This Accounting Change Could Drastically Impact Cannabis Companies’ Profitability

Motley Fool write..

Whether a cannabis company reports a profitable quarter or not can sometimes have a lot to do with nonoperating-related items. Impairment losses, fair-value gains, and income related to investments can easily pull a company’s bottom line into many different directions. Trying to suss out if a company had a good quarter becomes a challenge, to say the least. And although you can just use adjusted EBITDA, that is a non-GAAP number that can contain a lot of subjectivity.

It may not be an interesting topic to discuss whether a company uses U.S. GAAP or International Financial Reporting Standards (IFRS) when preparing its financials, but it’s something investors shouldn’t ignore, because it can play a significant role in both the predictability and quality of earnings results.

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