The legal landscape related to cannabis is changing rapidly in Canada. Federal legislation that allows the sale of cannabis for recreational adult use took effect on October 17, 2018 with edible cannabis products expected to be available on the market after October 2019. However, each province in Canada is enacting its own rules and putting systems in place as these changes come into force.
Public listings, financing, mergers and acquisitions, business development, licensing, product regulatory issues and distribution requirements will all raise questions as industries strive to comply with laws and meet market demand.
Canada is the second country in the world to legalize recreational marijuana nation-wide, after Uruguay. It is predicted that the cannabis industry is going to be a large and lucrative one since legalization took effect. According to an article in Lexpert magazine, Statistics Canada estimated in January 2018 that Canadians spent $5.7 billion on marijuana in 2017, and that 90 per cent of that was for illegal, non-medical purposes. In 2016, the major accounting firm Deloitte estimated that the industry could be worth $22.6 billion a year once the drug was decriminalized.
Subject to separate provincial restrictions, the Cannabis Act allows persons 18 years of age or older to:
- Possess in a public place or distribute a total of 30 grams of dried cannabis or equivalent; and
- Cultivate, propagate or harvest a maximum of four cannabis plants at any one time in a dwelling-house if they are residents of said dwelling-house.
The Cannabis Act only permits sales with a licence/permit, and in accordance with the terms therein. Classes of cannabis that an authorized person could sell include dried cannabis, cannabis oil, fresh cannabis, cannabis plants and cannabis plant seeds. Following the coming into force of certain amendments on October 17, 2019, additional classes will include edible cannabis, cannabis extract, and cannabis topical.
Gowling WLG has a dedicated Cannabis group to advise on the range of questions and legal requests that continue to arise in this fast growing industry. Cannabis companies are facing unique hurdles in what is quickly becoming a highly-competitive industry. The industry is complex, and the current rollout of new federal legislation will be closely watched.
We have extensive experience leading issuers, investment dealers and strategic investors through complex corporate finance and M&A transactions resulting in the listing of private cannabis companies — including by way of initial public offering or reverse take-over/ qualifying transactions, private and public mergers and acquisitions, and debt and equity financing transactions.
From product liability and consumer protection issues to intricate matters involving licensing, distribution, formulation, advertising, packaging and labelling, our professionals can help you navigate the legislative and regulatory framework surrounding cannabis in Canada.
- IPOs & private placements
- Reverse takeovers (RTOs)
- Private & public M&A
- Debt & equity financing transactions
- Cannabis Act & Access to Cannabis for Medical Purposes
- Regulations matters
- Commercial litigation
- Product liability & risk management
- Consumer protection
- Licensing & distribution
- Packaging & labelling
- Intellectual property
- Real estate & municipal zoning
- Employment & labour issues
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.