Canopy Growth Continues to Crater, Auditors Resign Over Operational Concerns

The company once had a multibillion-dollar market cap.

Canadian cannabis giant Canopy Growth Corp. (Nasdaq: CGC) is feeling the heat as its stock price continues to slump and its principal accountants flee the wreckage, according to recent reports and regulatory filings.

The company’s shares have nosedived by 81% this year amid a wider selloff in a deeply competitive cannabis market and stagnant progress on federal legislation in the U.S. The stock closed at 52 cents on Tuesday, marking further decline from its once-several-billion-dollar market capitalization a few years ago, to less than $280 million.

The company was ousted from the S&P/TSX index earlier this month due to its dwindling valuation.

Benchmark analyst Mike Hickey in a Monday note slashed his price target for Canopy Growth to zero, citing skepticism over the management’s ability to salvage its losses. He pointed to the company’s admission of a going concern risk in its latest annual report, in which it posted more than $3 billion in losses. The company indicated it “may not be able to continue operations and meet its financial obligations.”

Hickey also expressed doubts about the company’s aggressive U.S. expansion strategy, calling it a possible “signal of desperation” given the ongoing federal prohibition of marijuana here.

CIBC Capital Markets analyst John Zamparo wrote in a separate note that even if the U.S. were to legalize marijuana, it would not rescue Canopy Growth, which is “burning cash despite multiple cost-cutting programs.”

Zamparo lowered his price target on the stock to 45 Canadian cents from 50 Canadian cents, saying its “debt worries are no paranoia.”

The company’s principal accountants, KPMG LLP, also declined to stand for re-election, according to a report to the U.S. Securities and Exchange Commission.

The filing said that a June 22 KPMG report on the company

KPMG added that Canopy had “an ineffective control environment, resulting from a lack of the required number of trained operational and IT personnel with the appropriate skills and knowledge and with appropriate assigned authorities, responsibilities and accountability related to the design, implementation and operating effectiveness of internal control over financial reporting.”

KPMG stated it could not “agree or disagree” with Canopy Growth’s assertion that the company’s audit committee accepted the resignation.

The company is tapping PKF O’Connor Davies as its accounting firm for fiscal year 2024.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at

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