Curaleaf Holdings Announces Restatement of Financial Statements Following Internal Review

NEW YORK– Curaleaf Holdings, a leading cannabis company, announced today that it has been conducting a review of certain purchases and sales of products through its wholesale channel to determine whether they had commercial substance, and to confirm the timing and appropriateness of the recognition of revenue from those transactions. The review was conducted by the Audit Committee of the company’s Board of Directors, with the assistance of outside counsel and consultants, and in discussion with the company’s auditors, following an internal review by management.

As a result of the review, the company has determined that it will make certain adjustments to the revenue figures reported in its previously issued audited annual consolidated financial statements for the fiscal year ended December 31, 2021, and unaudited interim consolidated financial statements for the first, second, and third quarters of the fiscal year ended December 31, 2022. The adjustments will result in a reduction of aggregate revenue for the full 2021 fiscal year of approximately 1.25%, and a reduction of expected aggregate revenue for the full 2022 fiscal year of approximately 0.75%.

The company expects its revenue for the fourth quarter of 2022 to be approximately US $352 million, and its aggregate revenue for the full 2022 fiscal year to be approximately US $1.337 billion, subject to finalizing the adjustments described.

Following the review, the company determined, on the Audit Committee’s recommendation and after consultation with its independent registered public accounting firms for 2021 and 2022, that its previously issued financial statements and related reports, earnings releases, management’s discussion and analysis, investor presentations, or similar communications should no longer be relied upon. The company also determined that there were additional material weaknesses in its internal controls at the time of its prior financial statements.

The company’s 2021 Annual Financial Statements and 2022 Interim Financial Statements will be restated to effect the revenue adjustments described above, as well as other related flow-through adjustments. Additionally, the 2022 Interim Financial Statements will be restated to reflect the company’s transition from International Financial Reporting Standards to U.S. generally accepted accounting principles, as required under Canadian securities legislation.

The company has already begun taking remediation steps and will continue to further enhance its procedures and controls, based on information identified during the review and the restatement process. The new executive accounting team, which began leading the company in the fourth quarter of 2022, will be implementing and enhancing certain procedures and controls in consultation with the Audit Committee and its outside counsel and consultants.

“We are committed to accurate and transparent financial reporting,” said Ed Kremer, Curaleaf’s Chief Financial Officer. “We have begun taking a number of remediation steps and are committed to taking additional steps to enhance our controls so that this situation does not repeat in the future. We remain focused on executing on our strategies and continuing to expand our product innovations to strengthen the overall position of the Company.”

Curaleaf intends to file its audited annual consolidated financial statements for the fiscal year ended December 31, 2022, and related management’s discussion and analysis by May 1st, 2023, and its unaudited interim consolidated financial statements for the three months ended March 31, 2023, on or about May 17, 2023.