Canopy Growth (CGC) risk factors, 2026 10-K

Risks Relating to the Restatement of the Prior Financial Statements

1. 01We have concluded that certain of our previously issued financial statements should not be relied upon and have restated certain of our previously issued financial statements which was time-consuming and expensive and could expose us to additional risks that could have a negative effect on usnew
2. 02The restatement of the Prior Financial Statements may lead to future shareholder litigationnew
3. 03Failure to establish and maintain effective internal control over financial reporting may result in us not being able to accurately report our financial results, which could result in a loss of investor confidence and adversely affect the market price of the Canopy Shares36% rewritten

Risks Relating to Our Growth Strategy

1. 04We may not be able to achieve or maintain profitability and may continue to incur losses in the future
2. 05We are in the early stages of developing global infrastructure in a new industry and therefore we are subject to many risks common in developing companies69% rewritten
3. 06For a discussion of write downs of intangible assets and goodwill, see Note 15, “Intangible Assets” and Note 16, “Goodwill” to the consolidated financial statements in Item 8 of this Comprehensive Form 10-Knew
4. 07As a result of self-reporting the BioSteel Review, the Company is the subject of a regulatory investigation and inquiry in connection with the BioSteel Review, and it cannot predict the timing of developments, and any adverse outcome of these continuing matters could have a material adverse effect on the Company
5. 08There can be no assurance that our current and future acquisitions, including our most recent acquisition of MTL, investments or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations
6. 09We may not be able to secure adequate or reliable sources of funding required to operate our business
7. 10Controlled substance and other legislation and treaties may restrict or limit our ability to research, manufacture and develop a commercial market for our products outside of the jurisdictions in which we currently operate and our expansion into additional jurisdictions is subject to risks
8. 11We are subject to risks relating to our current and future operations in emerging markets65% rewritten
9. 12In the past, we have identified conditions and events that raised substantial doubt about our ability to continue as a going concern and it is possible that we may identify conditions and events in the future that raise substantial doubt about our ability to continue as a going concern77% rewritten

Risks related to Canopy USA

1. 13Our expansion plans into the United States rely upon the continued operations and success of Canopy USA and its subsidiaries and the anticipated benefits of the strategy involving Canopy USA is uncertain and may not be realized; and the fair value of our equity method investment in Canopy USA is volatile82% rewritten
2. 14We are unable to control Canopy USA40% rewritten
3. 15Canopy USA may impact our third party business relationships

Risks Relating to Our Products

1. 16We are subject to risks and uncertainty regarding future product development
2. 17We may not be successful in maintaining the consumer brand recognition and loyalty of our products
3. 18Our products have in the past and may in the future be subject to recalls27% rewritten
4. 19The controversy surrounding vapes and vaporizers and vaporizer products and government regulations of vapes and vaporizers and vaporizer products may materially and adversely affect the market for vapes and vaporizer products and expose us to litigation and additional regulation
5. 20Future research may lead to findings that vaporizers, electronic cigarettes and related products are not safe for their intended use

Risks Relating to Regulation and Compliance

1. 21Cannabis is a controlled substance in the United States and therefore subject to the CSA
2. 22We operate in highly regulated industries where the regulatory environments are rapidly developing and we may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business
3. 23We are reliant on required licenses, authorizations, approvals and permits issued by Canadian and foreign governmental authority for our ability to grow, process, store and sell cannabis, hemp and cannabinoids which are subject to ongoing compliance, reporting and renewal requirements
4. 24Changes in the laws, regulations and guidelines governing cannabis and hemp may adversely affect our business and that of our investments21% rewritten
5. 25The Canopy Shares are currently listed on the TSX and Nasdaq, and accordingly, so long as we choose to continue to be listed on these exchanges, we must comply with the TSX and Nasdaq requirements or guidelines when conducting business, especially when pursuing opportunities in the United States
6. 26We may be subject to heightened scrutiny by regulatory authorities
7. 27We are constrained by law in our ability to market and advertise our products
8. 28We are subject to a number of federal, state, and foreign environmental and safety laws and regulations that may expose us to significant costs and liabilities
9. 29Anti-money laundering and other banking laws and regulations can limit our ability to access financing and hamper our growth
10. 30We could be adversely affected by violations of the Corruption of Foreign Public Officials Act (Canada), the U.S. Foreign Corrupt Practices Act and other similar anti-bribery laws
11. 31We must rely on local counsel and consultants with respect to laws and regulations in countries outside of Canada
12. 32Any rescheduling of U.S. Schedule I cannabis to Schedule III would have an uncertain impact on our business70% rewritten

