.S. Manufacturing Ltd. (i) Israel September 4, 2018 90% Cronos Israel G.S. Store Ltd. (i) Israel June 28, 2018 90% Cronos Israel G.S. Pharmacies Ltd. (i) Israel February 15, 2018 90% (i) These Israeli entities are collectively referred to as “Cronos Israel.” |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory is comprised of the following items: As of March 31, 2020 December 31, 2019 Raw materials $ 4,198 $ 2,469 Work-in-progress – dry cannabis 14,799 11,538 Work-in-progress – cannabis extracts 17,517 17,975 Finished goods – dry cannabis 3,312 1,798 Finished goods – cannabis extracts 2,564 2,624 Supplies and consumables 728 1,639 Total $ 43,118 $ 38,043 |
Investments and Advances to J_2
Investments and Advances to Joint Ventures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investments | Net investment in equity accounted investees A reconciliation of the carrying amount of the investments in associates and joint ventures is as follows: Carrying Amount Ownership % March 31, 2020 December 31, 2019 Whistler Medicinal Marijuana Company (“Whistler”) (i) N/A $ — $ — Cronos Australia (ii) 31% — (346) Cronos GrowCo 50% 1,089 1,501 MedMen Canada 50% — — Natuera 50% — (598) $ 1,089 $ 557 (i) Whistler was incorporated in British Columbia, Canada and is a license holder under the Cannabis Act (Canada) with production facilities in British Columbia, Canada. Although the Company held less than 20% of the ownership interest and voting control of Whistler, the Company had the ability to exercise significant influence through its power to elect board members. The Company fully divested its investment in Whistler during the three months ended March 31, 2019. (ii) On October 25, 2019, Cronos Australia issued 40 million new shares in an initial public offering at an offering price of A$0.50 per share. Cronos’ ownership in Cronos Australia decreased from 50% to 31% on November 7, 2019 when Cronos Australia began trading on the Australian Securities Exchange. This resulted in a reconsideration event, which required the reassessment of the Company’s VIE conclusion. Upon reconsideration, the Company determined that the entity was no longer a VIE as of December 31, 2019 and is now reported under the equity method. The Company’s share of net earnings (losses) from equity investments accounted for under the equity method of accounting: For the three months ended March 31, 2020 2019 Whistler $ — $ 29 Cronos Australia (i) — (244) Cronos GrowCo (311) 11 MedMen Canada — 6 Natuera (ii) (861) — $ (1,172) $ (198) (i) The Company’s share of accumulated net losses in excess of its equity investment and advances in Cronos Australia were $515 for the three months ended March 31, 2020 (March 31, 2019 – $nil). (ii) The Company’s share of accumulated net losses in excess of its equity investment in Natuera has been applied as a loss allowance on the loan receivable. See Note 6(b) and Note 10. |
Schedule of Advances to Joint Ventures | Advances to Joint Venture MedMen Canada (i) Cronos GrowCo Cronos Australia (ii) Natuera Total As of January 1, 2020 $ 471 $ 18,966 $ — $ — $ 19,437 Credit loss allowance — (917) — — (917) Effect from foreign exchange (36) (1,405) — — (1,441) As of March 31, 2020 $ 435 $ 16,644 $ — $ — $ 17,079 As of January 1, 2019 1,244 2,970 475 — 4,689 Advances (repayment) (852) 15,494 274 219 15,135 Advances to joint ventures recovered from (applied to) carrying amount of investments 35 22 (779) (224) (946) Effect from foreign exchange 44 480 30 5 559 As of December 31, 2019 $ 471 $ 18,966 $ — $ — $ 19,437 (i) Advance is unsecured, non-interest bearing, and there are no terms of repayment. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following is a continuity schedule of accumulated other comprehensive income (loss): Three months ended March 31, 2020 2019 Net unrealized gain (loss) on revaluation and disposal of other investments Balance at January 1 $ 5 $ 5 Cumulative effect from adoption of ASU 2016-01 — — Balance as of March 31 5 5 Net foreign exchange gain (loss) on translation Balance at January 1 27,833 (9,875) Net unrealized (loss) gain (113,715) 3,895 Balance as of March 31 (85,882) (5,980) Total accumulated other comprehensive income (loss) $ (85,877) $ (5,975) |
Loans Receivable, Net (Tables)
Loans Receivable, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Loan Receivable | As of March 31, 2020 December 31, 2019 Current portion Natuera Series A loan (i) $ 3,200 $ 4,575 Cronos GrowCo Credit Facility (ii) 711 — Add: Accrued interest — 89 Total current portion of loans receivable 3,911 4,664 Long term portion Cronos GrowCo Credit Facility (ii) 41,557 31,678 2645485 Ontario Inc. ( “ Mucci ” ) Promissory Note (iii) 11,394 12,587 Add: Accrued interest 1,196 702 Total long term portion of loans receivable 54,147 44,967 Total loans receivable $ 58,058 $ 49,631 (i) On September 27, 2019, the Company entered into a master loan agreement (the “Series A Loan”) for $4,575 with Natuera with effect as of August 29, 2019. The total aggregate principal amount of the Series A Loan is $9,150, of which the Company has committed to fund 50% and its joint venture partner has committed to fund the remaining 50%. Outstanding principal amounts bear interest at a fixed annual rate of 5.67% with a maturity date of August 29, 2020. As of March 31, 2020, accrued interest is recorded in other receivables. For the three months ended March 31, 2020, a loss allowance of $1,439 was recorded against the Natuera Series A loan related to the Company’s share of net loss from Natuera in excess of the carrying value of the equity method investment. Refer to Note 6. (ii) On August 23, 2019, the Company entered into a credit agreement with Cronos GrowCo in respect of a C$100,000 ($71,114) secured non-revolving term loan credit facility (the “GrowCo Credit Facility”). The GrowCo Credit Facility will mature on March 31, 2031 and will bear interest at varying rates based on the Canadian prime rate as announced by the Bank of Montreal. Interest began to accrue as of the closing date of the GrowCo Credit Facility and is payable on a quarterly basis until maturity, except that any interest accrued prior to March 31, 2021 will be payable not later than December 31, 2021. Repayment of principal will be made on a quarterly basis commencing on March 31, 2021. The credit facility is secured by substantially all present and after acquired property of Cronos GrowCo and its subsidiaries. Mucci, the other 50% shareholder of Cronos GrowCo, has provided a limited recourse guarantee in favor of Cronos GrowCo, secured by Mucci’s shares in Cronos GrowCo. As of March 31, 2020, Cronos GrowCo had drawn C$60,650 ($43,131) from the Cronos GrowCo Credit Facility. For the three months ended March 31, 2020, a current expected credit loss allowance of $903 was recorded against the GrowCo Facility. (iii) On June 28, 2019, the Company entered into a promissory note receivable agreement (the “Mucci Promissory Note”) for C$16,350 ($11,627) with Mucci. The outstanding principal amount of the Mucci Promissory Note bears interest at 3.95% annually and is due within 90 days of demand. The Company does not intend to demand the loan within 12 months. Interest accrued under the Mucci Promissory Note until July 1, 2021 is payable by way of capitalization on the principal amount and interest thereafter must be paid in cash on a quarterly basis. The Mucci Promissory Note is secured by a general security agreement covering all the assets of Mucci. For the three months ended March 31, 2020, a current expected credit loss allowance of $243 has been recorded against the Mucci loan. |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Reconciliation of Carrying Amounts | A reconciliation of the carrying amounts of the derivative liability is presented below: January 1, 2020 (Gain) / Loss on revaluation Exercise of Rights Effect from foreign exchange As of March 31, 2020 (a) Altria Warrant $ 234,428 $ (88,104) $ — $ (13,958) $ 132,366 (b) Pre-emptive Rights 12,787 1,315 — (1,032) 13,070 (c) Top-up Rights 49,945 (26,579) — (2,626) 20,740 $ 297,160 $ (113,368) $ — $ (17,616) $ 166,176 |
