Invest in MJ Blog

Editors Notes: This is exciting news to see a major bank in Canada finally participate in the Cannabis industry and start financing larger cannabis licensed producers, the fact that Canopy has a $7 Billion dollar market cap and now big banks are investing in the space gives credibility to the Canadian cannabis sector.

Original Article:

Bank of Montreal became the first major Canadian bank to lead an equity financing for a public company in the medical marijuana sector, underwriting a $175-million stock sale for Canopy Growth Corp.

The bank's capital-markets arm and GMP Capital Inc. will be the co-lead underwriters on the bought deal financing, which was announced after the markets closed Wednesday. The deal was done at a price of $34.60 per share, or 8 percent below the company's closing share price on Wednesday.

Pot stocks have whipsawed in recent weeks, climbing sharply at the start of 2018 before selling off amid concerns about regulatory changes in the United States. Canopy, the largest Canadian public company in the cannabis sector with a market capitalization of $7.2-billion, has seen its shares climb 26 percent since the start of the year – yet they have fallen more than 10 percent since Jan. 9.

Canada's big banks have been hesitant to get involved in a visible way in the burgeoning marijuana sector because they have significant operations in the United States, where there is considerable conflict and uncertainty surrounding marijuana laws. The drug is legal in many U.S. states, at least for medical use, and on Jan. 1 California became the largest state to legalize it for recreational use for adults. Yet it is still illegal under U.S. federal law.

Since Canopy is one of the Canadian-headquartered cannabis companies that has no operations in the United States, it is considered a safer one for banks to do business with.

BMO was "very grueling about the fact that they are not looking to work with companies that break American law," said Bruce Linton, chief executive officer at Canopy.

Canopy's size and inclusion in the S&P/TSX composite index also means that it has a broader following among institutional investors.

"I think this signals a new normal," Mr. Linton added, referring to BMO entering the sector. "What I think is going to happen is the institutional buyers who've said we don't really do this because banks don't do this are going to say 'shoot, we really should do this.'"

Canopy is raising funds at a particularly tumultuous moment for the industry.

Days ago, U.S. Attorney-General Jeff Sessions revoked Obama-era guidelines, referred to as the Cole Memo, that limited how federal prosecutors could investigate and prosecute state-licensed marijuana production and distribution.

At the same time, the Canadian Securities Administrators (CSA) has said it is rethinking existing rules that allow marijuana firms with U.S. operations to go public on the stock market and raise money in Canada, as long as they disclose the legal risks they face south of the border.

Bank of Montreal has a relatively new CEO -- 46-year-old Darryl White took the top job last November -- who is a former investment banker. The bank has an extensive retail network in the U.S., along with significant U.S. capital markets operations. However, this deal doesn't indicate that the bank would be willing to support deals with cross-border cannabis companies.

Executives at Canada's other bank-owned investment dealers are expected to re-visit their policies on taking part in cannabis financings in the wake of BMO's participation in the Canopy Growth offering. An executive at a rival bank said late Wednesday: "We are reviewing our interpretation of the rules as we speak, and I imagine every other bank is doing the same."

The deal comes amid a hot market for financings related to marijuana stocks. Already, the amount raised in equity deals since the start of 2018 is closing in on $700-million in Canada. Until now, deals have largely been led by independent investment dealers such as GMP Capital Inc., Canaccord Genuity Group Inc. and Eight Capital, with the capital-markets arms of the Big Six banks on the sidelines.

Blog Repost: View Original Article

 Nov 11, 2017 at 14:00

Charles Alovisetti is a senior associate and co-chair of the corporate department at Vicente Sederberg LLC, and works with legal cannabis businesses in the U.S.

In this opinion piece, Alovisetti warns such enterprises to be wary of using bitcoin or other cryptocurrencies as a solution to the pot industry's continued difficulty obtaining or keeping bank accounts (a familiar problem for blockchain startups.)

One of the major challenges facing legal marijuana businesses is lack of consistent access to banking services. Many marijuana businesses do have banking accounts, but the sword of Damocles dangles above them, always threatening an unappealable termination of an account.

Enter digital currencies, which promise an end run around a wary financial system. There is a great deal of excitement in the marijuana industry about the possibilities regarding bitcoin and other cryptocurrencies.

But before the cannabis industry gets carried away with images of marijuana businesses sidestepping hostile federal banking regulators, we need to take a hard look at the future of digital currencies.

