Smoke and Mirrors? Disclosures in the Marijuana Industry in Canada

Abstract

Licensed producers (LPs) of marijuana in Canada are embedded in a highly competitive industry where they raise funds from investors to finance their growth. They face substantial risks from the uncertain legal status of marijuana and from its unsettled health and safety consequences. We argue that this context stands to have implications for the disclosures of firms in the marijuana industry. We rely on a multicase study of three large Canadian LPs to explore their mandatory and voluntary disclosures during the third quarter of 2018. We find that their mandatory interim disclosures are largely consistent with disclosure rules that target marijuana operations. We also find that they make voluntary disclosures relevant for their context (e.g., about risks from legal, health, and safety consequences), and that there is variation in these disclosures. We use our findings as a springboard for discussing the antecedents of mandatory and voluntary disclosures in the marijuana industry (i.e., proprietary costs, investor interest, detection costs of selective disclosures), and their consequence (i.e., lack of comparability). We offer suggestions for future research.

Regulations on Non-Financial Disclosure in Corporate Reporting: A Thematic Review

“…Mangen et al [73] explored the content disclosed under mandatory and voluntary disclosures in the marijuana industry in Canada. One study explained why the United States still relies heavily on private ordering in managing non-financial disclosures, and suggested possible reforms [75]. This study by Ho [75] can explain more about the study by Berger-Walliser and Scott [71] that explored the norms in the United States regarding corporate social responsibility.…”

“…One study explained why the United States still relies heavily on private ordering in managing non-financial disclosures, and suggested possible reforms [75]. This study by Ho [75] can explain more about the study by Berger-Walliser and Scott [71] that explored the norms in the United States regarding corporate social responsibility. Lastly, Abela [74] focused on business-model disclosures by examining the consistency of data obtained from industry players to conceptualise business models in the literature.…”

Foreign investment in emerging legal medicinal cannabis markets: the Jamaica case study

“…With increasing policymaker interest in cannabis law reforms around the world, the potential for international trade in cannabis is growing. Some of the biggest cannabis companies in the 'Global North' have established operations across continents [43]. For example, Canadian-based Canopy Growth™ holds licenses for cultivation and production in Europe (Denmark) and South America (Colombia) (having recently exited operations in South Africa and Lesotho), with access to more cannabis markets via joint ventures and partnerships across the world [10,11].…”