Schedule of Fair Values of Derivative Liabilities | The fair values of the derivative liabilities were determined using the Black-Scholes pricing model as of December 31, 2019 and March 31, 2020, applying the following inputs: December 31, 2019 As of March 31, 2020 Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights Share price at valuation date (per share in C$) $9.97 $9.97 $9.97 $7.99 $7.99 $7.99 Subscription price (per share in C$) $19.00 $16.25 $16.25 $19.00 $16.25 $16.25 Weighted average risk-free interest rate (i) 1.69% 1.73% 1.71% 0.49% 0.44% 0.36% Weighted average expected life (in years) (ii) 3.18 1.25 1.66 2.93 2.25 1.29 Expected annualized volatility (iii) 82% 82% 82% 80% 80% 80% Expected dividend yield —% —% —% —% —% —% (i) The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities. The risk-free interest rate uses a range of approximately 0.21% to 0.62% as of March 31, 2020 (December 31, 2019 – 1.66% to 1.73%) for the Pre-emptive rights and Top-up rights. (ii) The expected life in years represents the period of time that the derivative liabilities are expected to be outstanding. The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked. The expected life uses a range of approximately 0.25 year to 5.75 years as of March 31, 2020 (December 31, 2019 – 0.25 year to 6 years). (iii) |
Schedule of Sensitivity Analysis | The following table quantifies each of the significant inputs described above and provides a sensitivity analysis of the impact on the reported values of the derivative liabilities. The sensitivity analysis for each significant input is performed by assuming a 10% decrease in the input while other significant inputs remain constant at management’s best estimate as of the respective dates. A decrease in the inputs noted below would cause a decrease in derivative liability and as of March 31, 2020, there would be an equal but opposite impact on net income (loss). Decrease as of December 31, 2019 Decrease as of March 31, 2020 Altria Warrant Pre-emptive Rights Top-up Rights Altria Warrant Pre-emptive Rights Top-up Rights Share price $ 36,436 $ 2,743 $ 9,577 $ 22,448 $ 2,385 $ 4,550 Weighted average expected life 17,471 2,366 2,178 12,478 1,351 1,439 Expected annualized volatility 33,343 2,180 7,714 24,031 2,329 4,331 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant & Equipment, Useful Lives | Property, plant and equipment, net consisted of the following As of March 31, 2020 December 31, 2019 Cost Land $ 3,509 $ 3,727 Building 142,038 150,324 Furniture and equipment 10,457 10,156 Computer equipment 684 687 Leasehold improvements 2,787 2,789 Construction in progress 5,800 3,569 Less: accumulated depreciation (11,111) (9,443) Total $ 154,164 $ 161,809 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets are comprised of the following items: Weighted Average Amortization Period (in years) As of March 31, 2020 Cost Accumulated Amortization Net Software (i) N/A $ 478 $ (238) $ 240 ERP system (ii) 5 983 — 983 Health Canada licenses 17 7,970 (1,014) 6,956 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 138 — 138 Israeli Codes (iii) 25 290 (8) 282 $ 73,859 $ (1,260) $ 72,599 (i) Software amortizes using a double declining method. (ii) During the three months ended March 31, 2020, the Company capitalized costs for the new ERP system. As at March 31, 2020, the system is not yet available for use, resulting in no amortization being recorded against the asset. (iii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. Weighted Average Amortization Period (in years) As of December 31, 2019 Cost Accumulated Amortization Net Software (i) N/A $ 541 $ (202) $ 339 Health Canada licenses 17 8,627 (976) 7,651 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 36 — 36 Israeli Codes (ii) 25 298 (4) 294 $ 73,502 $ (1,182) $ 72,320 (i) Software amortizes using a double declining method. (ii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets are comprised of the following items: Weighted Average Amortization Period (in years) As of March 31, 2020 Cost Accumulated Amortization Net Software (i) N/A $ 478 $ (238) $ 240 ERP system (ii) 5 983 — 983 Health Canada licenses 17 7,970 (1,014) 6,956 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 138 — 138 Israeli Codes (iii) 25 290 (8) 282 $ 73,859 $ (1,260) $ 72,599 (i) Software amortizes using a double declining method. (ii) During the three months ended March 31, 2020, the Company capitalized costs for the new ERP system. As at March 31, 2020, the system is not yet available for use, resulting in no amortization being recorded against the asset. (iii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. Weighted Average Amortization Period (in years) As of December 31, 2019 Cost Accumulated Amortization Net Software (i) N/A $ 541 $ (202) $ 339 Health Canada licenses 17 8,627 (976) 7,651 Lord Jones™ brand N/A 64,000 — 64,000 Trademarks N/A 36 — 36 Israeli Codes (ii) 25 298 (4) 294 $ 73,502 $ (1,182) $ 72,320 (i) Software amortizes using a double declining method. (ii) The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. |
Schedule of Goodwill | As of December 31, 2019 Additions Effect of foreign exchange As of March 31, 2020 OGBC $ 302 $ — $ (23) $ 279 Peace Naturals 1,078 — (82) 996 Redwood (as defined herein) 213,414 — — 213,414 $ 214,794 $ — $ (105) $ 214,689 |
General and Administrative Ex_2
General and Administrative Expenses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of General and Administrative Expenses | General and administrative expense are comprised of the following items: Three months ended March 31, 2020 2019 Salaries and wages $ 7,466 $ 1,994 Professional and consulting 5,586 2,203 Office and general 3,075 2,901 Internal review costs related to restatement of 2019 interim financial statements 4,407 — Other 3,225 195 Total $ 23,759 $ 7,293 |
Share-based Payments (Tables)
Share-based Payments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Changes in Warrants and DSUs | The following is a summary of the changes in warrants during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of warrants Balance as of January 1, 2020 $ 0.26 18,066,662 Exercise of warrants — — Expiry of warrants — — Balance as of March 31, 2020 $ 0.26 18,066,662 Balance as of January 1, 2019 $ 0.26 25,457,623 Exercise of warrants 0.27 (4,390,961) Expiry of warrants — — Balance at March 31, 2019 $ 0.26 21,066,662 The following is a summary of the changes in DSUs from January 1, 2020 to March 31, 2020: Number of DSUs Financial liability Balance as of January 1, 2020 33,397 $ 255 Gain on revaluation — (50) Balance as of March 31, 2020 33,397 $ 205 |
Summary of Outstanding Warrants | As of March 31, 2020, the Company had outstanding warrants as follows. For a description of the Altria Warrant, see Note 11. Grant Date Expiry date Weighted average exercise price (C$) Number of warrants October 8 – 28, 2015 October 8 – 28, 2020 $ 0.31 2,976,610 May 13 – 27, 2016 May 13 – 27, 2021 0.25 15,090,052 As of March 31, 2020 $ 0.26 18,066,662 |
Summary of the Changes in Options | The following is a summary of the changes during the three months ended March 31, 2020 and 2019: Weighted average exercise price (C$) Number of options Weighted average remaining contractual term (years) Balance as of January 1, 2020 $ 4.84 14,149,502 2.56 Cancellation, forfeiture and expiry of options 17.17 (42,889) Balance as of March 31, 2020 $ 4.80 14,106,613 2.06 Exercisable at March 31, 2020 3.11 9,783,544 1.66 Balance as of January 1, 2019 $ 2.99 12,902,995 3.35 Issuance of options 24.75 51,830 Exercise of options 5.60 (125,715) Cancellation, forfeiture and expiry of options 1.40 (2,500) Balance at March 31, 2019 $ 3.06 12,826,610 3.11 Exercisable at March 31, 2019 2.28 5,838,386 2.91 |
Fair Value of Options Issued | The fair value of the options issued was determined using the Black-Scholes option pricing model, using the following inputs: For the three months ended March 31, 2019 Share price at grant date (per share) $24.75 Exercise price (per option) $24.75 Risk-free interest rate 1.51% Expected life of options (in years) 5 Expected annualized volatility 80% Expected dividend yield —% Weighted average Black-Scholes value at grant date (per option) $15.91 Forfeiture rate —% |
