What’s Up in Weed

By: Andrea Hill

I am pleased to bring you this instalment of my weekly blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad. 

• Statements of claim in respect of class-action lawsuits against licensed producers Organigram Inc. and Mettrum Ltd. were filed with the courts in Nova Scotia and Ontario this past week. 

• In a recall alert issued to the general public following Organigram’s recalls, Health Canada indicated that as of January 9, 2017, it had received only one adverse reaction report related to all of Organigram’s affected cannabis.  (Licensed producers are obligated to maintain a summary report that analyzes all adverse reactions of consumers to the cannabis they sell, and must provide that report to Health Canada upon request.)

• In its recall alert relating to Mettrum’s recalls, Health Canada stated that it had received 10 adverse reaction reports relating to the Mettrum’s recalled lots, which were sold between January and November of 2016.

• Health Canada issued an update on the recalls on March 9, clarifying that the trace levels of myclobutanil that were present in the affected cannabis would have produced a “negligible” amount of additional hydrogen cyanide upon combustion, in comparison to the levels already produced by burning marijuana alone. 

• “Had there been any evidence to show that a licensed producer had acted with indifference or recklessness and engaged in activities that put the health or safety of Canadians in danger,” Health Canada stated in the update, “the Department would have responded with appropriate enforcement actions, including licence suspension or revocation.”

Room to grow: Cronos Group closes $17.3 million financing

• On March 9, SkyLaw client Cronos Group announced it had closed a $17.3 million bought deal financing.

• Cronos stated that it intends to use the proceeds to expand production capacity at the sites of its wholly-owned licensed producers Peace Naturals Project Inc. and In The Zone Produce Ltd. to purchase extraction equipment, to invest in certain investee companies, to fund certain amounts payable pursuant to existing contractual obligations, and for general working capital purposes.

• Cronos also announced an additional $1 million investment in licensed producer Whistler Medical Marijuana Corp. in which Cronos holds a 21.5% stake.  Whistler is planning several significant expansions to its cannabis cultivation facilities.

WEED on the index: Canopy Growth Corporation added to S&P/TSX Composite index

• In a first for any cannabis company in Canada, licensed producer conglomerate Canopy Growth Corporation announced that it had been added to the S&P/TSX Composite index effective March 17, 2017.  Canopy expects this new status to drive liquidity and institutional investment.

• The Composite index is a principal broad market measure for the Canadian equity markets, and is designed to be representative of the Canadian equity market.  It serves as the benchmark for the majority of Canadian pension funds and mutual market funds.

• To be eligible for inclusion on the Composite index, a company must meet certain criteria including market capitalization and liquidity requirements. 

• Recognition of a cannabis producer on this index is an important step in the maturation of the young Canadian medical marijuana industry.

“There will be more”: dispensaries raided; “Prince and Princess of Pot” arrested

• Police have raided several locations of Cannabis Culture, a dispensary brand used by 19 locations across Canada, and have arrested owners Marc and Jodi Emery, the self-styled “Prince and Princess of Pot”, and charged them with a variety of drug-related offences, including trafficking and possession of controlled substances. 

• Toronto police emphasized that dispensaries are illegal, and suggested that additional enforcement efforts against dispensaries will be forthcoming as part of an effort dubbed “Project Gator”.

“It’s a little more complicated”: US Attorney General questioned about enforcement of federal law against marijuana retailers

• During a March 9 radio interview, US Attorney General Jeff Sessions was asked whether he would enforce federal criminal law, under which cannabis remains a controlled substance, in states which have legalized cannabis on a recreational basis.  Sessions indicated that the Department of Justice would “ enforce law in an appropriate way nationwide”, but did not provide details. 

• “We’ll be evaluating how we want to handle that,” he answered, saying it was “a little more complicated” than simply prosecuting one marijuana retailer to set an example for others.

Andrea Hill is a corporate and securities lawyer with SkyLaw Professional Corporation in Toronto. Recognized as one of Canada’s leading legal experts in corporate cannabis law, Andrea writes for the Globe and Mail about cannabis laws, and works with a broad variety of clients in the cannabis space, including publicly-listed licensed producers of marijuana, licence applicants, and ancillary businesses such as tech companies focused on the cannabis industry. For more information about Andrea, visit the SkyLaw website here.

If you have any questions or would like further information, please contact us at 416-759-5299 or online through SkyLaw.ca.  We would be delighted to speak with you.

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