CSA, TSX outline expectations for issuers with U.S. marijuana activities

The CSA has published CSA Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities, which outlines the staff’s specific disclosure expectations for issuers that have, or are in the process of developing, marijuana-related activities in the U.S.

Issuers with marijuana-related activities in the U.S. assume certain risks due to conflicting state and federal laws. While some states have authorized the use and sale of marijuana, it remains illegal under federal law. The federal law relating to marijuana could be enforced at any time, and this would put issuers with U.S. marijuana-related activities at risk of being prosecuted and having their assets seized.

Read: Advisors split on future of marijuana asset class

“We expect issuers with marijuana-related activities in the U.S. to address the current legal and regulatory environment in their disclosures, including any risks that result from changes in the approach to enforcement of U.S. federal law,” says Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers.

The CSA’s disclosure expectations apply to all issuers with U.S. marijuana-related activities, including those with direct and indirect involvement in the cultivation and distribution of marijuana, as well as issuers that provide goods and services to third parties involved in the U.S. marijuana industry. Issuers are expected to provide these disclosures in prospectus filings and other required documents, such as their Annual Information Form and Management’s Discussion and Analysis.

TSX offers guidance

TSX Venture Exchange. meanwhile, provided clarity in respect of Policy 2.1 – Initial Listing Requirements, Form 2D Listing Agreement and Policy 2.9 – Trading Halts, Suspensions and Delisting of the exchange’s corporate finance manual with respect to listed issuers in the marijuana sector.

The group’s notice on Monday said companies with business activities violating U.S. federal law regarding marijuana could face a delisting review at the Toronto Stock Exchange. U.S. federal law takes precedence over state laws, it said, even though more than two dozen states have legalized medical marijuana and eight states have legalized its use recreationally.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.