Excerpts from the last quarterly conference call:
Michael Gorenstein, Cronos Group Inc. - Chairman, President & CEO
Cronos Group has always maintained an asset-light approach to production capacity. And you've often heard us say, our business model is not to be the farmer. We believe that there will be value created across many verticals in the cannabis industry. However, we see sustainable long-term value in the areas of research and development and marketing innovative branded products. We firmly believe that the best way to create value to the supply chain is by working with contract farmers and suppliers to support our capacity needs versus full vertical integration. We have structured our supply chain with efficiency and flexibility in mind by creating a global network of co-manufacturing joint ventures with first-class operating partners to meet the company's needs. But as supply comes online, we are also procuring cannabis and cannabis-derived products from third-party producers to supplement our production and drive supply chain efficiencies in both Canada and in the U.S. for hemp-derived CBD.
As the new product categories come online, regulations changed domestically and new markets opened internationally, we expect to see our mix of wholly owned assets transitioned to being used for fermentation, manufacturing and packaging for branded products. Certain facilities at Peace Naturals will be partially repurposed from cultivation to provide for more R&D activities, production and manufacturing of derivative products and will allow for increased vault and warehousing space. This is a natural evolution as our business progresses, and there are times we have to update our facilities to ensure we are achieving our goals.
Jerry Barbato, Cronos Group Inc. - CFO
I'd like to provide an update on our capacity disclosures. As Mike mentioned, we remained focused on an asset-light strategy. We will continue to balance our own cultivation capacity with buying cannabis and cannabis derived products from third parties.
As you saw us announce this morning, we are optimizing our Peace Naturals campus for alternative uses like additional R&D facilities and derivative product manufacturing. At this time, we estimate the pretax onetime charge of these updates to be no more than $15 million, primarily related to asset write downs.
