Company Quick10K Filing
Cronos Group
10-Q 2021-03-31 Filed 2021-05-07
10-K 2020-12-31 Filed 2021-02-26
10-Q 2020-09-30 Filed 2020-11-05
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-02
8-K 2020-11-05
8-K 2020-09-08
8-K 2020-08-06
8-K 2020-07-20
8-K 2020-07-09
8-K 2020-06-25
8-K 2020-05-08
8-K 2020-03-30
8-K 2020-03-17
8-K 2020-03-17
8-K 2020-01-15

CRON 10Q Quarterly Report

Part Ifinancial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Iiother Information
Item 1: Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits
EX-10.1 ex101.htm
EX-10.2 ex102.htm
EX-31.1 a10-qq12021311.htm
EX-31.2 a10-qq12021312.htm
EX-32.1 a10-qq12021321.htm
EX-32.2 a10-qq12021322.htm

Cronos Group Earnings 2021-03-31

Balance SheetIncome StatementCash Flow


Washington, D.C. 20549
Form 10-Q
(Mark One)
For the quarterly period ended March 31, 2021
For the transition period from to .
Commission File No. 001-38403
(Exact name of registrant as specified in its charter)
British Columbia, Canada
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
111 Peter St. Suite 300
Toronto, Ontario
M5V 2H1
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, no par valueCRONThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated fileroSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes No x
As of May 6, 2021, there were 371,656,590 common shares of the registrant issued and outstanding.


Table of Contents
Item 1.3
Item 2.24
Item 3.38
Item 4.39
Item 1.40
Item 2.41
Item 3.41
Item 4.41
Item 5.41
Item 6.42

Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to the “Company”, “Cronos Group”, “we”, “us” and “our” refer to Cronos Group Inc., its direct and indirect wholly owned subsidiaries and, if applicable, its joint ventures and investments accounted for by the equity method; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers; the term “U.S. hemp” has the meaning given to term “hemp” in the U.S. Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), including hemp-derived cannabidiol (“CBD”); and the term “U.S. Schedule I cannabis” means cannabis excluding U.S. hemp.
This Quarterly Report contains references to our trademarks and trade names and to trademarks and trade names belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks or trade names to imply a relationship with, or endorsement or sponsorship of us or our business by, any other companies.
All currency amounts in this Quarterly Report are stated in U.S. dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to U.S. dollars; all references to “C$” are to Canadian dollars; all references to “A$” are to Australian dollars; and all references to “ILS” are to New Israeli Shekels.
(Exchange rates are shown as C$ per $)As of
March 31, 2021March 31, 2020December 31, 2020
Average rate1.26651.34371.3036
Spot rate1.25631.40621.2751
Year-to-date average rate1.26651.34371.3411
All summaries of agreements described herein are qualified by the full text of such agreements (certain of which are filed as exhibits hereto).


Table of Contents
Item 1. Financial Statements
Table of Contents
Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020


Cronos Group Inc.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share amounts)

As of March 31, 2021As of December 31, 2020
Current assets
Cash and cash equivalents$1,024,450 $1,078,023 
Short-term investments214,925 211,766 
Accounts receivable, net(i)
6,997 8,928 
Other receivables3,796 10,033 
Current portion of loans receivable, net (ii)
6,717 7,083 
Prepaids and other current assets15,053 11,161 
Inventory, net46,437 44,002 
Held-for-sale assets1,969 1,176 
Total current assets1,320,344 1,372,172 
Advances to joint ventures487 467 
Investments in equity accounted investees, net19,221 19,235 
Loan receivable, net (ii)
90,953 87,191 
Property, plant and equipment, net192,123 187,599 
Right-of-use assets8,538 9,776 
Intangible assets, net70,085 69,720 
Goodwill179,531 179,522 
Total assets$1,881,282 $1,925,682 
Current liabilities
Accounts payable and other liabilities$29,213 $42,102 
Current portion of lease obligation1,130 1,322 
Derivative liabilities272,300 163,410 
Total current liabilities302,643 206,834 
Due to non-controlling interests2,129 2,188 
Lease obligation8,231 8,492 
Total liabilities313,003 217,514 
Commitments and contingencies(iii)
Shareholders’ equity
Share capital(iv, v)
584,912 569,260 
Additional paid-in capital32,090 34,596 
Retained earnings895,503 1,064,509 
Accumulated other comprehensive income58,144 42,999 
Total equity attributable to shareholders of Cronos Group1,570,649 1,711,364 
Non-controlling interests(2,370)(3,196)
Total shareholders’ equity1,568,279 1,708,168 
Total liabilities and shareholders’ equity$1,881,282 $1,925,682 
(i)Net of current expected credit loss allowance on accounts receivable of $66 and $74 as of March 31, 2021 and December 31, 2020, respectively.
(ii)Net of current expected credit loss allowance on loans receivable of $3,020 and $2,439 as of March 31, 2021 and December 31, 2020, respectively.
(iii)Refer to Note 9. Commitments and Contingencies in the notes to condensed consolidated financial statements.
(iv)Authorized for issuance as of March 31, 2021: unlimited and December 31, 2020: unlimited.
(v)Shares issued as of March 31, 2021: 371,656,590 and December 31, 2020: 360,253,332.

