Canopy Growth Corp current report, Q4 FY2018

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Canopy Growth Corporation Form 6-K Summary

Business Context and Reporting Period

Canopy Growth Corporation filed this Form 6-K for October 2018. The filing concerns the Company’s change in independent auditor following the anticipated completion of a private placement with CBG Holdings LLC, an affiliate of Constellation Brands, Inc. Upon completion of the placement, Constellation would become an affiliate of Canopy Growth.

Financial Metrics and Liquidity

The filing does not provide revenue, profit, cash flow, margins, debt, liquidity, or other operating and financial metrics.

Material Changes

  • Deloitte LLP informed Canopy Growth in August 2018 that the anticipated affiliation with Constellation would cause Deloitte to no longer qualify as independent under PCAOB and SEC rules.
  • Following an audit committee review, Deloitte resigned and KPMG LLP was appointed as Canopy Growth’s independent auditor on October 4, 2018.
  • KPMG’s appointment applies to the audit of the consolidated financial statements as of and for the year ending March 31, 2019.

Auditor Independence, Outlook, and Risks

  • The Company reviewed potential independence issues involving major international audit firms. KPMG identified valuation and tax loaned-staff services provided to Canopy Growth during the fiscal year ending March 31, 2019 that were impermissible under SEC independence rules.
  • Those engagements were completed or terminated before October 4, 2018.
  • KPMG concluded that the matters did not impair its objectivity or ability to exercise impartial judgment. The audit committee reached the same conclusion.
  • The filing does not provide financial guidance or an operating outlook. The auditor transition and related independence matters could affect investor assessment of financial reporting and audit risk.

Key Facts for Investors to Verify

  • Completion and terms of the previously announced private placement with CBG Holdings LLC.
  • The scope and implications of Constellation becoming an affiliate of Canopy Growth.
  • The auditor-change notices and related letters from Deloitte and KPMG filed as Exhibits 99.1 through 99.3.
  • Whether any additional SEC or Canadian regulatory disclosures address the identified independence matters.