The Canadian regulator believes that the disclosures of a cannabis business are inadequate

TORONTO (Reuters) – A Canadian regulator group said on Wednesday that it had found that the level and quality of disclosure by cannabis-producing companies was inadequate.

The Canadian Securities Administrators (CSA), which examined the disclosure practices of 70 cannabis producers in Canada and the United States, indicated that some companies were not complying with Canadian securities obligations, including providing forward-looking information and providing guidance for balanced disclosure.

"Licensed cannabis producers have often not provided sufficient information in their financial statements and management reports so that an investor can understand their financial performance," CSA said in a statement. report published on the websites of the provincial securities regulators.

This decision comes before the planned legalization of recreational cannabis in Canada next week. Cannabis stocks have been falling over the last year in anticipation of strong demand following legalization.

"Issuers in the industry have very quickly exceeded billions of dollars," said James Munro, co-chair of cannabis practice at McMillan.

"The CSA reconciles the size of the industry with the type of meaningful disclosure required from these companies."

The exam seems to have already had an impact on the cannabis producing companies.

The CSA, a coordinating group representing provincial securities regulators, singled out companies operating in the US in the cannabis sector to improve disclosure, while asserting that all licensed producers had taken action to improve disclosure.

As a result of this review, 74% of issuers with cannabis-related activities in the United States took steps to strengthen disclosure and 17% resubmitted their latest management reports.

CSA did not name any producers during its review.