See notes to condensed consolidated financial statements.

Cronos Group Inc.
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
(In thousands of U.S dollars, except share and per share amounts, unaudited)

Three months ended March 31,
Net revenue, before excise taxes$14,654 $9,344 
Excise taxes(2,043)(912)
Net revenue12,611 8,432 
Cost of sales15,574 6,946 
Inventory write-down 7,962 
Gross profit (loss)(2,963)(6,476)
Operating expenses
Sales and marketing10,254 7,112 
Research and development (“R&D”)5,102 4,590 
General and administrative21,906 23,759 
Share-based payments2,499 2,436 
Depreciation and amortization735 687 
Total operating expenses40,496 38,584 
Operating loss(43,459)(45,060)
Other income (loss)
Interest income, net2,329 7,751 
Gain (loss) on revaluation of derivative liabilities(116,874)113,368 
Impairment loss on property, plant and equipment and right-of-use assets(1,741) 
Other loss(1,859)(378)
Total other income (loss)(118,145)120,741 
Income (loss) from continuing operations(161,604)75,681 
Loss from discontinued operations(21) 
Net income (loss)$(161,625)$75,681 
Net income (loss) attributable to:
Cronos Group$(161,312)$76,040 
Non-controlling interests(313)(359)
Other comprehensive income (loss)
Foreign exchange gain (loss) on translation$16,284 $(113,692)
Total other comprehensive income (loss)16,284 (113,692)
Comprehensive loss$(145,341)$(38,011)
Comprehensive income (loss) attributable to:
Cronos Group$(146,167)$(37,675)
Non-controlling interests826 (336)
Net income (loss) per share(i)
Basic - continuing operations$(0.44)$0.22 
Diluted - continuing operations(ii)
Weighted average number of outstanding shares
Basic363,012,740 348,817,472 
363,012,740 374,330,168 
(i) For the three months ended March 31, 2021 and 2020, the Company reported a basic and diluted loss from discontinued operations of $0.00 per share and $0.00 per share and $0.00 per share and $0.00 per share, respectively. See Note 7. Earnings (Loss) per Share.
(ii) In computing diluted earnings per share, incremental common shares are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive. See Note 7. Earnings (Loss) per Share.
See notes to condensed consolidated financial statements.

Cronos Group Inc.
Condensed Consolidated Statements of Changes in Equity
(In thousands of U.S. dollars, except share amounts, unaudited)
Table of Contents

Number of sharesShare capitalAdditional paid-in capitalRetained earningsAccumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders’ equity
Balance as of January 1, 2021360,253,332 $569,260 $34,596 $1,064,509 $42,999 $(3,196)$1,708,168 
Warrants exercised7,832,859 1,161 (1,161)— — —  
Vesting of options— — 2,064 — — — 2,064 
Options exercised3,570,399 3,213 (3,203)— — — 10 
Vesting of restricted share units— — 435 — — — 435 
Withholding taxes paid on share-based awards— — (979)(7,694)— — (8,673)
Vesting of common shares issued in connection with the use of certain publicity rights in brand development— — 338 — — — 338 
Top-up rights exercised— 11,278 — — — — 11,278 
Net income (loss)— — — (161,312)— (313)(161,625)
Foreign exchange gain (loss) on translation— — — — 15,145 1,139 16,284 
Balance as of March 31, 2021371,656,590 $584,912 $32,090 $895,503 $58,144 $(2,370)$1,568,279 

