The Canadian Securities Administrators said Wednesday that publicly-listed cannabis companies need to improve the amount of information disclosed in financial filings to help investors better understand their performance.

“Given the significant growth and interest in the cannabis industry, it is imperative that investors be provided with transparent information about issuers’ financial performance and risks related to their operations,” Louis Morisset, chair of the CSA, said in a statement. “Our review shows that the quality of disclosure in this area needs to be enhanced, and we encourage cannabis issuers to use this publication as a guide to make improvements.”

The CSA reviewed disclosures from 70 reporting issuers operating in the cannabis industry with various levels of involvement in the sector and operations in different countries. The country’s securities regulators took action to support informed investing decisions amid the recent rapid growth of the cannabis industry.


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    The CSA found that licensed cannabis producers often did not provide sufficient information in their financial statements and management discussion and analysis filings. The CSA said all producers it reviewed needed to improve their fair value and fair value related disclosures.

    Additionally, a significant number of publicly-traded cannabis companies didn’t consistently comply with securities requirements for forward-looking information or provide guidance for balanced disclosure. That includes an inconsistent disclosure of the cost of cannabis sold during the period, a key metric that investors are likely to use when comparing gross profit between companies.

    The CSA said it plans to continue to monitor the cannabis industry to ensure that changes to financial disclosure are improved, and noted that companies that don’t provide appropriate disclosure may be subject to additional regulatory action.

    Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.