Pot firms have ‘deficiencies’ in disclosures to investors: securities regulators


TORONTO — Canadian securities regulators say cannabis industry companies have several “deficiencies” in their disclosures to investors, including insufficient information in their financial statements.

The Canadian Securities Administrators says it reviewed the disclosures of 70 publicly listed companies in the marijuana industry and found that licensed producers often did not provide enough information in their financial documentation for an investor to understand their performance.

The CSA also said in a notice today that 74 per cent of publicly listed cannabis companies with operations in the U.S. — where marijuana is illegal at the federal level — did not provide sufficient disclosure about the related risks, as previously requested.

The umbrella organization of the country’s provincial securities regulators also noted that all the licensed cannabis producers reviewed needed to improve disclosures regarding the fair value of their plants.

The accounting practice, in which a value is put on pot plants before they are sold, has been criticized previously because it is confusing for investors and approaches differ among companies.

The CSA’s notice calling on cannabis companies to improve their disclosure comes one week before recreational marijuana is legalized across Canada on Oct. 17.


The Canadian Press