Cannabis producer Canopy splits with auditor, could save millions

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Canopy Growth Corp.’s principal accountants resigned June 22, but the company told MJBizDaily the move was a “joint decision” with the auditor and not related to recent accounting woes.

“On June 22, 2023, KPMG LLP, which had been serving as the independent registered public accounting firm of Canopy Growth Corporation, declined to stand for reelection and resigned as the Company’s independent registered public accounting firm,” Canopy disclosed in a regulatory filing with U.S. Securities and Exchange Commission.

Canopy’s fiscal 2022 sales were recently restated lower, by 10 million Canadian dollars ($7.5 million), while year-to-date sales for fiscal 2023 were lowered by approximately CA$14 million.

Canopy reported a net loss of CA$3.3 billion for its fiscal year ended March 31 and warned of “material misstatements” in past disclosures.

Canopy previously indicated the restatements had been related to international sales that had been improperly recognized by BioSteel Sports Nutrition’s previous management.

The Smiths Falls, Ontario, producer acquired BioSteel in 2019.

On June 22, 2023, Canopy hired auditing firm PKFOD to replace KPMG as its new independent public accounting firm.

“This change has been underway for some time and is not related to the restatement of BioSteel revenues but reflects a joint decision between Canopy Growth and KPMG,” a spokesperson for Canopy said in a written statement to MJBizDaily.

The spokesperson suggested the change could save the company anywhere from 25%-50% in annual accounting costs, which were roughly CA$6 million in the previous fiscal year.

In a call with analysts to discuss quarterly earnings, CEO David Klein said it was important to “act swiftly to provide stability to the business at this pivotal time.”

The CEO said Canopy fired several members of the BioSteel leadership team and is considering litigation to recover damages and costs associated with the BioSteel sales mishap.

Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.