Number of sharesShare capitalAdditional paid-in capitalRetained earningsAccumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders’ equity
Balance as of January 1, 2020348,817,472 $561,165 $23,234 $1,137,646 $27,838 $(853)$1,749,030 
Vesting of options— — 1,730 — — — 1,730 
Vesting of restricted share units— — 706 — — — 706 
Vesting of common shares issued in connection with the use of certain publicity rights in brand development— 2,000 (187)— — — 1,813 
Net income (loss)— — — 76,040 — (359)75,681 
Foreign exchange gain (loss) on translation— — — (113,715)23 (113,692)
Balance as of March 31, 2020348,817,472 $563,165 $25,483 $1,213,686 $(85,877)$(1,189)$1,715,268 

See notes to condensed consolidated financial statements.

Cronos Group Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of U.S. dollars, except share amounts, unaudited)

Three months ended March 31,
Operating activities
Net income (loss)$(161,625)$75,681 
Items not affecting cash:
Inventory write-down 7,962 
Share-based payments2,499 2,436 
Depreciation and amortization1,880 1,162 
Gain (loss) on revaluation of derivative liabilities116,874 (113,368)
Impairment loss on property, plant and equipment and right-of-use assets1,741  
Expected credit losses on financial assets and non-cash charges to inventory681 2,068 
Other non-cash operating activities, net1,749 643 
Changes in non-cash working capital:
Accounts receivable, net1,931 472 
Other receivables5,687 (1,235)
Prepaids and other current assets(3,737)(2,439)
Inventory, net(1,007)(14,319)
Accounts payable and other liabilities(12,675)2,039 
Cash flows used in operating activities(46,002)(38,898)
Investing activities
Proceeds from (purchase of) short-term investments, net 80,333 
Purchase of property, plant and equipment(6,680)(6,411)
Purchase of intangible assets(392)(1,105)
Advances on loans receivable(2,645)(14,512)
Other non-cash investing activities, net 781 
Cash flows provided by (used in) investing activities(9,717)59,086 
Financing activities
Repayment of lease obligations(613)(448)
Withholding taxes paid on share-based awards(8,673) 
Other non-cash investing activities, net10  
Cash flows provided by (used in) financing activities(9,276)(448)
Effect of foreign currency translation on cash and cash equivalents11,422 (91,037)
Net change in cash and cash equivalents(53,573)(71,297)
Cash and cash equivalents, beginning of period1,078,023 1,199,693 
Cash and cash equivalents, end of period$1,024,450 $1,128,396 
Supplemental cash flow information
Interest paid$ $7 
Interest received1,157 7,758 
Income taxes paid624  
See notes to condensed consolidated financial statements.


Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
1. Background, Basis of Presentation and Accounting Policies
Cronos Group Inc. (“Cronos Group” or the “Company”) is incorporated in the Province of British Columbia and under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter Street, Suite 300, Toronto, Ontario, M5V 2H1. 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 seeking to build an iconic brand portfolio. Cronos Group’s brand portfolio includes PEACE NATURALS, a global wellness platform; two adult-use brands, COVE and Spinach; and three U.S. hemp-derived consumer products brands, Lord Jones, Happy Danceand PEACE+.
Cronos Group has established strategic joint ventures in Canada, Israel, and Colombia. Cronos Israel (as defined herein) is consolidated for financial reporting purposes. The Company also holds approximately 31% of the issued capital of Cronos Australia Limited (“Cronos Australia”) and accounts for its investment in Cronos Australia under the equity method of accounting. For additional discussion regarding the joint ventures and strategic investment, see Note 3. Investments in Equity Accounted Investees, net.
(b)Out-of-period adjustments
The Company identified an error in the accounting related to the withholding taxes on the net exercise of stock options, which resulted in an understatement of accounts payable and other liabilities of $966 and overstatements of other receivables, retained earnings and common stock of $3,202, $3,838 and $330, respectively, as of December 31, 2020. The error was deemed immaterial, and thus the Company has recorded an out-of-period adjustment to the condensed consolidated balance sheet and the condensed consolidated statement of changes in equity as of March 31, 2021 to correct the error. This error had no impact to the condensed consolidated statement of net income (loss) and comprehensive income (loss). The impact of the out-of-period adjustments are included within the changes in non-cash working capital and withholding taxes paid on share-based awards lines in the Company’s condensed consolidated statements of cash flows.
(c)Basis of presentation
The interim condensed consolidated financial statements of Cronos Group are unaudited. They have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) for interim financial information and with applicable rules and regulations of the U.S. Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP 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, 2021 are not necessarily indicative of the results that may be expected for any other reporting period.
These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Financial Statements”).
Certain prior year amounts have been reclassified to conform to the current year presentation of our condensed consolidated financial statements. These reclassifications had no effect on the reported results of operations and ending shareholder’s equity.
(d)Adoption of new accounting pronouncements
On January 1, 2021, the Company adopted 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”). ASU No. 2020-01 clarifies the interaction of accounting for the transition into and out of the equity method as well as measuring certain purchased options and forwards contracts to acquire investments. The adoption of ASU No. 2020-01 did not have an impact on the Company’s interim condensed consolidated financial statements.
On January 1, 2021, the Company adopted 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 changes in enacted tax laws or rates and employee stock option plans. The adoption of ASU No. 2019-12 did not have an impact on the Company’s interim condensed consolidated financial statements.

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
(e)New accounting pronouncements not yet adopted
In August 2020, the FASB issued ASU 2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging –Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No. 2020-06”). ASU No. 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU No. 2020-06 is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU No. 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company is currently evaluating the impact ASU No. 2020-06 will have on its interim condensed consolidated financial statements.

2. Inventory, net
Inventory, net is comprised of the following items:
As of March 31, 2021As of December 31, 2020
Raw materials, net$11,182 $11,489 
Work-in-progress – dry cannabis, net21,590 20,520 
Work-in-progress – cannabis extracts, net5,036 5,758 
Finished goods – dry cannabis, net5,677 4,894 
Finished goods – cannabis extracts, net2,141 1,011 
Supplies and consumables811 330 
Total$46,437 $44,002 
Inventory is written down for any obsolescence such as slow-moving or non-marketable products, or when the net realizable value of inventory is less than the carrying value. For the three months ended March 31, 2021 and 2020, the Company recorded write-downs related to inventory of $nil and $7,962, respectively.

3. Investments in Equity Accounted Investees, net
The Company holds variable interests in Cronos Growing Company Inc. (“Cronos GrowCo”), Natuera S.à.r.l (“Natuera”), MedMen Canada Inc. (“MedMen Canada”) and Cannasoul Lab Services Ltd. (“CLS”).
Cronos GrowCo is a joint venture incorporated under the Canada Business Corporations Act (“CBCA”) on June 14, 2018 with the objective of cultivating and commercializing cannabis and cannabis products. Cronos Group holds variable interests in Cronos GrowCo through its ownership of 50% of Cronos GrowCo’s common shares and senior secured debt. 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. 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 hemp and cannabis products. Cronos holds variable interests in Natuera through its ownership of 50% of Natuera’s common shares and other debt. Natuera’s economic performance is driven by the quantity and strains of cannabis grown, which is mutually determined by the joint venture partners.
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 each entity’s economic performance. Thus, Cronos Group is not considered the primary beneficiary of each entity. These investments are accounted for as equity method investments classified as “Investments in equity accounted investees, net” in the consolidated balance sheets.