Risks Relating to Competition, Performance and Operations

1. 33We may not successfully execute our business strategy
2. 34We have been and may in the future be required to write down inventory due to downward pressure on market prices, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects
3. 35We may not be able to supply the purchasers in various provinces and territories of Canada with our products in the quantities or prices anticipated, or at all, due to the discretion such purchasers have over purchasing, pricing, and product listings35% rewritten
4. 36The adult-use cannabis market in Canada has in the past been and may in the future become oversupplied
5. 37We must rely largely on our own market research and internal data to forecast sales and market demand and market prices, which may differ from our forecasts38% rewritten
6. 38We may be unsuccessful in competing in the legal cannabis market in Canada and in international markets
7. 39We face competition from the illegal cannabis market in every market we sell our products
8. 40Regulatory non-compliance by licensed cannabis competitors may have an adverse effect on our business, results of operations and financial condition
9. 41The Canadian excise duty framework affects our profitability
10. 42We rely on third-party manufacturers and distributors to manufacture and distribute certain of our products, and those third parties may not perform their obligations66% rewritten
11. 43We are vulnerable to third-party transportation risks
12. 44The inability of our customers or suppliers to meet their financial or contractual obligations to us may result in disruption to our supply chain and operations and could result in financial losses
13. 45Our business may be impacted as a result of increased rates of inflation
14. 46Our cannabis cultivation operations consume considerable energy, making us vulnerable to rising energy costs. Rising or volatile energy costs may have a material adverse effect on our business, financial condition, results of operations and growth prospects
15. 47We, or the cannabis industry more generally, may receive unfavorable publicity or become subject to negative consumer perception48% rewritten
16. 48The markets that we operate in are increasingly competitive, and we may compete for market share with other companies, both domestically and internationally, that may have longer operating histories and more financial resources, manufacturing and marketing experience than us
17. 49We are subject to liability arising from any fraudulent or illegal activity by our employees, contractors and consultants
18. 50Our production facilities are integral to our operations and any adverse changes or developments affecting our facilities may affect our business, financial condition, results of operations and growth prospects
19. 51We are subject to risks inherent in an agricultural business, including the risk of crop failure
20. 52The majority of our assets are the capital stock of our material subsidiaries; therefore our investors are subject to the risks attributable to our material subsidiaries, which generate substantially all of our revenues
21. 53We are and may become subject to a variety of privacy and data security laws and contractual obligations, which could increase compliance costs and our failure to comply with them could subject us to potentially significant fines or penalties and otherwise harm our business86% rewritten
22. 54We are and may become subject to, or prosecute, litigation in the ordinary course of our manufacturing, marketing, distribution and sale of our products
23. 55We may be subject to product liability claims
24. 56We rely on third-party testing and analytical methods which are validated but still being standardized
25. 57We may decide, or be required, to divest or restructure certain of our interests
26. 58Fluctuations in wholesale and retail prices could result in earnings volatility
27. 59The Loan Agreement contains restrictive covenants that may limit our operating flexibility66% rewritten
28. 60We may be unable to attract or retain skilled labor and personnel with experience in our various areas of business, or to obtain adequate equipment, parts and components, and we may be unable to attract, develop and retain additional employees required for our operations and future developmentsnew
29. 61We are exposed to counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms

Risks Relating to Our Intellectual Property

1. 62We are subject to risks related to the protection and enforcement of our intellectual property rights, and we may be unable to protect or enforce our intellectual property rights
2. 63Our intellectual property rights may be invalid or unenforceable under applicable laws, and we may be unable to have issued or registered, and unable to enforce, our intellectual property rights
3. 64We may be subject to allegations that we are in violation of third-party intellectual property rights, and we may be found to infringe third-party intellectual property rights, possibly without the ability to obtain licenses necessary to use such third-party intellectual property rights

Risks Relating to the Canopy Shares and the Exchangeable Shares

1. 65The market price for the Canopy Shares has in the past been volatile and may continue to be volatile and subject to significant fluctuation22% rewritten
2. 66the realization of any of the other risk factors set forth herein
3. 67The financial reporting obligations of being a public company and maintaining a dual listing on the TSX and on Nasdaq requires significant company resources and management attention
4. 68restrictions on the issuance of securities, each of which may make it difficult for us to conduct our business and raise working capital
5. 69limits on borrowing, extensive compliance program requirements, reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations to which we are currently not subject
6. 70It is not anticipated that any dividend will be paid to holders of the Canopy Shares for the foreseeable future
7. 71Investors in the United States may have difficulty bringing actions and enforcing judgments against us and others based on securities law civil liability provisions
8. 72Future sales or issuances of securities could adversely affect the prevailing market price of our securities28% rewritten
9. 73Sales of substantial amounts of our securities by our shareholders, including Constellation Brands Inc. and its wholly-owned subsidiaries, or the availability of such securities for sale, could adversely affect the prevailing market prices for the securities and dilute investors’ earnings per share56% rewritten
10. 742,600,460 options exercisable into 2,600,460 Canopy Shares at an average exercise price of $4.22 per Canopy Share
11. 75The Exchangeable Shares have different rights from the Canopy Shares and there may never be a trading market for the Exchangeable Shares

General Risks

1. 76We are dependent on our senior management62% rewritten
2. 77cannot assure the continued services of such individuals and consultants. We do not maintain key-person insurance on the lives of any of our officers or employeesnew
3. 78Our business, financial condition, results of operations and cash flow may be negatively impacted by challenging global economic conditions
4. 79Natural disasters, pandemic outbreaks, boycotts and geopolitical events or acts of terrorism could adversely affect our operations and financial results
5. 80Our business may be negatively affected by climate change, weather conditions and the availability of natural resources
6. 81Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters, which could expose us to numerous risks
7. 82We may be unable to obtain insurance coverage at acceptable rates and there may be coverage limitations and other exclusions which may not be sufficient to cover our potential liabilities
8. 83Tax and accounting requirements may change or be interpreted in ways that are unforeseen to us and we may face difficulty or be unable to implement and/or comply with any such changes or interpretations