Alternative prescriptions

One strategy that's been pushed is for cannabis businesses to take an existing digital currency and simply use it as a method of transacting business to avoid the need to rely on banks.

This way, marijuana companies without bank accounts could eliminate the need to operate in cash, instead accepting payment directly from customers or other businesses in digital currency – although converting digital currency into dollars will still require a bank account.

Another possible use of digital currencies would be to develop a new token, often referred to as an app coin, protocol token, or altcoin, specifically for the marijuana industry. Again, the goal would be to reduce or eliminate the use of cash and integrate blockchain technology into the compliance and other needs of marijuana businesses.

Finally, some business offer bitcoin-based payment processing services. These services allow customers to purchase bitcoin via a credit or debit card and then purchase a marijuana product with the recently acquired bitcoin. The store then converts the bitcoin back into dollars. The idea is to provide an alternative to traditional payment processing services and credit card companies that will not work with marijuana businesses.

Harsh realities

However, regulators present a real and present threat to cryptocurrencies as they currently exist; for example, recent Chinese regulatory restrictions have seen the closure of platforms allowing people to buy or sell tokens.

And these threats become even more important for digital currencies servicing marijuana-related businesses ("MRBs" in the parlance of the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN).

As longtime CoinDesk readers will recall, in March 2013, FinCEN published its initial guidance on virtual currencies. The agency defined three categories of participants: users, exchangers and administrators. A user is "a person that obtains virtual currency to purchase goods or services," whereas an exchanger is "a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency" and an administrator is "a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency."

FinCEN concluded that, barring any specific exemption, exchangers and administrators are money service businesses (MSBs) and as such are subject to FinCEN registration and the framework of the Bank Secrecy Act (BSA), which was designed to aid FinCEN's investigations of potential criminal activity.

Subsequent administrative rulings have clarified that FinCEN considers digital currency exchanges, ATM operators, and payment processors to be exchangers within the agency's tripartite framework.

On the marijuana side of the equation, it is important to note that, while marijuana remains illegal federally, the industry in the U.S. exists in its current form because it is tolerated pursuant to federal policy, as set forth in the Cole Memo (put out by the Department of Justice on Aug. 29, 2013).

The Cole Memo states that while marijuana remains illegal federally, federal law enforcement should not consider prosecution of state-legal marijuana businesses if those business do not implicate any of eight enumerated enforcement priorities (e.g. preventing revenue from the sale of marijuana from going to criminal enterprises and preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or illegal activity).

A potent brew

While it is unfair to associate all digital currency use with illicit activity, there is a perception, reinforced by certain bad actors, that digital currencies are being used to launder money, divert revenue to criminal enterprises and traffic illicit drugs. Any risk that a business could be seen as violating the Cole Memo priorities needs to be treated extremely seriously as it could provoke a federal law enforcement action.

While the Cole Memo addressed violations of the Controlled Substances Act (CSA), it was silent as to financial crimes that would inevitably result from the use or banking of proceeds of a federally illegal activity. In response to financial institutions' concerns regarding accepting MRBs as clients, on Feb. 14, 2014, in two memos often referred to as the "Valentine's Day Letters," the Department of Justice and FinCEN each outlined their respective attitudes to money laundering concerns related to the violations of the CSA.

The FinCEN memo contained detailed guidelines on how to provide banking services to an MRB while remaining compliant with the BSA. These guidelines included the obligation to file different types of suspicious activity reports (SARs) in response to activity on the part of an MRB. The new DOJ memo updated the earlier Cole Memo to extend the realm of non-priority violations to include provisions of the money laundering statutes, the unlicensed money remitter statute and the BSA triggered by underlying violations of the CSA.

But the DOJ reiterated that any exercise of discretion regarding its resources was subject to the provision of services to an MRB whose activities do not trigger any of the eight priority factors. The DOJ also noted that following the FinCEN guidance was critical to remaining within the low enforcement priority category of the Cole Memo.

Again, FinCEN has also made it clear BSA compliance obligations also apply to many businesses dealing in digital currencies – exchanges, ATM operators and payment processors are all required to register as MSBs. That means that to comply with the Cole Memo and FinCEN's marijuana policy guidance, any digital currency business that is required to register as an MSB must make the required SAR reports outlined in the Feb. 14, 2014, FinCEN guidance.

Just say no

When it comes to marijuana firms using cryptocurrencies, discretion should remain the better part of valor.