Summary of Restricted Share Units Activity | The following is a summary of the changes in RSUs from January 1, 2020 to March 31, 2020: Number of RSUs Share-based reserve Balance as of January 1, 2020 732,972 $ 889 Vesting of issued RSUs — 706 Balance as of March 31, 2020 732,972 $ 1,595 |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings (Loss) Per Share | Basic and diluted earnings (loss) per share are calculated using the following numerators and denominators: For the three months ended March 31, 2020 2019 Basic earnings per share computation Net income attributable to common shareholders of Cronos Group $ 76,040 $ 314,092 Weighted average number of common shares outstanding 348,817,472 218,949,590 Basic earnings per share $ 0.22 $ 1.43 Diluted earnings per share computation Net income used in the computation of basic earnings per share $ 76,040 $ 314,092 Adjustment for gain on revaluation of derivative liabilities — (224,726) Net income used in the computation of diluted income per share $ 76,040 $ 89,366 Weighted average number of common shares outstanding used in the computation of basic earnings per share 348,817,472 218,949,590 Dilutive effect of warrants 17,550,444 23,294,663 Dilutive effect of stock options and share appreciation rights 8,473,466 11,351,671 Dilutive effect of restricted share units 732,972 — Dilutive effect of Altria Warrant — 17,472,990 Dilutive effect of Top-up Rights – exercised and exercisable fixed price — 17,661 Weighted average number of common shares for computation of diluted income (loss) per share 375,574,354 271,086,575 Diluted earnings per share $ 0.20 $ 0.33 |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Shares Outstanding | The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because conditions for contingently issuable shares were not satisfied at the end of the reporting periods. Three months ended March 31, 2020 2019 Ginkgo Equity Milestones 14,674,904 14,674,903 Pre-emptive Rights 12,006,740 12,006,739 Top-up Rights – fixed price 25,111,456 27,730,859 Top-up Rights – market price 1,941,349 — Altria warrant 77,514,993 — Stock options 1,729,242 — Total anti-dilutive securities 132,978,684 54,412,501 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Data | Segment data was as follows for the three months ended March 31, 2020: Three months ended March 31, 2020 United States Rest of World Corporate Total Consolidated statements of net income and comprehensive income (loss) Net revenue Cannabis flower $ — $ 2,741 $ — $ 2,741 Cannabis extracts 2,176 3,400 — 5,576 Other — 115 — 115 Net revenue $ 2,176 $ 6,256 $ — $ 8,432 Equity loss (income) $ — $ 1,172 $ — $ 1,172 Interest revenue 5 7,751 2 7,758 Interest expense — (7) — (7) Net interest income $ 5 $ 7,744 $ 2 $ 7,751 Depreciation and amortization $ (33) $ (648) $ (6) $ (687) Income tax (benefit) expense — — — — Net income (loss) (9,805) 92,156 (6,670) 75,681 Consolidated balance sheets Total assets $ 292,723 $ 316,216 $ 1,318,987 $ 1,927,926 Investments in equity accounted investees — 1,089 — 1,089 Goodwill 213,414 1,275 — 214,689 Purchase of property, plant and equipment, net 180 6,231 — 6,411 Sources of net revenue for the three months ended March 31, 2020 were as follows: Three months ended March 31, 2020 2019 Cannabis flower $ 2,741 $ 1,825 Cannabis extracts 5,576 1,103 Other 115 76 Net revenue $ 8,432 $ 3,004 |
Schedule of Revenue from External Customers by Geographic Areas | Net revenue attributed to a geographic region based on the location of the customer were as follows: Three months ended March 31, 2020 2019 Canada $ 6,091 $ 2,983 United States 2,176 — Other countries 165 21 Total $ 8,432 $ 3,004 |
Schedule of Long-lived Assets by Geographic Areas | Property, plant and equipment assets were physically located in the following geographic regions: As of March 31, 2020 As of December 31, 2019 Canada $ 132,640 $ 141,021 United States 2,251 2,103 Other countries 19,273 18,685 Total $ 154,164 $ 161,809 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2020 and December 31 2019, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. March 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,128,396 $ — $ — $ 1,128,396 Short-term investments 206,230 — — 206,230 Derivative liabilities — — 166,176 166,176 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,199,693 $ — $ — $ 1,199,693 Short-term investments 306,347 — — 306,347 Derivative liabilities — — 297,160 297,160 |
Supplementary Cash Flow Infor_2
Supplementary Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Net Changes in Non-Cash Working Capital | The net changes in non-cash working capital items are as follow: For the three months ended March 31, 2020 2019 Accounts receivable $ 1,234 $ 984 Other receivables (410) (3,763) Prepaids and other assets (1,684) (973) Inventory (11,270) (3,737) Accounts payable and other liabilities (1,011) 20,845 Cumulative effect from foreign exchange (2,341) 762 Total $ (15,482) $ 14,118 |
Background (Details)
Background (Details) | Mar. 31, 2020continentbrandventure |
Schedule of Equity Method Investments [Line Items] | |
Number of continents with international production and distribution | continent | 5 |
Number of adult-use brands | 2 |
Number of hemp-derived cannabidiol personal care brands | 2 |
Number of strategic joint ventures | venture | 4 |
Cronos Australia | |
Schedule of Equity Method Investments [Line Items] | |
Ownership percentage | 31.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Cronos Israel G.S. Cultivations Ltd. | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership Interest | 70.00% |
Cronos Israel G.S. Manufacturing Ltd. | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership Interest | 90.00% |
Cronos Israel G.S. Store Ltd. | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership Interest | 90.00% |
Cronos Israel G.S. Pharmacies Ltd. | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership Interest | 90.00% |
Revenues from Contracts with _2
Revenues from Contracts with Customers (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable | [1] | $ 3,404 | $ 4,638 |
Current expected credit loss | $ 141 | $ 136 | |
[1] | Authorized for issuance as of March, 31 2020: unlimited (December 31, 2019 – unlimited). Shares issued as of March 31, 2020: 348,817,472 (as of December 31, 2019: 348,817,472) |
Inventory (Details)
Inventory (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Inventory [Line Items] | |||
Raw materials | $ 4,198,000 | $ 2,469,000 | |
Supplies and consumables | 728,000 | 1,639,000 | |
Total | 43,118,000 | 38,043,000 | $ 38,043,000 |
Inventory write-down | 7,962,000 | 0 | |
Dry Cannabis | |||
Inventory [Line Items] | |||
Work-in-progress | 14,799,000 | 11,538,000 | |
Finished goods | 3,312,000 | 1,798,000 | |
Cannabis Extracts | |||
Inventory [Line Items] | |||
Work-in-progress | 17,517,000 | 17,975,000 | |
Finished goods | $ 2,564,000 | $ 2,624,000 |
Investments and Advances to J_3
Investments and Advances to Joint Ventures - Narrative (Details) - Variable Interest Entity, Not Primary Beneficiary | Jun. 14, 2018 | Mar. 13, 2018 | Mar. 31, 2020 |
Cronos GrowCo | |||
Variable Interest Entity [Line Items] | |||
Ownership percentage | 50.00% | ||
MedMen Canada | |||
Variable Interest Entity [Line Items] | |||
Ownership percentage | 50.00% | ||
Natuera | |||
Variable Interest Entity [Line Items] | |||
Ownership percentage | 50.00% | ||
Minimum | MedMen Canada | |||
Variable Interest Entity [Line Items] | |||
License term | 20 years |
Investments and Advances to J_4
Investments and Advances to Joint Ventures - Schedule of Equity Method Investments (Details) - USD ($) | Nov. 07, 2019 | Nov. 06, 2019 | Oct. 25, 2019 | Jun. 14, 2018 | Mar. 13, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Schedule of Equity Method Investments [Line Items] | ||||||||
Investments in equity accounted investees | $ 1,089,000 | $ 557,000 | ||||||
Share of loss from investments in equity accounted investees | $ (1,172,000) | $ (198,000) | ||||||
IPO | Cronos Australia | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 40,000,000 | |||||||
Sale of stock, price per share (in aud per share) | $ 0.50 | |||||||
Whistler | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage (less than) | 20.00% | |||||||
Ownership percentage | 20.00% | |||||||
Investments in equity accounted investees | $ 0 | 0 | ||||||
