Acreage Holdings and the $4.2 Million Mistake
A Lesson in Corporate Compliance and Respecting the Hustle
Welcome back to Free the Jane, where we dissect the darker underbellies of the cannabis industry's corporate scene, documenting the cautionary (and often corrupt) tales of Legacy vs. MSO for the aspiring and established alike in the cannabis industry.
Today's feature is a white collar crime story that I believe most of my readers will get a laugh out of. Let us share the iron Acreage Holdings, one of the nations biggest cannabis ‘Multi State Operator” was recently snagged in the regulatory nets of the SEC. Yep, you read that right, and not in the ‘oh we made a mistake on one report’ type of trouble… nope… the big dog type.
The Story of How Acreage Holdings Tried to Hustle on the US Government, and Failed
In a twist of financial creativity that veered into the illegal, and made me laugh reading it, Acreage Holdings—now under the umbrella of Canopy Growth—orchestrated a financial facade, momentarily boosting their year-end cash position by $4.2 million!!! Yep, over FOUR MILLION DOLLARS!
This maneuver involved quiick transfer of funds from an affiliate into their business account at the end of the year. Thus enabling Acreage Holdings to claim a FOUR MILLION DOLLAR company increase in value right at the end of the financial year!
That’s right, right around the end of the 2019 fiscal year, they tried a little ‘behind the scenes bank account ping pong” giving the illusion of a healthier cash balance.
The plan? Simple yet flawed.
The funds, parked briefly in Acreage's accounts, were to be whisked away soon after the new year's celebrations,
but not before the books were shown to the prying eyes of the public
..and, unfortunately for Acreage, the SEC.
***BREAK TO ENJOY A GALLERY OF IMAGES I GENERATED LAST YEAR USING Ai TO DEPICT THE TYPICAL MSO BOARDROOM, AS I IMAGINE IT AT LEAST*** :)







A “Round Trip” to Jail
This act of financial sleight of hand is known in the drab corners of accounting as a "round-trip" transaction—much frowned upon for its deceptive nature. The SEC's crackdown was swift, culminating in a $225,000 fine and a stern "cease and desist" to forestall future misadventures. The affair highlights a common pitfall in the cannabis sector, where regulatory scrutiny is intense and often unforgiving. It serves as a potent reminder to maintain transparency and adhere strictly to financial and corporate governance standards. For those navigating the treacherous waters of cannabis business, let Acreage's misstep be a lesson in compliance and the peril of cutting corners. As this industry grows, so does the watchful eye of regulators, and the cost of oversight can be much more than monetary—it can be reputational. For a detailed dive into the SEC's proceedings against Acreage Holdings, you can read the full announcement here. Stay tuned for more insights, and remember, in cannabis business, transparency isn't just a virtue—it's a necessity.