Cannabis Companies use Different Words to Tell Investors about Risk
July 23, 2019
Hansell McLaughlin’s data science practice was featured in a July 2019 article by the Law Times. The article discussed our recent findings regarding cannabis company risk disclosure. Quoting from the article:
“It’s a new industry and the disclosure about the industry, necessarily, is also new. The cannabis companies are probably looking at each other, and what others are doing in disclosure. That could create a boilerplate approach,” Hansell says.
Hansell’s group, aided by data scientist Krista Bennatti-Roberts, compared the cannabis companies to Toronto Stock Exchange-listed companies with large and small market value. The 35 large companies had to “have had consistently high market capitalization for a number of years” to qualify, while the 35 small companies qualified by maintaining their Toronto Stock Exchange listing since 2013 or earlier.
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“What we would point out to cannabis clients is that the impression they may be making with investors is more cautious and less committed,” says Hansell.
Hansell says her firm is also using the technology to help general counsel at companies strengthen their CEO letters by analyzing words used by popular CEOs such as Warren Buffett.
“This provides us with an additional tool to advise clients of the impact off their disclosures,” she says.