{"url_path":"/sec/cgc/10-k/2026/item-9a","section_key":"item-9a","section_title":"Item 9A Controls and Procedures.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-15","source_url":"https://www.sec.gov/Archives/edgar/data/1737927/0001193125-26-270260-index.html","accession_number":"0001193125-26-270260","cik":"0001737927","ticker":"CGC","issuer_name":"Canopy Growth Corp","edgar_url":"https://www.sec.gov/Archives/edgar/data/1737927/0001193125-26-270260-index.html","primary_entity_key":"0001737927","primary_entity_name":"Canopy Growth Corp"},"word_count":1385,"has_tables":true,"body_markdown":"Item 9A. Controls and Procedures.\n\nEvaluation of Disclosure Controls and Procedures\n\nWe maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Comprehensive Form 10‑K was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.\n\n181\n\n \n\nBased upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective as of such date due to a material weakness in internal control over financial reporting, as described below.\n\nHowever, giving full consideration to the material weakness, we have concluded that the Financial Statements included in this Comprehensive Form 10-K present fairly, in all material respects, our financial position, the results of our operations and our cash flows for each of the periods presented in conformity with U.S. GAAP.\n\nManagement’s Annual Report on Internal Control Over Financial Reporting\n\nOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP.\n\nOur internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.\n\nManagement conducted an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2026, based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management has determined that our internal control over financial reporting as of March 31, 2026 was not effective because of a material weakness in internal control over financial reporting. Accordingly, a reasonable possibility exists that material misstatements in the Company’s financial statements will not be prevented or detected on a timely basis.\n\nA material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.\n\nManagement has determined that it did not maintain effective internal control over financial reporting due to the existence of a material weakness pertaining to material misstatements made in prior financial statements related to incorrect non-cash technical accounting application over equity-linked instruments. Specifically, management identified a deficiency in the design and operating effectiveness of a control intended to review and approve the financial reporting implications of significant technical accounting and, specifically, the classification between equity and liabilities. This occurred due to incorrect assessments of the functional currency interaction with instrument terms, triggered by new U.S. dollar-denominated fact pattern that arose in the second quarter of the fiscal year ended March 31, 2024. As a consequence, the Company determined that certain share-settled warrants with exercise prices denominated in U.S. dollars, first issued during the fiscal year ended March 31, 2024, should have been classified as liabilities rather than equity instruments under applicable accounting standards, given the Company’s Canadian dollar functional currency. Accordingly, the Company should have recorded these instruments as liabilities on its consolidated balance sheets and measured them at fair value at each reporting date, with changes in fair value recorded in the consolidated statements of operations and comprehensive loss.\n\nThe deficiency did not impact revenue, gross margin, operating income/loss, Adjusted EBITDA, or cash flows from operations. Management corrected the misclassification between equity and liabilities, as well as subsequent changes in fair value being reported through the income statement prior to the issuance of this Comprehensive Form 10-K.\n\nIn March 2026, we completed the acquisition of MTL and are currently integrating MTL into our operations, compliance program and internal control processes. MTL constituted approximately 13.4% of our total assets as of March 31, 2026, including the goodwill and other intangible assets recorded as part of the purchase price allocation, and 1.2% of our net revenues for the fiscal year ended March 31, 2026. In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first fiscal year following an acquisition. Therefore, we have excluded the acquired operation of MTL from our assessment of our internal control over financial reporting.\n\nOur independent registered public accounting firm, PKF O’Connor Davies, LLP, who audited our financial statements included in this Comprehensive Form 10-K, has issued its report on the effectiveness of our internal control over financial reporting as of March 31, 2026, which is included herein.\n\n182\n\n \n\nPlan for Remediation of Material Weakness\n\nOur management, with the oversight of the Audit Committee of the Board, is updating our internal processes and controls to strengthen their effectiveness and has developed a remediation plan, which includes the following actions:\n\n•\nEnhancing technical accounting review controls and procedures for all complex and non-routine transactions involving equity-linked financial instruments to ensure compliance with applicable accounting standards and guidance. This will include the design and implementation of a formal control involving the engagement of third-party experts for new equity-instrument issuances.\n\n•\nImplementing training aimed at improving employee knowledge and skills in accounting requirements for complex financial instruments and raising awareness of applicable guidance and frameworks.\n\n•\nEnhancing management oversight and monitoring of significant accounting matters.\n\nWe will not be able to conclude whether the actions we are taking will fully remediate the material weakness in our internal control over financial reporting until the updated controls have operated for a sufficient period of time and management has concluded, through testing, that such controls are operating effectively. We may also conclude that additional measures may be required to remediate the material weakness in our internal control over financial reporting, which may necessitate further action. See “Item 1A. Risk Factors—Risks Relating to the Restatement of the Prior Financial Statements – We have identified a material weakness in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which may adversely affect investor confidence in our company and, as a result, the value of the Canopy Shares.”\n\nChanges in Internal Control Over Financial Reporting\n\nExcept as discussed above, as of March 31, 2026, there were no other changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) that occurred during our most recent quarter, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting."}