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
CLS is a wholly owned subsidiary of Cannasoul Analytics Ltd., incorporated with the purpose of establishing a commercial cannabis analytical testing laboratory located on the premises of Cronos Israel (the “Cannasoul Collaboration”). Cronos Israel agreed to advance up to ILS 8,297 ($2,483) by a non-recourse loan to CLS over a period of two years from April 1, 2020 for the capital and operating expenditures of the laboratory. The loan bears interest at 3.5% annually. Cronos Israel will receive 70% of the profits of the laboratory until such time as it has recovered 150% of the amounts advanced to CLS, after which time it will receive 50% of the laboratory profits. As a result, the Company is exposed to economic variability from CLS’s performance. The Company does not consolidate CLS as it does not have the power to direct the activities that most significantly impact the entity’s economic performance; thus, the Company is not considered the primary beneficiary of the entity. The carrying amount of the non-recourse loan is recorded under loans receivable and the full loan amount, ILS 8,297, represents the Company’s maximum potential exposure to losses through the Cannasoul Collaboration. See Note 4. Loans Receivable, net for further information regarding loans receivable.
A reconciliation of the carrying amount of the investments in associates and joint ventures is as follows:
Ownership interestAs of March 31, 2021As of December 31, 2020
Cronos Australia31%$ $ 
Cronos GrowCo50%$19,221 $19,235 
$19,221 $19,235 

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,
Cronos GrowCo$(299)$(311)
(i)    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 4. Loans Receivable, net.
The Company determined that the maximum exposure of loss on investments in non-consolidated investments is limited to the Company’s initial investment, advances and/or loans for each variable interest entity. The following is a summary of the maximum exposure to loss as of March 31, 2021 and December 31, 2020:
Ownership interestAs of March 31, 2021As of December 31, 2020
Cronos Australia31%$1,553 $1,530 
Cronos GrowCo50%21,433 21,125 
MedMen Canada50%487 467 
Natuera50%8,160 8,154 
Total$31,633 $31,276 


Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
4. Loans Receivable, net
As of March 31, 2021As of December 31, 2020
Natuera Series A loan(i)
$2,013 $3,518 
GrowCo Facility(ii)
796 3,137 
Add: Accrued interest3,908 428 
Total current portion of loans receivable6,717 7,083 
GrowCo Facility(ii)
76,043 69,939 
Mucci promissory note(iii)
13,654 13,324 
Cannasoul collaboration loan(iv)
1,215 1,261 
Add: Accrued interest41 2,667 
Total long-term portion of loans receivable90,953 87,191 
Total loans receivable, net$97,670 $94,274 
(i)As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $1,151 and $685, respectively, was recorded against the master loan agreement entered into with Natuera on September 27, 2019 (the “Series A loan”). As of March 31, 2021 and December 31, 2020, a loss allowance of $4,582 and $3,024, respectively, was recorded against the 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 3 and Note 14.
(ii)As of March 31, 2021 and December 31, 2020, Cronos GrowCo had drawn C$98,500 ($78,405) and C$95,150 ($74,626), respectively, from a credit agreement it entered into with the Company in August 2019 (the “GrowCo Facility”). As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $1,569 and $1,470, respectively, was recorded against the GrowCo Facility.
(iii)As of March 31, 2021 and December 31, 2020, a current expected credit loss allowance of $274 and $259, respectively, was recorded against the Mucci promissory note.
(iv)As of March 31, 2021 and December 31, 2020 CLS has received ILS 4,149 (approximately $1,241) from a non-recourse loan. As of March 31, 2021 and December 31, 2020 a current expected credit loss allowance of $26 and $25, respectively, was recorded against the Cannasoul collaboration loan.
5. Derivative Liabilities
On March 8, 2019, the Company closed the previously announced investment in the Company (the “Altria Investment”) by Altria Group, Inc. (“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 and one warrant of the Company (the “Altria Warrant”), all of which were issued to a wholly owned subsidiary of Altria. As of the closing date of the Altria Investment, Altria beneficially held an approximately 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 82.6 million common shares at March 31, 2021) 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 Strategic Partnership”)), 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 Strategic Partnership 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%.

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
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.
A reconciliation of the carrying amounts of the derivative liability for the three months ended March 31, 2021 and 2020:
As of January 1, 2021Revaluation (gain)/lossExercise of rightsForeign exchange effectAs of March 31, 2021
(a) Altria Warrant$138,858 $92,964 $ $2,834 $234,656 
(b) Pre-emptive Rights12,095 7,833  245 20,173 
(c) Top-up Rights12,457 16,077 (11,278)215 17,471 
$163,410 $116,874 $(11,278)$3,294 $272,300 

As of January 1, 2020Revaluation (gain)/lossExercise of rightsForeign exchange effectAs of March 31, 2020
(a) Altria Warrant$234,428 $(88,104)$ $(13,958)$132,366 
(b) Pre-emptive Rights12,787 1,315  (1,032)13,070 
(c) Top-up Rights49,945 (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 three months ended March 31, 2021, the Company’s share price increased from December 31, 2020 resulting in a loss on revaluation of $116,874. During the three months ended March 31, 2020, the Company’s share price decreased from December 31, 2019 resulting in a gain on revaluation of $113,368.