The marijuana industry in the U.S. exists solely due to permissive federal policies that require businesses to follow certain guidelines, including filings SARs with FinCEN. If these guidelines are not being followed to the letter, which is a challenging and sometimes onerous task, a business is no longer within the guidance of the Cole Memo and is at higher risk of facing federal law enforcement action.

And even if these guidelines are religiously adhered to, while FinCEN-compliant use of digital currencies is not explicitly prohibited by federal policy, their use is sometimes linked by law enforcement with money laundering, illicit drug sales and other illegal activities.

As these crimes are listed as prevention priorities in the Cole Memo, digital currency use could potentially provide an excuse for Attorney General Jeff Sessions (no fan of legal marijuana) to crack down on state-legal pot enterprises.

Original Article: https://www.coindesk.com/pipe-dreams-bitcoin-wont-solve-pot-industrys-banking-problem/

The U.S. distributor of Corona beer is chasing a new type of buzz.

Constellation Brands Inc. (STZ)  has agreed to take a 9.9% stake in Canopy Growth Corp. WEED , a Canadian marijuana company, and plans to work with the grower to develop and market cannabis-infused beverages.

Canopy Growth is the world’s largest publicly traded cannabis company, with a market valuation of 2.2 billion Canadian dollars on the Toronto Stock Exchange. The C$245 million (US$191 million) deal gives Constellation a toehold in an industry that the brewer expects to be legalized nationwide in the U.S. in the coming years.

“We think that it’s highly likely, given what’s happened at the state level,” Rob Sands, chief executive of the Victor, N.Y.-based beer, wine and spirits company, said in an interview. “We’re obviously trying to get first-mover advantage.”

Constellation—flush with cash after posting a 13% increase in beer sales in its latest quarter—is interested in developing drinkable cannabis products that don’t contain alcohol, he said. Products currently on the market in U.S. states where they are legal include buzz-inducing sodas, coffees and fruit elixirs.

A worker trims medical marijuana plants at a facility in Canada, where recreational use is expected to soon be legalized.

Constellation doesn’t plan to sell such a product in the U.S. before marijuana is legalized there nationwide, Mr. Sands said, but could sell it in Canada, where edible and drinkable cannabis products are expected to be legalized by 2019, or other countries where recreational marijuana is permitted.

Independent research firm Euromonitor International estimates that the legal marijuana market in 2018 will be US$7.5 billion in Canada and $10.2 billion in the U.S.

U.S. beer-industry executives have been debating whether legalized marijuana could cannibalize sales of beer, even as other consumers migrate from beer to wine and spirits. Some brewers have experimented with cannabis-infused beers, not containing THC but instead a marijuana flavor.

“Wine and spirits are not sitting still, and marijuana is being legalized in many states,” Heineken USA Chief Executive Ronald den Elzen said at a beer wholesalers conference earlier this month. “We have to act now, and we have to do it together.”

Mr. Sands said he doesn’t see pot as a threat to booze. But if a consumer is going to choose a can of beer, a glass of wine, a shot of liquor or a weed-laced elixir, he wants to be able to offer all four, he said.

An employee with medicinal marijuana plants at Canopy Growth in Smith Falls, Ontario.

“Could it be a threat? Yes, I guess it could be,” he said. “We’re not going to stand around twiddling our thumbs.”

Medical use of marijuana has been legal in Canada since 2001. The country is expected to legalize recreational use, not including edibles, by July 2018, with edible and drinkable products expected to become legal the following year. In the U.S., eight states plus the District of Columbia have legalized marijuana, and more than 20 states have legalized it for medical purposes.

Constellation doesn’t plan to lobby for or against marijuana legalization in the U.S., Mr. Sands said.

Canopy Growth, based in Smiths Falls, Ontario, is ramping up capacity ahead of next summer’s legalization in Canada and said it would use the new capital to expand its production and storage facilities throughout the country.

The deal, expected to close by early November, gives Constellation board-observer status and the option to increase its stake to just under 20%. Canopy Growth CEO Bruce Linton said Constellation’s expertise in alcohol distribution would be helpful for the cannabis company as it determines how to distribute and package recreational cannabis. Canada’s provincial regulators are still considering how to handle the selling of marijuana, he said.

Mr. Linton said he hoped the deal could be the turning point for the nascent industry, signaling to institutional investors “that a cannabis company that fully complies within legal jurisdictions would be the right place to invest."

There are 69 publicly traded cannabis companies listed on Canada’s three main stock markets, representing about C$8 billion in market capitalization. The bulk of the trades in Canada are conducted by retail investors.