Share of loss from investments in equity accounted investees | $ 0 | 29,000 | ||||||
Cronos Australia | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage (less than) | 31.00% | |||||||
Share of accumulated net losses in excess of its equity investment and advances | $ 515,000 | 0 | ||||||
Ownership percentage | 31.00% | |||||||
Investments in equity accounted investees | $ 0 | (346,000) | ||||||
Share of loss from investments in equity accounted investees | $ 0 | (244,000) | ||||||
Cronos Australia | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 31.00% | 50.00% | ||||||
Cronos GrowCo | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage (less than) | 50.00% | |||||||
Ownership percentage | 50.00% | |||||||
Investments in equity accounted investees | $ 1,089,000 | 1,501,000 | ||||||
Share of loss from investments in equity accounted investees | $ (311,000) | 11,000 | ||||||
Cronos GrowCo | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 50.00% | |||||||
MedMen Canada | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage (less than) | 50.00% | |||||||
Ownership percentage | 50.00% | |||||||
Investments in equity accounted investees | $ 0 | 0 | ||||||
Share of loss from investments in equity accounted investees | $ 0 | 6,000 | ||||||
MedMen Canada | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 50.00% | |||||||
Natuera | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage (less than) | 50.00% | |||||||
Ownership percentage | 50.00% | |||||||
Investments in equity accounted investees | $ 0 | $ (598,000) | ||||||
Share of loss from investments in equity accounted investees | $ (861,000) | $ 0 | ||||||
Natuera | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 50.00% |
Investments and Advances to J_5
Investments and Advances to Joint Ventures - Schedule of Advances to Joint Ventures (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2020AUD ($) | Dec. 31, 2018USD ($) | |
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Advances to joint ventures | $ 19,437 | $ 17,079 | $ 4,689 | ||
Credit loss allowance | $ (917) | ||||
Advances (repayments) | 15,135 | ||||
Advances to joint ventures recovered from (applied to) carrying amount of investments | (946) | ||||
Effect from foreign exchange | (1,441) | 559 | |||
MedMen Canada | |||||
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Advances to joint ventures | 471 | 435 | 1,244 | ||
Credit loss allowance | 0 | ||||
Advances (repayments) | (852) | ||||
Advances to joint ventures recovered from (applied to) carrying amount of investments | 35 | ||||
Effect from foreign exchange | (36) | 44 | |||
Cronos GrowCo | |||||
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Advances to joint ventures | 18,966 | 16,644 | 2,970 | ||
Credit loss allowance | (917) | ||||
Advances (repayments) | 15,494 | ||||
Advances to joint ventures recovered from (applied to) carrying amount of investments | 22 | ||||
Effect from foreign exchange | (1,405) | 480 | |||
Cronos Australia | |||||
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Advances to joint ventures | 0 | $ 0 | 475 | ||
Credit loss allowance | 0 | ||||
Advances (repayments) | 274 | ||||
Advances to joint ventures recovered from (applied to) carrying amount of investments | (779) | ||||
Effect from foreign exchange | 0 | 30 | |||
Cronos Australia | Other Affiliates | |||||
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Face amount | $ 1,500,000 | ||||
Interest rate | 12.00% | 12.00% | |||
Additional interest rate if past due | 2.00% | 2.00% | |||
Natuera | |||||
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Advances to joint ventures | 0 | $ 0 | $ 0 | ||
Credit loss allowance | 0 | ||||
Advances (repayments) | 219 | ||||
Advances to joint ventures recovered from (applied to) carrying amount of investments | (224) | ||||
Effect from foreign exchange | $ 0 | $ 5 |
Other Investments (Details)
Other Investments (Details) - Equity Securities $ in Thousands | Mar. 06, 2020USD ($) | Mar. 04, 2019shares | Mar. 31, 2020dmilestoneshares | Mar. 31, 2019USD ($)shares |
Whistler | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Number of milestones achieved | milestone | 1 | |||
Number of milestones | milestone | 2 | |||
Number of shares sold (in shares) | 2,563 | |||
Shares sold, percentage of shares issued and outstanding | 19.00% | |||
Aurora | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Shares received (in shares) | 2,524,341 | 578,101 | ||
Proceeds from sale of equity securities, FV-NI | $ | $ 781 | $ 19,259 | ||
Stock issued during period, new issues, measurement input | d | 5 | |||
Number of shares sold (in shares) | 2,524,341 | |||
Canopy | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Proceeds from sale of equity securities, FV-NI | $ | $ 355 | |||
Number of shares sold (in shares) | 11,062 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | Jan. 01, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,749,030 | $ 148,549 | ||
Ending balance | 1,715,268 | 713,345 | ||
Accumulated other comprehensive income (loss) | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | 27,838 | (9,870) | ||
Ending balance | (85,877) | (5,975) | ||
Net unrealized gain (loss) on revaluation and disposal of other investments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | 5 | 5 | ||
Cumulative effect from adoption of ASU 2016-01 | $ 0 | $ 0 | ||
Ending balance | 5 | 5 | ||
Net foreign exchange gain (loss) on translation | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | 27,833 | (9,875) | ||
Net unrealized (loss) gain | (113,715) | 3,895 | ||
Ending balance | $ (85,882) | $ (5,980) |
Leases (Details)
Leases (Details) - Land-use Rights Lease | Mar. 31, 2020 |
Lessee, Lease, Description [Line Items] | |
Operating lease, term | 15 years |
Operating lease, extension term | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term | 9 years |
Loans Receivable, Net - Schedul
Loans Receivable, Net - Schedule of Loan Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current portion | ||
Total current portion of loans receivable | $ 3,911 | $ 4,664 |
Long term portion | ||
Total long term portion of loans receivable | 54,147 | 44,967 |
Loans Receivable | ||
Current portion | ||
Add: Accrued interest | 0 | 89 |
Total current portion of loans receivable | 3,911 | 4,664 |
Long term portion | ||
Add: Accrued interest | 1,196 | 702 |
Total long term portion of loans receivable | 54,147 | 44,967 |
Total loans receivable | 58,058 | 49,631 |
NatuEra Series A Loan | Loans Receivable | ||
Current portion | ||
Current portion of loans receivable, before accrued interest | 3,200 | 4,575 |
Cronos GrowCo Credit Facility | Loans Receivable | ||
Current portion | ||
Current portion of loans receivable, before accrued interest | 711 | 0 |
Long term portion | ||
Long term portion of loans receivable, before accrued interest | 41,557 | 31,678 |
2645485 Ontario Inc. Mucci Promissory Note | Loans Receivable | ||
Long term portion | ||
Long term portion of loans receivable, before accrued interest | $ 11,394 | $ 12,587 |
Loans Receivable, Net - Narrati
Loans Receivable, Net - Narrative (Details) | Jun. 28, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2020CAD ($) | Sep. 27, 2019USD ($) | Aug. 23, 2019USD ($) | Aug. 23, 2019CAD ($) | Jun. 28, 2019CAD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Draw downs | $ 14,512,000 | $ 0 | |||||||
Mucci | Cronos GrowCo | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Ownership interest | 50.00% | 50.00% | |||||||
Loans Receivable | NatuEra Series A Loan | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Face amount | $ 4,575,000 | ||||||||
Total aggregate principal amount | $ 9,150,000 | ||||||||
Funding commitment percentage | 50.00% | ||||||||
Stated interest rate | 5.67% | ||||||||
Allowance for credit loss | $ 1,439,000 | $ 1,439,000 | |||||||
Loans Receivable | Cronos GrowCo Credit Facility | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Face amount | $ 71,114,000 | $ 100,000,000 | |||||||
Allowance for credit loss | 903,000 | 903,000 | |||||||
Draw downs | 43,131,000 | $ 60,650,000 | |||||||
Loans Receivable | 2645485 Ontario Inc. Mucci Promissory Note | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Face amount | $ 11,627,000 | $ 16,350,000 | |||||||