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
The fair values of the derivative liabilities were determined using the Black-Scholes pricing model as of March 31, 2021 and December 31, 2020 applying the following inputs:
As of March 31, 2021As of December 31, 2020
Altria WarrantPre-emptive RightsTop-up RightsAltria WarrantPre-emptive RightsTop-up Rights
Share price at valuation date (i)
Subscription price (i)
Weighted average risk-free interest rate (ii)
Weighted average expected life (iii)
Expected annualized volatility (iv)
Expected dividend yield%%%%%%
(i)Per share in C$.
(ii)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. As of March 31, 2021 and December 31, 2020, the risk-free interest rate uses a range of approximately 0.09% to 0.86% and 0.10% to 0.39%, respectively, for the Pre-emptive Rights and Top-up Rights.
(iii)The expected life represents the period of time, in years, 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. As of March 31, 2021 and December 31, 2020, the expected life uses a range of approximately 0.25 year to 4.50 years and 0.50 year to 5.00 years, respectively.
(iv)Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company as of March 31, 2021. As of December 31, 2020, volatility was based on the blended historical volatility levels 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. While a decrease in the inputs noted below would cause a decrease in the carrying value of the derivative liability, there would also be an equal but opposite impact on net income (loss) as of March 31, 2021.
Increase as of March 31, 2021
Altria WarrantPre-emptive RightsTop-up Rights
Share price$42,479 $4,133 $4,376 
Weighted average expected life18,051 3,039 683 
Expected annualized volatility35,099 2,865 2,785 
These inputs are classified in Level 3 on the fair value hierarchy and are subject to volatility and several factors outside of the Company’s control, which could significantly affect the fair value of these derivative liabilities in future periods.

6. Share-based Payments
(a)Share-based award plans
The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the Stock Option Plan dated May 26, 2015 (the “2015 Stock Option Plan”), the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan” and, together with the 2015 Stock Option Plan, the “Prior Option Plans”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU plan dated August 10, 2019 (the “DSU Plan”). The Company can no longer make grants under the Prior Option Plans.
The following table summarizes the total stock-based compensation expense associated with the Company’s stock options and RSUs for the three months ended March 31, 2021 and 2020:
For the three months ended March 31,
Vesting of stock options$2,064 $1,730 
Vesting of RSUs435 706 
Total share-based payments$2,499 $2,436 

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of $, except gram and share amounts)
(b)Stock options
Vesting conditions for grants of options are determined by the Compensation Committee of the Company’s Board of Directors. The typical vesting for stock option grants made under the 2020 Omnibus Plan is annual vesting over three to five years with a maximum term of ten years. The typical vesting for stock option grants made under the Prior Option Plans is quarterly vesting over three to five years with a maximum term of seven years. The Prior Option Plans did not and the 2020 Omnibus Plan does not authorize grants of options with an exercise price below fair market value.
The following is a summary of the changes during the three months ended March 31, 2021 and 2020:
Weighted average exercise price (C$) (i)
Number of optionsWeighted average remaining contractual term (years)
Balance as of January 1, 2021$5.40 13,755,148 2.30
Exercise of options2.13 (5,230,550)
Cancellation, forfeiture and expiry of options14.71 (25,771)
Balance as of March 31, 2021$7.38 8,498,827 2.82
Exercisable as of March 31, 2021$5.75 4,896,820 1.46
(i)The weighted average exercise price reflects the conversion of foreign currency-denominated stock options translated into C$ using the average foreign exchange rate as of the date of issuance.
Weighted average exercise price (C$)Number of optionsWeighted average remaining contractual term (years)
Balance as of January 1, 2020$4.84 14,149,502 2.56
Cancellation, forfeiture and expiry of options17.17 (42,889)
Balance as of March 31, 2020$4.80 14,106,613 2.06
Exercisable as of March 31, 2020$3.11