Canadian stock regulators have a word of warning for those investing in MMJ companies north of the border: do your homework.
The Canadian Securities Administrators (CSA) said many publicly traded cannabis firms haven’t appropriately disclosed the risks of investing in their businesses, according to Reuters.
The CSA declined to identify which companies it reviewed. But the organization said it asked 92% of the companies it analyzed for further documentation to officially clarify their disclosures. There were 25 companies with “serious investor protection concerns,” Reuters reported, most of which were in the early stages of setting up their businesses.
Many of the companies, according to the CSA report, focused more on the potential financial rewards of the marijuana industry, while downplaying monetary risks, barriers to entry, and occasionally lengthy timelines involved in getting MMJ operations legally up and running.