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Smoke and Mirrors? Disclosures in the Marijuana Industry in Canada

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  • Claudine Mangen
  • Alexia Paduano
  • Bianca Paduano
  • Jessica Hadzurik
  • Juliano Leggio
  • Kayla Russo

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. Un écran de fumée? Divulgation de l'information au sein de l'industrie de la marijuana au Canada Les producteurs autorisés (PA) de marijuana au Canada sont partie prenante d'un secteur d'activités fortement concurrentiel où ils doivent lever des capitaux auprès d'investisseurs pour financer leur croissance. Ils font face à des risques importants en raison du statut juridique incertain de la marijuana et de ses conséquences non déterminées sur la santé et la sécurité. Nous soutenons que ce contexte a des répercussions sur le plan de la divulgation d'information par les entreprises de l'industrie de la marijuana. Nous nous appuyons sur une étude multicas portant sur trois importants PA canadiens pour examiner leurs divulgations obligatoires et volontaires au cours du troisième trimestre de 2018. Nous établissons que leurs divulgations obligatoires provisoires sont en grande partie conformes aux règles de divulgation de l'information visant les activités de l'industrie de la marijuana. Nous montrons également qu'ils communiquent de l'information propre à leur contexte (p. ex., à propos des risques associés aux conséquences juridiques, sanitaires et sécuritaires), et que l'information divulguée varie. Nous nous appuyons sur nos observations pour discuter des antécédents en matière de divulgation d'information obligatoire et volontaire dans l'industrie de la marijuana (c.‐à‐d., coûts propres à ce secteur, intérêt des investisseurs, coûts de détection de la divulgation sélective) et de ses conséquences (c.‐à‐d., manque de comparabilité). Nous faisons aussi des suggestions pour les recherches à venir.

Suggested Citation

  • Claudine Mangen & Alexia Paduano & Bianca Paduano & Jessica Hadzurik & Juliano Leggio & Kayla Russo, 2020. "Smoke and Mirrors? Disclosures in the Marijuana Industry in Canada," Accounting Perspectives, John Wiley & Sons, vol. 19(3), pages 149-179, September.
    • Handle: RePEc:wly:accper:v:19:y:2020:i:3:p:149-179
    DOI: 10.1111/1911-3838.12230
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