(This story has been updated to include comments from cannabis analyst Matt Karnes.)
Marijuana multistate operator Verano Holdings said it must restate five quarterly financial statements dating back to March 31, 2021, and that all of its disclosures and investor presentations since then “should therefore no longer be relied upon.”
The Illinois-based company said this week in a news release the restatements will include:
- A revaluation of the company’s stock-based compensation expense for each of those financial quarters. The company said it understated those expenses.
- A recalculation of the company’s tax expense in the first quarter of 2022. That was overstated and, accordingly, the company’s tax obligation will be reduced, according to Verano.
In addition, Verano said its audit committee determined that the company’s tax expense for the first quarter of 2022 was overstated because of a clerical error in calculating the tax rate.
Verano said it will file the appropriate adjustments to its financials “as soon as practicable.”
Matt Karnes, founder of New York-based cannabis financial consultancy GreenWave Advisors, told MJBizDaily Friday that he views Verano’s restatement as a big deal because it can affect investor confidence.
“With Verano, it raises added concern because this is the second time that the financials were restated,” Karnes wrote in an email.
“Bigger picture,” he added, “this underscores some of the growing pains that the cannabis industry is faced with” as the industry attracts more experienced accountants and more scrutiny.
The company’s stock price slid about 10% after Wednesday’s announcement to about $6 a share on the U.S. over-the-counter markets but had steadied at about $6.20 a share on Friday morning.
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Like many marijuana MSOs, Verano’s stock has been pummeled the past year, and is substantially off its 52-week high of $18.78 on the OTC market.