Canadian cannabis company Cronos Group Inc. on Wednesday announced plans to end its hemp-derived CBD operations in the U.S. by the end of this year’s second quarter. The company said the decision will “improve its cash flow in the near term and position itself to directly enter the U.S. THC market when the necessary changes in U.S. regulatory conditions occur.”
The move is part of a larger plan by Cronos to improve its cash flow and streamline its operations.
In a press release, Mike Gorenstein, Cronos chairman, president, and CEO said the company believes that “one day, the U.S. will be one of the most important cannabis markets in the world” but that Cronos’ “resources are best spent on staying laser-focused on becoming cash flow positive by driving cost savings and process efficiencies” for its “borderless adult-use products.”
“We have 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. 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 U.S. once regulatory conditions change.” — Gorenstein in a statement
Cronos also announced that starting in the second quarter of the year it intends to report its financial results under one consolidated segment and will no longer report the U.S. and rest of world as separate segments. The firm is also increasing its previously announced 2023 operating expense savings target from a range of $10 to $20 million to a new range of $20 to $25 million, partially due to its decision to wind down and exit its existing U.S. operations.
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