Stated interest rate | 3.95% | 3.95% | |||||||
Allowance for credit loss | $ 243,000 | $ 243,000 | |||||||
Due on demand, term | 90 days | ||||||||
Due on demand, intended demand term, minimum | 12 months | ||||||||
Loans Receivable | Natuera | NatuEra Series A Loan | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Funding commitment percentage | 50.00% |
Derivative Liabilities - Narrat
Derivative Liabilities - Narrative (Details) $ in Thousands | Mar. 08, 2019numberOfDayswarrant$ / sharesshares | Mar. 31, 2020USD ($)shares |
Derivative [Line Items] | ||
Gain on revaluation | $ 113,368 | |
Altria Group, Inc. | Cronos Group, Inc. | ||
Derivative [Line Items] | ||
Ownership percentage | 45.00% | |
Altria Investment | ||
Derivative [Line Items] | ||
Shares issued (in shares) | shares | 149,831,154 | |
Cronos Group, Inc. | Altria Group, Inc. | ||
Derivative [Line Items] | ||
Ownership percentage, if warrant exercised | 55.00% | |
Altria Investment | ||
Derivative [Line Items] | ||
Maximum additional subscription percentage | 10.00% | |
Derivative liability, additional subscription (in shares) | shares | 77,500,000 | |
Altria Warrant | ||
Derivative [Line Items] | ||
Exercise price (in dollars per share) | $ / shares | $ 19 | |
Gain on revaluation | $ 88,104 | |
Pre-emptive Rights | ||
Derivative [Line Items] | ||
Exercise price (in dollars per share) | $ / shares | $ 16.25 | |
Exercise rights, minimum ownership percentage | 20.00% | |
Gain on revaluation | (1,315) | |
Top-up Rights | ||
Derivative [Line Items] | ||
Exercise price (in dollars per share) | $ / shares | $ 16.25 | |
Exercise rights, minimum ownership percentage | 20.00% | |
Exercise price, volume-weighted average price, measurement period | 10 days | |
Exercise price, volume-weighted average price, measurement period, days preceding exercise | numberOfDays | 10 | |
Derivative transaction costs | 22,355 | |
Gain on revaluation | $ 26,579 | |
Altria Warrant | Cronos Group, Inc. | ||
Derivative [Line Items] | ||
Number of warrants issued | warrant | 1 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Reconciliation of Carrying Amounts (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Derivative Instruments [Roll Forward] | |
Beginning balance | $ 297,160 |
(Gain) / Loss on revaluation | (113,368) |
Exercise of Rights | 0 |
Effect from foreign exchange | (17,616) |
Ending balance | 166,176 |
Altria Warrant | |
Derivative Instruments [Roll Forward] | |
Beginning balance | 234,428 |
(Gain) / Loss on revaluation | (88,104) |
Exercise of Rights | 0 |
Effect from foreign exchange | (13,958) |
Ending balance | 132,366 |
Pre-emptive Rights | |
Derivative Instruments [Roll Forward] | |
Beginning balance | 12,787 |
(Gain) / Loss on revaluation | 1,315 |
Exercise of Rights | 0 |
Effect from foreign exchange | (1,032) |
Ending balance | 13,070 |
Top-up Rights | |
Derivative Instruments [Roll Forward] | |
Beginning balance | 49,945 |
(Gain) / Loss on revaluation | (26,579) |
Exercise of Rights | 0 |
Effect from foreign exchange | (2,626) |
Ending balance | $ 20,740 |
Derivative Liabilities - Sche_2
Derivative Liabilities - Schedule of Fair Values of Derivative Liabilities (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020$ / shares | Dec. 31, 2019$ / shares | |
Minimum | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0166 | |
Maximum | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0173 | |
Altria Warrant | Share price at valuation date (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 7.99 | 9.97 |
Altria Warrant | Subscription price (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 19 | 19 |
Altria Warrant | Expected annualized volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.80 | 0.82 |
Altria Warrant | Expected dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0 | 0 |
Altria Warrant | Weighted Average | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0049 | 0.0169 |
Altria Warrant | Weighted Average | Weight average expected life (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 2 years 11 months 4 days | 3 years 2 months 4 days |
Pre-emptive Rights | Share price at valuation date (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 7.99 | 9.97 |
Pre-emptive Rights | Subscription price (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 16.25 | 16.25 |
Pre-emptive Rights | Expected annualized volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.80 | 0.82 |
Pre-emptive Rights | Expected dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0 | 0 |
Pre-emptive Rights | Weighted Average | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0044 | 0.0173 |
Pre-emptive Rights | Weighted Average | Weight average expected life (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 2 years 3 months | 1 year 3 months |
Top-up Rights | Share price at valuation date (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 7.99 | 9.97 |
Top-up Rights | Subscription price (per share in C$) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 16.25 | 16.25 |
Top-up Rights | Expected annualized volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.80 | 0.82 |
Top-up Rights | Expected dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0 | 0 |
Top-up Rights | Weighted Average | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0036 | 0.0171 |
Top-up Rights | Weighted Average | Weight average expected life (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 1 year 3 months 14 days | 1 year 7 months 28 days |
Pre-emptive Rights and Top-up Rights | Minimum | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0021 | |
Pre-emptive Rights and Top-up Rights | Minimum | Weight average expected life (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 3 months | 3 months |
Pre-emptive Rights and Top-up Rights | Maximum | Weighted average risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative liability, measurement input | 0.0062 | |
Pre-emptive Rights and Top-up Rights | Maximum | Weight average expected life (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 5 years 9 months | 6 years |
Derivative Liabilities - Sche_3
Derivative Liabilities - Schedule of Sensitivity Analysis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Altria Warrant | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | $ 22,448 | $ 36,436 |
Weighted average expected life | 12,478 | 17,471 |
Expected annualized volatility | 24,031 | 33,343 |
Pre-emptive Rights | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | 2,385 | 2,743 |
Weighted average expected life | 1,351 | 2,366 |
Expected annualized volatility | 2,329 | 2,180 |
Top-up Rights | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | 4,550 | 9,577 |
Weighted average expected life | 1,439 | 2,178 |
Expected annualized volatility | $ 4,331 | $ 7,714 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Less: accumulated depreciation | $ (11,111,000) | $ (9,443,000) | |
Total | 154,164,000 | 161,809,000 | |
Depreciation expense included in costs of sales | 223,000 | $ 176,000 | |
Depreciation expense included in operating expenses | 507,000 | 169,000 | |
Interest costs capitalized | 0 | $ 89,000 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 3,509,000 | 3,727,000 | |
Building | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 142,038,000 | 150,324,000 | |
Furniture and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 10,457,000 | 10,156,000 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 684,000 | 687,000 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 2,787,000 | 2,789,000 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Cost | $ 5,800,000 | $ 3,569,000 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (1,260) | $ (1,182) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Cost | 73,859 | 73,502 |
Accumulated Amortization | (1,260) | (1,182) |
Net | 72,599 | 72,320 |
Lord Jones brand | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 64,000 | 64,000 |
Trademarks | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 138 | 36 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 478 | 541 |
Accumulated Amortization | (238) | (202) |
Net | 240 | 339 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated Amortization | $ (238) | $ (202) |
