WEED
Accounting for
Public companies traded on any stock exchange have higher demands for financial reporting. International Financial Reporting Standards (IFRS) are required to be followed in most countries, including Canada.
These standards guide accountants how to present the financial information of the company, and have caused some controversy recently with the rise of cannabis companies in Canada.
Controversy
Several opinion pieces were published outlining the risk of investors being misled by how cannabis companies value their plants; namely, that a company can ‘front-load’ earnings. This is where a company, that has had no sales in a reporting period, can report the changes in the fair-value of growing or harvested cannabis as a reduction of their cost of sales, boosting their net income, as per the accounting standard IAS 41, (explained further below).
Some argue there is currently not an established market for legal, recreational marijuana in Canada, so the fair value adjustments have little
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By Regan McGrath