This evening, MarketWatch reporter Max Cherney broke the story that Cronos Group (TSX: CRON) (NASDAQ: CRON) has received inquiries from that of the Securities and Exchange Commission related to its revenue recognition practices. The news follows internal investigations conducted by the issuer itself related to certain revenues that were recognized throughout 2019.
As per the report, Cronos staff has been instructed to retain certain documents related to the “confidential and nonpublic inquiry” by the SEC, which is focused on the bulk-resin purchases and biomass wholesale transaction that the company itself is currently reviewing. In a report earlier this week, Cronos revealed that the forensic review of these transactions has resulted in the decrease of 2019 revenues by at least $7.6 million. Associated financial statements filed throughout 2019 will also need to be refiled as a result.
Documents related to the inquiry allegedly require Cronos to keep records that involve a number of public companies that Cronos has transacted and dealt with since June 2018 for various purposes. Those companies include Medipharm Labs (TSX: LABS), Heritage Cannabis (CSE: CANN), TerrAscend Corp (CSE: TER), and 48North Cannabis (TSXV: NRTH).
Cronos Group last traded at $5.87 on the Nasdaq.
Information for this analysis was found via Sedar, MarketWatch and Cronos Group. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
