LETTER

Canada’s legalization of cannabis

 

Kenneth Sam is a partner of the international law firm Dorsey & Whitney and a member of the firm’s Canada cross-border practice group. He represents cannabis companies and underwriters, agents and investors in cannabis companies on US legal matters.  Mr Sam co-authored the “US Emerging Company Guide to Listing on the Canadian Securities Exchange” which is endorsed by the Canadian Securities Exchange, the primary securities exchange in Canada for cannabis companies with US assets or operations. Of the legalization he says,

“Canada’s Bill C-45 (Cannabis Act) legalizes recreational use of cannabis at the federal level, which opens the door to orderly regulation of the cannabis industry.  Unlike the legal uncertainly of cannabis in the United States, where several states have decriminalized cannabis for medical and/or recreational use through voter initiatives and legislative act and where the federal law categorizes cannabis as a Schedule I drug under Controlled Substances Act (21 U.S.C. § 811), Canada has taken a more progressive approach to cannabis and a thriving eco-system is developing in business and the capital markets, free from legal uncertainty,” Sam says.

“Banking: One of the largest hurdles for cannabis companies in the United States is the ability to open bank accounts and transact business using traditional banking systems.  Legalization at the federal level in Canada solves this problem.”

“Capital Markets:  Canada has become the world’s top source of public venture and growth capital for cannabis companies.  There is a vibrant public market for cannabis companies in Canada that provide higher valuations and greater access to capital.  An ecosystem has developed in Canada that includes investment bankers and analysts, executive talent, experienced independent directors and legal and accounting  professionals knowledgeable in the cannabis industry.  Cannabis companies have already raised over $2.4 billion in capital and there are several “unicorns” ($1 billion+ companies) that have been minted in Canada.”

“Government Cooperation: With the Cannabis Act, the business environment is expected to move toward cooperation with the support of federal, provincial and local government.  An entire industry is developing and there are ground floor opportunities for businesses and governments to emerge as leaders in the industry.”

Laura Kelley (Dorsey & Whitney LLP), Colorado