ERP System | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (in years) | 5 years | |
Cost | $ 983 | |
Accumulated Amortization | 0 | |
Net | 983 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated Amortization | $ 0 | |
Health Canada licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (in years) | 17 years | 17 years |
Cost | $ 7,970 | $ 8,627 |
Accumulated Amortization | (1,014) | (976) |
Net | 6,956 | 7,651 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated Amortization | $ (1,014) | $ (976) |
Israeli Codes | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (in years) | 25 years | 25 years |
Cost | $ 290 | $ 298 |
Accumulated Amortization | (8) | (4) |
Net | 282 | 294 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated Amortization | $ (8) | $ (4) |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 180,000 | $ 149,000 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2021 | 609,000 | |
2022 | 553,000 | |
2023 | 509,000 | |
2024 | 481,000 | |
2025 | 472,000 | |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets acquired, fair value | 983,000 | |
Disposal of intangible assets | $ 67,000 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 214,794 |
Additions | 0 |
Effect of foreign exchange | (105) |
Balance at end of period | 214,689 |
OGBC | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 302 |
Additions | 0 |
Effect of foreign exchange | (23) |
Balance at end of period | 279 |
Peace Naturals | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 1,078 |
Additions | 0 |
Effect of foreign exchange | (82) |
Balance at end of period | 996 |
Redwood | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 213,414 |
Additions | 0 |
Effect of foreign exchange | 0 |
Balance at end of period | $ 213,414 |
General and Administrative Ex_3
General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Salaries and wages | $ 7,466 | $ 1,994 |
Professional and consulting | 5,586 | 2,203 |
Office and general | 3,075 | 2,901 |
Internal review costs related to restatement of 2019 interim financial statements | 4,407 | 0 |
Other | 3,225 | 195 |
Total | $ 23,759 | $ 7,293 |
Share-based Payments - Summary
Share-based Payments - Summary of Changes in Warrants (Details) - Warrants - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Weighted average exercise price (C$) | ||
Balance at beginning of period (in dollars per share) | $ 0.26 | $ 0.26 |
Exercise of warrants (in dollars per share) | 0 | 0.27 |
Expiry of warrants (in dollars per share) | 0 | 0 |
Balance at end of period (in dollars per share) | $ 0.26 | $ 0.26 |
Number of awards | ||
Balance at beginning of period (in shares) | 18,066,662 | 25,457,623 |
Exercise of warrants (in shares) | 0 | (4,390,961) |
Expiry of warrants (in shares) | 0 | 0 |
Balance at end of period (in shares) | 18,066,662 | 21,066,662 |
Share-based Payments - Summar_2
Share-based Payments - Summary of Outstanding Warrants (Details) - Warrants - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average exercise price (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.26 | $ 0.26 |
Number of warrants (in shares) | 18,066,662 | 18,066,662 | 21,066,662 | 25,457,623 |
October 8 – 28, 2015 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average exercise price (in dollars per share) | $ 0.31 | |||
Number of warrants (in shares) | 2,976,610 | |||
May 13 – 27, 2016 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average exercise price (in dollars per share) | $ 0.25 | |||
Number of warrants (in shares) | 15,090,052 |
Share-based Payments - Stock Op
Share-based Payments - Stock Options Narrative (Details) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2020USD ($)shares | Mar. 31, 2019USD ($)shares | Dec. 31, 2019shares | Mar. 31, 2019$ / sharesshares | Dec. 31, 2018shares | Jun. 28, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options outstanding (in shares) | 14,106,613 | 14,149,502 | 12,826,610 | 12,902,995 | ||
Share-based payments | $ | $ 2,436 | $ 1,771 | ||||
Options exercised (in shares) | 0 | 125,715 | ||||
Issuance of options (in shares) | 51,830 | |||||
2015 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options outstanding (in shares) | 12,319,230 | |||||
2018 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options outstanding (in shares) | 1,787,383 | |||||
Issuance of options (in shares) | 0 | |||||
2020 Omnibus Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options outstanding (in shares) | 0 | |||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share price at grant date (in dollars per share) | $ / shares | $ 24.75 | |||||
Stock options | 2015 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Future awards to be granted (in shares) | 0 | |||||
Stock options | 2018 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based payments | $ | $ 1,730 | $ 1,771 | ||||
Weighted Average | Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share price at grant date (in dollars per share) | $ / shares | $ 26.12 |
Share-based Payments - Summar_3
Share-based Payments - Summary of the Changes in Options (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020$ / shares$ / sharesshares | Mar. 31, 2019$ / shares$ / sharesshares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2018$ / sharesshares | |
Weighted average exercise price (C$) | ||||
Balance at beginning of period (in dollars per share) | $ / shares | $ 4.84 | $ 2.99 | $ 2.99 | |
Issuance of options (in dollars per share) | $ / shares | 24.75 | |||
Exercise of options (in dollars per share) | $ / shares | 5.60 | |||
Cancellation, forfeiture and expiry of options (in dollars per share) | $ / shares | 17.17 | 1.40 | ||
Balance at end of period (in dollars per share) | $ / shares | $ 4.80 | $ 3.06 | $ 4.84 | $ 2.99 |
Weighted average exercise price of options exercisable (in dollars per share) | $ / shares | $ 3.11 | $ 2.28 | ||
Number of options | ||||
Balance at beginning of period (in shares) | shares | 14,149,502 | 12,902,995 | 12,902,995 | |
Issuance of options (in shares) | shares | 51,830 | |||
Exercise of options (in shares) | shares | 0 | (125,715) | ||
Cancellation, forfeiture and expiry of options (in shares) | shares | (42,889) | (2,500) | ||
Balance at end of period (in shares) | shares | 14,106,613 | 12,826,610 | 14,149,502 | 12,902,995 |
Exercisable (in shares) | shares | 9,783,544 | 5,838,386 | ||
Weighted average remaining contractual term (years) | ||||
Outstanding | 2 years 21 days | 3 years 1 month 9 days | 2 years 6 months 21 days | 3 years 4 months 6 days |
Exercisable | 1 year 7 months 28 days | 2 years 10 months 28 days |
Share-based Payments - Fair Val
Share-based Payments - Fair Value of Options Issued (Details) - Stock options | 3 Months Ended |
Mar. 31, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share price at grant date (in dollars per share) | $ 24.75 |
Exercise price (in dollars per share) | $ 24.75 |
Risk-free interest rate | 1.51% |
Expected life of options | 5 years |
Expected annualized volatility | 80.00% |
Expected dividend yield | 0.00% |
Weighted average Black-Scholes value at grant date (in dollars per share) | $ 15.91 |
Forfeiture rate | 0.00% |
Share-based Payments - Restrict
Share-based Payments - Restricted Share Units Narrative (Details) - USD ($) | Sep. 05, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based payments | $ 2,436,000 | $ 1,771,000 | ||
Restricted share units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuances (in shares) | 732,972 | 0 | ||
Award vesting rights, number of common shares per award (in shares) | 1 | |||
Share price at grant date (in dollars per share) | $ 15.34 | |||
Vesting period | 3 years | |||
Share-based payments | $ 706,000 | $ 0 | ||
Outstanding awards (in shares) | 732,972 | 0 | 732,972 |
Share-based Payments - Summar_4
Share-based Payments - Summary of Restricted Share Units Activity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based reserve | ||
Granting and vesting of awards | $ 2,436,000 | $ 1,771,000 |
Restricted share units | ||
Number of awards | ||
Balance at beginning of period (in shares) | 732,972 | |
Vesting of issued RSUs (in shares) | 0 | |
Balance at end of period (in shares) | 732,972 | 0 |
Share-based reserve | ||
