Navigating KPMG’s Exit from Cannabis Audits: Understanding the Shift
KPMG in Canada has decided to cease providing financial-statement audit services to businesses in the cannabis industry. This marks a significant turnaround for the company.
Background on KPMG’s Decision
Kevin Dove, national director of external communications for KPMG Management Services, cited “elevated risk” in Canada’s adult-use cannabis industry as the reason behind the move.
Challenges Facing the Cannabis Sector
The decision comes amidst a host of challenges for the cannabis sector, including financial distress among Canadian producers and snowballing excise-tax debt.
Implications for Cannabis Companies
Toronto-based producers Organigram Holdings and Cronos Group have both received notice from KPMG of the company’s intention not to stand for reappointment as auditor.
Transitioning to New Auditors
To facilitate the transition, KPMG is prepared to continue performing interim reviews for affected companies.
Historical Context
KPMG has had a long history with the cannabis industry, with significant involvement since Canada’s legalization in 2018.
Uncertainty Surrounding the Decision
Questions remain about whether the decision applies only to Canada-headquartered cannabis companies or if it extends to those in other countries.
Conclusion: Understanding the Shift
KPMG’s decision to exit cannabis audits underscores the challenges and uncertainties facing the industry, with implications for both companies and auditors alike.
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