Cronos Group Inc (NASDAQ:CRON, TSX:CRON) said it has decided to streamline its operating structure by winding down and exiting its existing US hemp-derived CBD-focused operations by the end of the second quarter of 2023.
The global cannabinoid company noted it made the move to improve its cash flow in the near term and position itself to directly enter the US THC market when the necessary changes in the country’s regulatory conditions occur.
“We believe our resources are best spent on staying laser-focused on becoming cash flow positive by driving cost savings and process efficiencies for our borderless adult-use products,” Cronos Group CEO Mike Gorenstein said in a statement.
“Achieving our goal to generate positive cash flow in 2024 will advance our industry-leading cash balance and put us in the best position to win in the US once regulatory conditions change.”
Gorenstein asserted that Cronos Group has “the best balance sheet in the cannabis industry,” with $836 million in cash and short-term investments and zero debt as of March 31, 2023.
As well, Cronos reported that it is increasing its previously-announced 2023 operating expense savings target from a range of $10 million to $20 million to a new range of $20 million to $25 million, partially due to its decision to wind down and exit its existing US operations.
The company noted that it expects to incur expenses in the second quarter of 2023 of up to $1.8 million due to inventory write-offs, severance and other employee costs, and asset impairment charges in connection to the exit of its existing US operations.
Furthermore, Cronos stated that it anticipates bringing the Lord Jones brand back to its adult-use roots by launching it in the Canadian market in the fourth quarter of 2023.
Cronos Group stock has dropped nearly 32% year to date as of Thursday’s closing price.
Contact Sean at sean@proactiveinvestors.com