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The Cronos Group reported USD$34.3 million in net revenue, $3.6 million in gross profit, and $7.3 million in net income in its third quarter 2024 report for the three months ended September 30, 2024 (all figures in USD).
This represented a significant year-over-year increase in net revenue and income for the cannabis producer, with a 38% increase of $9.5 million from the three months ended September 30, 2023. Cronos attributes this to an increase in sales domestically and in the international market.
However, gross profit was down 9% year-over-year, representing a decrease of $0.4 million from the third quarter in 2023. Cronos attributes this loss mainly to inventory-related purchase accounting adjustments resulting from the Cronos GrowCo transaction on July 1, 2024. This loss was also somewhat offset by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel, and higher cannabis flower sales in other countries.
The bulk of Crono’s cannabis sales are in Canada and Israel. For the three months ending September 30, 2024, $26.3 million of those sales were for cannabis flower, while $7.8 million were for cannabis extracts. From those sales, $24.1 was in Canada’s medical and non-medical cannabis market, $7.3 million was in Israel, and $2.9 million was from sales in other countries.
Cronos also recently announced a $51 million (CAD$70 million) expansion of Cronos Growing Company Inc. (Cronos GrowCo) to address increased international demand for its cannabis. Cronos GrowCo reported preliminary unaudited net revenue to third parties, excluding sales to the Company, of approximately $2.7 million in the second quarter of 2024. Q3 2024 represents the first quarter where Cronos consolidates Cronos GrowCo’s results in its financial statements.
The company’s adjusted gross profit in Q3 2024 was a 170% increase from the same quarter in 2023.
“Our results this quarter demonstrate that our long-term strategy is working,” said Mike Gorenstein, Cronos chairman, president and CEO. “With record net revenue and a disciplined approach to operating expenses, Cronos operates more efficiently and effectively than ever before, and we anticipate long-term margin improvement.
“Our consolidation of Cronos Growing Company has further strengthened our supply chain, which we anticipate will lead to improved margins and allow us to meet the increasing global demand for high-quality cannabis. With an industry-leading balance sheet, we are well-positioned to expand into new legal markets and drive future growth opportunities.
“As international demand continues to rise, particularly in markets like Germany, the UK, and Australia, the investments we’ve made in our infrastructure and global partnerships are paying off.”
In Q3 2024, Cronos brand Spinach was the top-selling cannabis brand in Canada, according to Hifyre. The brand’s edibles were in the number one position with a 17.2% market share in Q3 2024, while its flower products held the number one spot with a 6% market share.
In September, Cronos joined a group of cannabis cultivators that had filed an administrative petition in the District Court of Jerusalem, Israel, against the Trade Levies Commissioner and certain Israeli and Canadian businesses in relation to the Israeli government’s concerns about “product dumping” into their domestic market from Canadian cannabis companies.
The Israeli government had proposed a levy on Canadian cannabis products, which could be as high as 369% on Cronos products. In their most recent quarterly report, Coronos says that on November 10, 2024, Israel’s Trade Levies Commissioner published final findings under which Cronos would be subject to a proposed duty of 175%, pending a ruling from an advisory committee.
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