Canopy Growth to Refile Financial Statements Due to “Material Misstatement” by BioSteel

Troubled Canadian cannabis company Canopy Growth Corp. is required to refil three quarterly reports and its annual report, saying it can no longer be relied on after discovering “material misstatements” related to its BioSteel sports drink business.

As first confirmed by BNN Bloomberg’s Jon Erlichman, Canopy is required to re-file its financial reports for its first, second and third quarter 2022 results, as well as its audited financial statements for the fiscal year ended 2022, following an audit at the BioSteel division that found errors in the accounting of the revenues posted in that particular business unit are revealed.

While Canopy said in a filing that it was unable to quantify the specific impact of its BioSteel business on its revised financial reports as the review is ongoing, it added that it could not provide investors with certainty that other errors are not identified or would impact additional prior accounting periods.

“Canopy has announced its intention to adjust financial data related to reporting [certain] BioSteel sales and related balance sheet items,” a Canopy spokesman told BNN Bloomberg in an email. “The Company is working diligently to complete a comprehensive review of its BioSteel segment reporting and to submit its 10K report for fiscal year 2023 as soon as possible.”

BioSteel had sales of $44.6 million in fiscal 2022, a 56 percent increase over the prior year. Canopy acquired a 72% stake in BioSteel Sports Nutrition Inc. in October 2019, later valued at $50.7 million because the company’s former co-CEO, Bruce Linton, one day fortified with cannabidiol (CBD). drinks -affecting compound found in the cannabis plant. Since then, Canopy’s BioSteel has signed dozens of endorsement deals with athletes like Patrick Mahomes and Connor McDavid to promote the sports drink.

Canopy’s shares fell sharply on Thursday, falling nearly 14 percent on the Toronto Stock Exchange.