Balance as of January 1, 2020 | $ 889,000 | |
Granting and vesting of awards | 706,000 | $ 0 |
Balance as of March 31, 2020 | $ 1,595,000 |
Share-based Payments - Summar_5
Share-based Payments - Summary of Deferred Share Units Activity (Details) - Deferred Share Units (DSUs) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)shares | |
Number of awards | |
Balance at beginning of period (in shares) | shares | 33,397 |
Balance at end of period (in shares) | shares | 33,397 |
Financial liability | |
Balance as of January 1, 2020 | $ 255 |
Gain on revaluation | (50) |
Balance as of March 31, 2020 | $ 205 |
Share-based Payments - Deferred
Share-based Payments - Deferred Share Units Narrative (Details) - Deferred Share Units (DSUs) - shares | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuances (in shares) | 0 | ||
Outstanding awards (in shares) | 0 | 33,397 | 33,397 |
Earnings (loss) per Share - Sch
Earnings (loss) per Share - Schedule of Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic earnings per share computation | ||
Net income attributable to common shareholders of Cronos Group | $ 76,040 | $ 314,092 |
Weighted average number of common shares outstanding used in the computation of basic earnings per share (in shares) | 348,817,472 | 218,949,590 |
Basic earnings per share (in dollars per share) | $ 0.22 | $ 1.43 |
Diluted earnings per share computation | ||
Net income used in the computation of basic earnings per share | $ 76,040 | $ 314,092 |
Adjustment for gain on revaluation of derivative liabilities | 0 | (224,726) |
Net income used in the computation of diluted income per share | $ 76,040 | $ 89,366 |
Weighted average number of common shares outstanding used in the computation of basic earnings per share (in shares) | 348,817,472 | 218,949,590 |
Weighted average number of common shares for computation of diluted income (loss) per share (in shares) | 375,574,354 | 271,086,575 |
Diluted earnings per share (in dollars per share) | $ 0.20 | $ 0.33 |
Altria Warrant | ||
Diluted earnings per share computation | ||
Dilutive effect of derivative liabilities (in shares) | 0 | 17,472,990 |
Top-up Rights | ||
Diluted earnings per share computation | ||
Dilutive effect of derivative liabilities (in shares) | 0 | 17,661 |
Warrants | ||
Diluted earnings per share computation | ||
Dilutive effect of awards (in shares) | 17,550,444 | 23,294,663 |
Stock options and share appreciation rights | ||
Diluted earnings per share computation | ||
Dilutive effect of awards (in shares) | 8,473,466 | 11,351,671 |
Restricted share units | ||
Diluted earnings per share computation | ||
Dilutive effect of awards (in shares) | 732,972 | 0 |
Earnings (loss) per Share - S_2
Earnings (loss) per Share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Shares Outstanding (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 132,978,684 | 54,412,501 |
Ginkgo Equity Milestones | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 14,674,904 | 14,674,903 |
Pre-emptive Rights | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 12,006,740 | 12,006,739 |
Top-up Rights – fixed price | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 25,111,456 | 27,730,859 |
Top-up Rights – market price | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 1,941,349 | 0 |
Altria warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 77,514,993 | 0 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive securities (in shares) | 1,729,242 | 0 |
Related Party Transactions an_2
Related Party Transactions and Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Mar. 08, 2019 | |
Cronos Group, Inc. | Altria Group, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 45.00% | |||
Altria Pinnacle LLC. | Consulting Services | Altria Pinnacle LLC. | ||||
Related Party Transaction [Line Items] | ||||
Consulting fees | $ 672 | $ 0 | ||
Accrual for consulting services | $ 672 | $ 1,152 | ||
Altria Pinnacle LLC. | Purchase of Machinery and Equipment | Altria Pinnacle LLC. | ||||
Related Party Transaction [Line Items] | ||||
Purchases | $ 1,258 |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Current expected credit loss | $ 141 | $ 136 | |
Net revenue, before excise taxes | 9,344 | $ 3,391 | |
United States | |||
Segment Reporting Information [Line Items] | |||
Current expected credit loss | 107 | 12 | |
Rest of World | |||
Segment Reporting Information [Line Items] | |||
Current expected credit loss | 34 | $ 124 | |
Three Major Customers | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Net revenue, before excise taxes | $ 4,121 | ||
One Major Customer | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Net revenue, before excise taxes | $ 1,002 | ||
Customer Concentration Risk | Revenue Benchmark | One Major Customer | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 33.00% | ||
Customer Concentration Risk | Revenue Benchmark | BC Liquor Distribution Branch | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 19.00% | ||
Customer Concentration Risk | Revenue Benchmark | Albert Gaming, Liquor and Cannabis | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 16.00% | ||
Customer Concentration Risk | Revenue Benchmark | Ontario Cannabis Store | Rest of World | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 14.00% |
Segment Information - Schedule
Segment Information - Schedule of Segment Data (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | $ 8,432 | $ 3,004 | |
Equity loss (income) | 1,172 | 198 | |
Interest revenue | 7,758 | ||
Interest expense | (7) | ||
Net interest income | 7,751 | 2,087 | |
Depreciation and amortization | (687) | (318) | |
Income tax recovery (expense) | 0 | 0 | |
Net income (loss) | 75,681 | 313,989 | |
Consolidated balance sheets | |||
Total assets | 1,927,926 | $ 2,090,442 | |
Investments in equity accounted investees | 1,089 | 557 | |
Goodwill | 214,689 | $ 214,794 | |
Purchase of property, plant and equipment, net | 6,411 | ||
Operating Segments | United States | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 2,176 | ||
Equity loss (income) | 0 | ||
Interest revenue | 5 | ||
Interest expense | 0 | ||
Net interest income | 5 | ||
Depreciation and amortization | (33) | ||
Income tax recovery (expense) | 0 | ||
Net income (loss) | (9,805) | ||
Consolidated balance sheets | |||
Total assets | 292,723 | ||
Investments in equity accounted investees | 0 | ||
Goodwill | 213,414 | ||
Purchase of property, plant and equipment, net | 180 | ||
Operating Segments | Rest of World | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 6,256 | ||
Equity loss (income) | 1,172 | ||
Interest revenue | 7,751 | ||
Interest expense | (7) | ||
Net interest income | 7,744 | ||
Depreciation and amortization | (648) | ||
Income tax recovery (expense) | 0 | ||
Net income (loss) | 92,156 | ||
Consolidated balance sheets | |||
Total assets | 316,216 | ||
Investments in equity accounted investees | 1,089 | ||
Goodwill | 1,275 | ||
Purchase of property, plant and equipment, net | 6,231 | ||
Corporate | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 0 | ||
Equity loss (income) | 0 | ||
Interest revenue | 2 | ||
Interest expense | 0 | ||
Net interest income | 2 | ||
Depreciation and amortization | (6) | ||
Income tax recovery (expense) | 0 | ||
Net income (loss) | (6,670) | ||
Consolidated balance sheets | |||
Total assets | 1,318,987 | ||
Investments in equity accounted investees | 0 | ||
Goodwill | 0 | ||
Purchase of property, plant and equipment, net | 0 | ||
Cannabis flower | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 2,741 | 1,825 | |
Cannabis flower | Operating Segments | United States | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 0 | ||
Cannabis flower | Operating Segments | Rest of World | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 2,741 | ||
Cannabis flower | Corporate | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 0 | ||
Cannabis extracts | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 5,576 | 1,103 | |
Cannabis extracts | Operating Segments | United States | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 2,176 | ||
Cannabis extracts | Operating Segments | Rest of World | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 3,400 | ||
