Cronos Group Inc. to pay more than $1 million for accounting and control failures

For Immediate Release OSC Enforcement

TORONTO – A panel of the Capital Markets Tribunal today approved a settlement agreement between the OSC and Cronos Group Inc. (Cronos) regarding accounting errors that led to two restatements of its interim financial statements. A separate settlement agreement was also approved between the OSC and William Hilson, Cronos’ former Chief Financial Officer and Chief Commercial Officer, for his role in one of the company’s cannabis wholesale transactions.

The OSC acknowledges the assistance provided in its investigation by the U.S. Securities and Exchange Commission (SEC), which announced today it settled charges against Cronos and Hilson.

Cronos improperly recognized $7.6 million in revenue in its Q1, Q2 and Q3 2019 interim financial statements regarding three wholesale cannabis transactions. The company also overstated virtually all of its U.S. goodwill and a significant portion of its U.S. intangible assets by a collective amount of $234.9 million in its Q2 2021 interim financial statements. As a result of these accounting errors, the company restated its Q1, Q2 and Q3 2019 interim financial statements, and its Q2 2021 interim financial statements. In both instances, Cronos reported related material weaknesses in internal control over financial reporting (ICFR).

“As the industry continues to grow, it is imperative that investors receive accurate information about the financial performance of public cannabis companies to support informed investment decisions in this nascent sector,” said Jeff Kehoe, Director of Enforcement at the OSC. “The settlements announced today hold Cronos and Mr. Hilson accountable for their failures and serve as another excellent example of the OSC working across international borders to protect Ontario’s capital markets.  

As part of its settlement with the OSC, Cronos admits that it failed to file interim financial statements prepared in accordance with applicable generally accepted accounting principles. Additionally, the company has paid an administrative penalty of $1.3 million, and a further $40,000 towards the cost of the OSC’s investigation. Cronos will also pay for an independent consultant, acceptable to the OSC, to review its internal controls and ICFR.

The terms of the settlement reflect Cronos’ full cooperation with the OSC and the timely, proactive, and comprehensive measures it took to remediate its conduct.

In 2019, while Hilson was Cronos’ Chief Commercial Officer, he was involved in one of the wholesale transactions in which Cronos improperly recognized $3 million in revenue. In settling this matter, Hilson admits that he failed to take appropriate steps to address the handling of revenue recognition issues for this transaction by Cronos, and that his conduct was contrary to the public interest.

Hilson will be subject to a one-year ban from acting as a director or officer of any reporting issuer. Hilson also agreed to make a voluntary payment of $50,000 to the OSC and pay a further $20,000 towards the cost of the OSC’s investigation. The settlement reflects that Hilson reached a timely resolution of the matter, which saved resources for both the OSC and the Capital Markets Tribunal.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at

– 30 –

For Media Inquiries:

For Investor and Industry Inquiries: