Cronos Group Inc. brought in $32.3 million in net revenue and reported $13.7 million in gross profit in the three months ended March 31, 2025 (Q1 2025), with $7.7 million in net income and $3.2 million in comprehensive income (all figures in US dollars).
The cannabis producer saw a $7 million year-over-year increase (15.6%) in net revenue compared to Q1 2024, which the company attributes to higher international sales, as well as cannabis extract sales in the Canadian market.
Also, due to the consolidation of Cronos GrowCo’s results of operations in the company’s financial statements beginning July 1, 2024, Cronos GrowCo contributed $2.9 million of cannabis flower sales in the three months ended March 31, 2025. No such sales were recognized for the three months ending March 31, 2024.
Cost of sales for Cronos also declined compared to the same quarter in the previous year, which the company says was primarily due to lower direct costs and production efficiencies, partially offset by higher sales volumes and the impact of the inventory step-up from the Cronos GrowCo Transaction.
Cronos reported $9.6 million in federal excise taxes on $41.9 million in sales in the first three months of 2025, or a nearly 23% rate.
Cronos GrowCo is licensed to sell certain cannabis products to other license holders in the wholesale channel, as well as to provincial cannabis control authorities. It is also licensed to export dried flower to the Israeli medical cannabis market.
On June 20, 2024, Cronos Group made an additional investment, the “Cronos GrowCo Transaction,” in Cronos Growing Company Inc. (Cronos GrowCo) to fund the expansion of cultivation operations.
The company’s gross profit of $13.7 million represented an increase of $9.3 million from the three months ended March 31, 2024. The increase was mainly attributed to higher sales volumes and average sales prices, lower direct costs, and production efficiencies, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.
“2025 is shaping up to be a transformative year for Cronos as we execute our strategic priorities to drive revenue growth, expand margins, and maintain disciplined cost management,” said Mike Gorenstein, Chairman, President and CEO of Cronos.
“While strong demand for our flower products has recently outpaced supply, we are confident that our Cronos GrowCo expansion, on track for completion in the second quarter with initial sales in the second half of the year, will unlock significant capacity to meet this demand and fuel our next phase of growth.”
Cronos reports through one consolidated segment, including operations in Canada and Israel. In Canada, Cronos operates one wholly owned license holder under the Cannabis Act, the Peace Naturals Project Inc., which has production facilities near Stayner, Ontario, called the Peace Naturals Campus.
On July 1, 2024, the company also obtained majority control of the board of directors of Cronos GrowCo, a license holder under the Cannabis Act. Cronos maintains its 50% equity interest in Cronos GrowCo. Cronos says the construction of GrowCo’s expanded cultivation facilities is on track for completion in Q2 2025, with first harvests and sales beginning in the second half of the year.
In Israel, Cronos operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel.
Israel has recently threatened to add a tariff of up to 165% on Canadian medical cannabis products brought into the country. While the future of those tariffs is in dispute due to internal conflicts in the Israeli government, the Minister of Economy has said he will still be moving forward with them.
In a recent interview, Israel’s Ministry of Economy, Danny Tal, specifically called out The Cronos Group by name. According to Tal, Cronos accounts for more than 75% of total imports from Canada, accusing them of being the most prominent participant in the alleged “dumping” process.
In response, Mike Gorenstein, the CEO of Cronos, recently told StratCann that such claims are unfounded.
“The idea that Cronos is sitting on immovable inventory and shipping it to Israel because it’s ‘cheaper than destroying it’ is pure fiction, which is par for the course in the Trade Commissioner’s investigation,” says Gorenstein. “As I have said before, we are struggling to keep up with global demand, which is why we announced a 70% capacity expansion at Cronos GrowCo last year.
Written May 8, 2025 | Sarah Clark Posted in Stratcann