Cannabis extracts | Corporate | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 0 | ||
Other | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 115 | $ 76 | |
Other | Operating Segments | United States | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 0 | ||
Other | Operating Segments | Rest of World | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | 115 | ||
Other | Corporate | |||
Consolidated statements of net income and comprehensive income (loss) | |||
Net revenue | $ 0 |
Segment Information - Schedul_2
Segment Information - Schedule of Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net revenue | $ 8,432 | $ 3,004 |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net revenue | 6,091 | 2,983 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net revenue | 2,176 | 0 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net revenue | $ 165 | $ 21 |
Segment Information - Schedul_3
Segment Information - Schedule of Long-lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 154,164 | $ 161,809 |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 132,640 | 141,021 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 2,251 | 2,103 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 19,273 | $ 18,685 |
Commitments - R&D Commitments a
Commitments - R&D Commitments and Altria Consulting Services (Details) $ in Thousands | Feb. 18, 2019 | Oct. 15, 2018USD ($) | Sep. 04, 2018USD ($)cannabinoidshares | Jul. 17, 2018USD ($) |
Long-term Purchase Commitment [Line Items] | ||||
Number of cannabinoids targeted to develop scalable and consistent production | cannabinoid | 8 | |||
Ginkgo | Research and Development Arrangement | ||||
Long-term Purchase Commitment [Line Items] | ||||
Common shares issuable (up to) (in shares) | shares | 14,674,903 | |||
Common shares issuable, value assigned | $ 100,000 | |||
Payments subject to milestones | $ 22,000 | |||
Technion | Research and Development Arrangement | ||||
Long-term Purchase Commitment [Line Items] | ||||
Payments subject to milestones | $ 4,900 | |||
Amount of commitment | $ 1,784 | |||
Research funding period | 3 years | |||
Altria Ventures | Consulting Services Arrangement | ||||
Long-term Purchase Commitment [Line Items] | ||||
Monthly fee, percentage of direct and indirect service costs | 105.00% |
Commitments - Use of Publicity
Commitments - Use of Publicity Rights in Brand Development (Details) - Common Shares | Dec. 23, 2022 | Jun. 23, 2021 | Jan. 31, 2020 | Dec. 23, 2019USD ($)dshares | Mar. 31, 2019shares |
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued (in shares) | shares | 149,831,154 | ||||
Private Placements | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued (in shares) | shares | 856,017 | ||||
Stock issued during period, new issues, measurement input | d | 10 | ||||
Stock issued during period, new issues, fair value | $ 6,000,000 | ||||
Private Placements | Sale of Stock, Performance Milestone One | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Triggering event, minimum revenue | 50,000,000 | ||||
Triggering event, shares issued, value | 1,000,000 | ||||
Private Placements | Sale of Stock, Performance Milestone Two | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Triggering event, minimum revenue | 100,000,000 | ||||
Triggering event, shares issued, value | $ 1,000,000 | ||||
Vested on January 31, 2020 | Private Placements | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Award vesting rights, percentage | 33.33% | ||||
Vesting on June 23, 2021 | Private Placements | Forecast | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Award vesting rights, percentage | 33.33% | ||||
Vesting on December 23, 2022 | Private Placements | Forecast | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Award vesting rights, percentage | 33.33% |
Commitments - Take or Pay (Deta
Commitments - Take or Pay (Details) - 1 months ended Jan. 31, 2020 - Dried Cannabis Flower $ in Thousands, $ in Thousands | USD ($) | CAD ($) |
Recorded Unconditional Purchase Obligation [Line Items] | ||
Take or pay supply agreement, term of agreement | 6 months | |
Minimum | ||
Recorded Unconditional Purchase Obligation [Line Items] | ||
Take or pay supply agreement, purchase amount | $ 1,290 | $ 1,734 |
Maximum | ||
Recorded Unconditional Purchase Obligation [Line Items] | ||
Take or pay supply agreement, purchase amount | $ 3,188 | $ 4,284 |
Contingencies (Details)
Contingencies (Details) - U.S. District Court of Eastern District of New York Vs. Cronos - Pending Litigation | Mar. 12, 2020numberOfAllegedShareholdersnumberOfComplaints |
Loss Contingencies [Line Items] | |
Number of alleged shareholders | numberOfAllegedShareholders | 2 |
Number of putative class action complaints | numberOfComplaints | 2 |
Financial Instruments - Credit
Financial Instruments - Credit Risk Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||
Maximum exposure to credit risk | $ 1,420,809,000 | $ 1,586,978,000 | |
Accounts receivable, threshold period past due, writeoff | 120 days | ||
Current expected credit loss | $ 141,000 | $ 136,000 | |
Cash and cash equivalents | 1,128,396,000 | 1,199,693,000 | |
Short-term investments | 206,230,000 | 306,347,000 | |
Advances to joint ventures, allowance for credit loss | $ 917,000 | $ 0 | |
Five Customers | Accounts Receivable | Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 73.00% | ||
Two Customers | Accounts Receivable | Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 56.00% |
Financial Instruments - Liquidi
Financial Instruments - Liquidity Risk Narrative (Details) - Accounts Payable - Supplier Concentration Risk | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
One Vendor | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 17.00% | |
Three Vendors | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 42.00% |
Financial Instruments - Currenc
Financial Instruments - Currency Rate Risk Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |||
Foreign exchange gain (loss) on translation | $ (113,692) | $ 3,898 | |
Impact of ten percent change in exchange rate | $ 171,503 | $ 174,902 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 1,128,396 | $ 1,199,693 |
Short-term investments | 206,230 | 306,347 |
Derivative liabilities | 166,176 | 297,160 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 1,128,396 | 1,199,693 |
Short-term investments | 206,230 | 306,347 |
Derivative liabilities | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Derivative liabilities | $ 166,176 | $ 297,160 |
Supplementary Cash Flow Infor_3
Supplementary Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Increase (Decrease) in Operating Capital [Abstract] | ||
Accounts receivable | $ 1,234 | $ 984 |
Other receivables | (410) | (3,763) |
Prepaids and other assets | (1,684) | (973) |
Inventory | (11,270) | (3,737) |
Accounts payable and other liabilities | (1,011) | 20,845 |
Cumulative effect from foreign exchange | (2,341) | 762 |
Total | $ (15,482) | $ 14,118 |
Non-monetary Transactions (Deta
Non-monetary Transactions (Details) | Mar. 28, 2019USD ($)numberOfTransactions | Mar. 31, 2020numberOfTransactions |
Nonmonetary Transaction [Line Items] | ||
Number of transactions | numberOfTransactions | 0 | |
Revenue recognized | $ | $ 0 | |
Gain (loss) recognized on transfer | $ | $ 0 | |
Purchased Cannabis Resin and Sold Cannabis Dry Flower | ||
Nonmonetary Transaction [Line Items] | ||
Number of transactions | numberOfTransactions | 2 |
Subsequent Events (Details)
Subsequent Events (Details) - Establishment of a Commercial Cannabis Analytical Testing Laboratory - Cannasoul - Subsequent Event ₪ in Thousands, $ in Thousands | 1 Months Ended | |
Apr. 30, 2020ILS (₪) | Apr. 30, 2020USD ($) | |
Subsequent Event [Line Items] | ||
Collaboration agreement, amount of advances | ₪ 8,300 | $ 2,341 |
Collaboration agreement, term of agreement | 2 years | |
Collaboration agreement, interest rate, stated percentage | 3.50% | 3.50% |
Collaboration agreement, percentage of profits to be received | 70.00% | 70.00% |
Collaboration agreement, profits to be received, maximum percentage of amounts advanced | 150.00% | 150.00% |
Collaboration agreement, percentage of profits to be received, triggering event, subsequent to maximum percentage of amounts advanced being met | 50.00% | 50.00% |