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CRON.US

id: 1614

Cronos Group (CRON) Investor Settlement

The settlement terms have been submitted to the court for approval.

$10,000,000

Cash Settlement

E.D. New York

Court

2:20-cv-01310

Case number

05/19/2019

Class period Start

03/30/2020

Class period End

Cronos Group has reached a settlement with $CRON investors over claims it inflated revenue through sham cannabis sales and hid major financial reporting weaknesses in 2019.

Outline

In 2019, Cronos reported strong revenue growth. But the company later restated its earnings after revealing that it had recorded non-existent sales from “round-trip” cannabis transactions. $CRON fell nearly 50% as the fraud came to light, and regulators launched investigations. After that, Cronos faced a lawsuit from investors.

Timeline
May 9, 2019 – Cronos reported Q1 revenue that included C$2.5M in sales.
September 19, 2019 – An additional sale was booked with MediPharm, inflating Q3 revenue by C$3M.
February 24, 2020 – Cronos delayed its earnings release; $CRON fell 10.9%.
March 2, 2020 – The company filed an incomplete annual report; stock dropped 11.6%.
March 11, 2020 – Investors filed a lawsuit against Cronos.
March 30, 2020 – Cronos filed restatements for Q1 and Q3 2019 with internal control failures disclosed; $CRON dropped another 29%.
October 24, 2022 – The SEC and OSC charged Cronos and former executives with accounting fraud.
May 30, 2025 – Cronos agreed to settle the claims.
Background

Cronos, a Canadian cannabis company, promoted itself as a leader in both medical and recreational cannabis markets. In 2019, it reported substantial revenue growth through deals with MediPharm and Heritage Cannabis. 

But behind the scenes, Cronos recorded processing transactions as sales, falsely boosting revenue in at least two quarters.

In these round-trip arrangements, Cronos sent cannabis to be processed and then reacquired the product, yet booked the initial transfer as a sale. 

These actions were later exposed, prompting earnings restatements for Q1 and Q3 2019, totaling a CAD $7.6 million reduction in revenue. The company also admitted internal control failures, and its auditor, KPMG, declined reappointment.

After all of this happened, in March 2020, shareholders sued the company for misleading them about its financial performance.

In 2022, U.S. and Canadian regulators charged Cronos and its former Chief Commercial Officer with accounting fraud. 

Following the restatements and enforcement actions, $CRON dropped nearly 50% from its previous highs. 

What Can Investors Expect Now?

Cronos Group has reached a settlement with $CRON investors over claims it inflated revenue through sham cannabis sales and hid major financial reporting weaknesses in 2019.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section below.

Case Type

US Securities Class Action

Case Status

Stipulative Settlement

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Failure to Disclose

Suspected Party

Directors,

Management

Security Type

Stocks

Trade Direction

Long

Payout per Share

0.06

Filing date

03/11/2020

Plaintiffs

Keith D. Norman

Attorneys

Robbins Geller Rudman & Dowd LLP

Defendants

Michael Gorenstein; Jerry F. Barbato; William Hilson

Judge

Eric N. Vitaliano

Administrator

A.B. Data Ltd

Attorney fee

$3,500,000

Trades matching type

FIFO

Frequently Asked Questions

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