Cronos Establishes International Low Cost Production in Israel

September 6, 2017

Cronos Establishes International Low Cost Production in Israel

TORONTO, Sept. 6, 2017 /CNW/ – Cronos Group Inc. (TSXV: MJN) (OTC: PRMCF) (“Cronos” or the “Company”) is pleased to announce that the Company has entered into a strategic joint venture (“Cronos Israel”) with Kibbutz Gan Shmuel (“Gan Shmuel”) for the production, manufacture and global distribution of medical cannabis. Gan Shmuel is one of the largest and most sophisticated kibbutzim in Israel, producing and exporting a variety of products to 35 countries throughout Europe and Asia.

Israel has an ideal climate for growing cannabis with abundant light to support year-round greenhouse cultivation without the need for supplemental flower lighting. The Israeli climate, combined with Gan Shmuel’s existing manufacturing infrastructure and skilled labor force, will enable Cronos Israel to produce high quality medical cannabis at an expected cost of between $0.40 and $0.50 per gram.

“Gan Shmuel is one of the most established kibbutzim, with extensive experience in agriculture, large scale manufacturing and export. This partnership allows Cronos to efficiently scale low cost, high quality production to meet global demand,” said David Hsu, COO of Cronos.

Phase One of Cronos Israel involves the construction of a 45,000-sq. ft. greenhouse that is expected to produce up to 5,000 KG annually. This will be paired with a separate 11,000-sq. ft., extraction laboratory that will be utilized for analytics, formulation development, and research. In Phase Two, Cronos Israel plans to increase production capacity to 24,000 KG annually. Gan Shmuel is situated on 4,939 acres of mixed-use agricultural/industrial land, which gives Cronos Israel the ability to expand production capacity well beyond 100,000 KG annually with its anticipated future build-outs.

Cronos Israel designed the facility to meet the Company’s best-in-class quality standards, including Good Production Practices and Good Manufacturing Practices (GMP). Cronos’ expertise operating under these guidelines will ensure that all quality controls across the Company’s international platforms are consistent with the highest manufacturing standards.

Earlier this year, the Israeli Health Ministry’s medical cannabis agency (the “Yakar”) granted Gan Shmuel four codes to establish four distinct commercial operations: (1) propagation and breeding (“Nursery”), (2) commercial cannabis cultivation (“Cultivation”), (3) extraction, formulation and packaging (“Manufacturing”), and (4) patient care and distribution (“Distribution”), (collectively, the “Codes”). Cronos will contribute intellectual property, management expertise, access to its current and future distribution channels, and capital to Cronos Israel. Gan Shmuel will contribute the Codes, agricultural and industrial expertise, land, capital and access to the skilled Gan Shmuel labor force. Cronos will hold a 70% stake in each of the Nursery and Cultivation operations and a 90% stake in the Manufacturing and Distribution operations.

“This isn’t just about becoming the lowest cost producer in the world. Establishing a major operation in Israel gives us frontline exposure to leading medical cannabis research and innovation. Cronos Israel is a significant step in raising the standard of medical cannabis globally,” said Mike Gorenstein, CEO of Cronos.

Cronos Israel is subject to final approvals, including the approval of the TSXV.

A conference call to discuss Cronos Israel will be held at 8:30 am (EST). The call will be open to the public.

Members of the public who would like to listen to the conference call should dial +1-888-231-8191 (in Canada) or +1-647-427-7450 (outside of Canada). The number should be dialed at least 5 minutes prior to the start of the conference call. For those unable to listen to the live broadcast, a replay will be available by dialing +1-855-859-2056 passcode number 82023991 beginning approximately two hours after the event.

About Cronos Group
Cronos Group is a geographically diversified and vertically integrated cannabis company that operates two wholly-owned Licensed Producers (“LPs”) regulated within Health Canada’s Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) and holds a portfolio of minority investments in other Licensed Producers. The Company’s flagship LPs, Peace Naturals Project Inc. (Ontario) and In The Zone Produce Ltd. (British Columbia), are collectively situated on over 125 acres of agricultural, licensed land. Cronos Group is focused on building an international iconic brand portfolio, providing patients with compassionate and personalized care, and creating value for our shareholders.

About Gan Shmuel
Founded in 1921, Gan Shmuel has over 1,000 members and spans across 4,939 acres, making it one of the largest Kibbutzim in Israel. Gan Shmuel operates a variety of businesses including: Gan Shmuel Foods (TLV: GSFI), a commercial shopping mall and supermarket, a koi breeding farm, orchards, cattle farms, a distribution company, a manufacturing factory for cheese and meat and a commodity trading company. Gan Shmuel is a traditional kibbutz, based on principles of joint property ownership, equality and cooperation in production.

Forward-looking statements
This news release may contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Except as required by law, Cronos Group disclaims any obligation to update or revise any forward-looking statements. Readers are cautioned not to put undue reliance on these forward-looking statements. This news release contains information obtained by Cronos Group from third parties. Cronos Group believes such information to be accurate but has not independently verified such information.

 

CONTACT INFORMATION

The Cronos Group.
Michael Krestell
Investor & Media Relations
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michael@thecronosgroup.com

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