Authored By: The Wall Street Journal

Canadian Securities Exchange and OTC Markets Group Announce Strategic Alliance to Attract Foreign Issuers to North America

By Sherri Altshuler and Tyler Brent* from Aird Berlis

The Canadian Securities Exchange (“CSE”) and OTC Markets Group recently announced a strategic alliance to offer a new program for issuers looking to go-public in Canada and have cost-effective access to North American investors. Both the CSE and OTC Markets Group hope to utilize the strategic alliance to introduce foreign companies to the North American capital markets.

The alliance pairs the benefits of public company status in Canada with OTC Markets Group’s secondary market network across the United States. Under the alliance, foreign companies would raise capital through an IPO on the CSE and then broaden their reach to U.S. investors through OTC Markets Group’s dealer network. Securities would then be traded on both the CSE and over-the-counter in the United States, allowing for increased liquidity and access to funding.

Both the CSE and OTC Markets Group have publicly announced their excitement over the alliance, and hope to introduce new and compelling investment opportunities to the North American marketplace. “As a result of our relationship with OTC Markets Group, we expect to offer the most efficient access to North America’s public capital markets for foreign issuers,” said Richard Carleton, Chief Executive Officer of the CSE. “At the same time, with our partners at OTC Markets Group, we will present a series of new and interesting investment opportunities to investors in Canada and the United States.”

We expect the alliance between the CSE and OTC Markets Group will provide companies in the cannabis sector with better access to U.S. investors. As of June 30, 2017, one third of companies listed on the CSE were also quoted on one of the OTC Markets, with the bulk of companies quoted on the OTC Pink (65 companies) or the OTCQB (37 companies).

See related blog post: TSX May delist Canadian Companies With US Cannabis Exposure. 

TSX, TSX-V and CSA Clarify Their Positions on Listed Entities with Ties to U.S. Marijuana Market

By Richard Kimel, Daniel Everall and Tyler Brent*

On October 16, 2017, the Toronto Stock Exchange (“TSX”), the TSX Venture Exchange (together with the TSX, the “Exchanges”) and the Canadian Securities Administrators (the “CSA”) released separate guidance clarifying their positions on the regulation of entities with ties to the U.S. marijuana market.

The Exchanges released identical notices confirming that listed entities are not permitted to engage in the U.S. marijuana market. The Exchanges have always required applicants and listed entities to comply with all laws, rules and regulations applicable to their businesses. The Exchanges’ bulletins reminded that, despite the “Cole Memorandum,” marijuana remains a Schedule I drug, prohibited by the U.S. federal Controlled Substances Act. Therefore, entities that cultivate, distribute or possess marijuana in the U.S. (“Subject Entities”) are considered by the Exchanges to be engaging in illegal activity in contravention of the Exchanges’ policies. Further, the Exchanges suggested that financial transactions involving U.S. marijuana businesses may contravene U.S. money laundering rules. Non-compliance with the Exchanges’ requirements could lead to a delisting. Those following the space should not be surprised with this news, given that it is simply a formalization of the Exchanges’ recent informal positions.

The Exchanges also warned that entities that own Subject Entities either directly, indirectly or in substance are considered to be engaged in the business of U.S. marijuana, and therefore at risk of delisting. Similarly, entities that target Subject Entities with their products or services, or have commercial arrangements with such entities, may also be considered to be in breach of the listing requirements.

The Exchanges announced that they expect to complete reviews of all of their listed entities by the end of the year. The Exchanges expect listed entities to take steps to ensure they are in compliance with their rules, meaning that some companies may need to divest certain U.S. interests or transfer their listing to other exchanges.

The Exchanges’ approach comes in contrast to the CSA requirements, which were clarified by Staff Notice 51-352 (the “Staff Notice”). The CSA considers securities regulation to be primarily disclosure-based. Accordingly, the Staff Notice focused on disclosure requirements for listed entities, which require each entity’s disclosure fairly presents all material facts and risks. The Staff Notice emphasized that the CSA’s disclosure-based approach is premised on the entity complying with U.S. laws at the state level.

The CSA recognized that there is uncertainty associated with operating in the U.S. marijuana industry because the federal government’s policy towards non-enforcement of the federal prohibition (i.e. the “Cole Memorandum”) could change at any time. However, the CSA considered this to be largely a business risk, and barring public interest concerns, not a securities law violation provided adequate disclosure is made to investors. Specific disclosure recommendations were included in the Staff Notice as replicated here in Table 1.

 Cannabis companies applying to be or already listed on the Canadian Securities Exchange (“CSE”) will be relieved by the Staff Notice, as it largely accords with the CSE’s existing position. Consequently, companies with ties to U.S. marijuana can still list publicly in Canada and comply with our securities laws, but should consider friendlier alternatives to the TSX/TSX-V, such as the CSE.

*Tyler Brent is a 2017/2018 articling student at the firm. 

Aird Berlis is a law firm specializing in the cannabis industry.

During May 2017, Health Canada announced that they are making the process to become a licensed producer of marijuana in Canada easier and quicker.  We at Invest In MJ are excited to see this happen, we expect a lot of attraction to the industry as more applicants become licensed over the coming year.  

Why this is significant to an applicant who is in the final review stages?  Instead of waiting for approval to build out the facility, they can start building it out now which takes capital.  I suspect we will see many of these applicants looking to build out their facility in the coming months, that could mean them looking to raise capital for at financing options.  We at #IMJ will seek out these opportunities to work with many of the pre-license companies looking to become a ACMPR licensed producer.

Below is the notice from Health Canada's site...

Improving the Licensing of Production of Cannabis for Medical Purposes

From Health Canada, May 2017

Health Canada is introducing several improvements that aim to streamline the licensing of medical cannabis producers and enable increased production of cannabis. 

Licensed producers and applicants will need to continue to meet all of the requirements under the Access to Cannabis for Medical Purposes Regulations, including the security and inventory control measures that help prevent diversion, and the Good Production Practices that help to provide individuals with access to quality-controlled cannabis for medical purposes.

As announced previously, Health Canada has begun conducting random testing of cannabis products produced by licensed producers to provide added assurance to Canadians that they are receiving safe, quality-controlled product.

What is a licensed producer?

A licensed producer is the holder of a producer’s licence that is issued by Health Canada under the Access to Cannabis for Medical Purposes Regulations to produce quality-controlled cannabis under secure and sanitary conditions. They can be authorized to produce and sell dried and fresh cannabis, seeds and plants, and cannabis oil. As of May 24, 2017, there are 44 licensed producers of cannabis for medical purposes. Over the past four years, licensed producers have established a strong record of compliance and are inspected regularly by Health Canada.

Licensed producers are authorized to sell to registered clients who have been authorized by their healthcare practitioner to use cannabis for medical purposes. Products are delivered to clients securely through the mail or by courier. More than 153,000 individuals are registered to purchase cannabis from licensed producers, while more than 4,000 individuals are registered with Health Canada to produce a limited amount of cannabis for their own medical purposes. On average, the number of registered clients has been growing by 10% a month. Sales of dried cannabis have been growing by 6% a month, and sales of cannabis oil have increased by 16% a month.

What is the current process to become a licensed producer?

All applications to become a licensed producer undergo a strict and thorough review. Applications are assessed on a case-by-case basis. All key personnel must pass a stringent security clearance process. In addition, each application must demonstrate how the security and inventory control measures and Good Production Practices at the facility meet all the regulatory requirements. This compliance is verified by Health Canada inspectors.

How will the licensing approach change?

Health Canada has drawn on nearly four years of experience administering the medical cannabis regime to identify what works well, and what can be improved. The changes that are being put in place are measures to streamline licensing and enable increased production of cannabis for medical purposes. These measures will help ensure that Health Canada’s approach to licensing and oversight continues to be aligned with the regulations, the existing evidence of risks to public health and safety, and its approach to other regulated sectors.

Effective immediately, Health Canada is implementing the following measures:

• Increasing the Department’s capacity to review and process applications
  • Health Canada is allocating more resources to streamline the processing of applications to produce cannabis for medical purposes. The majority of these additional resources will focus on applications at the review stage, during which Health Canada undertakes a detailed review of all aspects of the application and assesses its compliance with the requirements of the regulations. There are currently 187 applications at the review stage. Additional resources will also be applied to applications at the intake and screening stage.
  • In the past few weeks, Health Canada has dedicated additional resources to accelerate the processing of applications from individuals who are authorized by their healthcare practitioner to produce a limited amount of cannabis for their own medical use.
• Undertaking some stages of the review of the application concurrently;
  • The detailed review stage of processing applications will now happen at the same time as the personnel security screening process. Historically, the review stage did not begin until the security screening of key personnel is complete, which can lengthen the time to process the application.
• Permitting licensed producers to manage production on the basis of their vault capacity;
  • Licensed producers will be permitted to increase cannabis production within their existing facility to the maximum they are authorized to store, based on the capacity and security level of their vault(s) or safe(s). This will allow licensed producers to better manage production as necessary to meet demand.
  • In addition, licensed producers will be able to store low-value cannabis waste products (e.g., leaves) in a secure area and will no longer need to keep these products in a secure vault or safe, thereby creating more room for storage of finished cannabis products and enabling increased production.
• Authorizing longer validity periods for licences and security clearances in accordance with the regulations
  • New licences that are issued, and existing licences that are renewed for licensed producers with a good compliance record, may now be valid for the full three years allowed in the regulations. New or renewed security clearances for key personnel at licensed production facilities may also be valid for up to five years in accordance with regulations, subject to Health Canada receiving new information that could result in a security clearance being suspended.
• Streamlining the review and approval of applications to modify or expand a production facility for licensed producers with a record of good compliance with the ACMPR;
  • Where a licensed producer has a good compliance record and the proposed modification or expansion is straightforward, materially similar to an existing room or facility, and falls within an existing security perimeter (e.g., fence), applications for a production site modification or expansion may be approved following a successful application review. The physical inspection of the site modification or expansion would then occur during the regular facility inspection rather than before approval.

Health Canada will continue to inspect all facilities before cultivation begins and before a licence to sell products to the public is issued. Henceforth, Health Canada will schedule this first inspection after it has determined an application meets the regulatory requirements and it has issued the licence to cultivate and once the producer is ready to initiate production in its facility. This approach will help provide successful applicants with a decision on their application as soon as possible while ensuring that all facilities are inspected as cultivation begins.

Licensed producers and applicants must continue to meet all of the requirements under the Access to Cannabis for Medical Purposes Regulations. These include security and inventory control measures that help prevent diversion, and the Good Production Practices that help provide individuals with access to quality-controlled cannabis for medical purposes. Since licensed production began in June 2013, licensed producers have established a solid record of compliance with the regulatory requirements and Health Canada will continue to ensure compliance through regular inspections.

The federal government is getting ready to drastically speed up its licensing process to increase the numbers of companies that are authorized to produce marijuana for the recreational market that will open up in the first half of 2018, sources said.

A senior federal official said that in addition to tabling legislation to legalize marijuana on Thursday, the federal government will announce a push to authorize new producers of marijuana. At this point, there are 42 companies that have the necessary authorizations from Health Canada to produce marijuana for medical purposes across the country.

The official said the current holders of licences will have a head start once the market is opened up to recreational users, but added that the federal government will add staff and resources at Health Canada to speed up the approval process for new producers

A key concern is ensuring that the supply of marijuana will meet the demand for the drug once it is legalized by the unofficial deadline of July 1, 2018. As Ottawa works toward squeezing out illegal producers of marijuana, federal officials are worried that a shortage of cannabis would hurt their plans in the initial stages of legalization.

Another priority for the government will be to ensure that there is a broad variety of producers of marijuana serving the recreational market, and not just the existing network that includes many large-scale facilities.

“It’s obvious that the producers who are already licensed have an advantage going in. But there is also a clear desire on the government’s part to have a mix of big and small producers,” said the federal official who spoke on the condition of anonymity ahead of the tabling of the legislation.

“There is a great deal of awareness to the needs of smaller producers in the government,” the official added.

Federal officials said the government will table its legislation on Thursday, but that a number of key issues will only be addressed in the rules and regulations that will be unveiled at a later date.

Ottawa will give itself broad powers to oversee the production of marijuana and to design rules on the marketing of the product, which are expected to be similar to the ones that govern Canada’s tobacco industry.

The federal government will leave the provinces and territories entirely in charge of overseeing the distribution and sale of marijuana, in line with Canada’s alcohol regime.

“We are going to let them make their own choices on the sales side,” the federal official said. “It’s going to be similar to the situation with alcohol. In Alberta, it’s in the hands of the private sector, whereas in Quebec and Ontario, it’s run by the state.”

After it is tabled in the House, the legislation to legalize marijuana will be studied in committee. At the same time, the provinces will be expected to develop their own plans to distribute and sell the product.

The federal government will also be working to develop an “interim system” by which marijuana would be available across Canada even if some provinces do not develop their own distribution mechanisms quickly enough. Sources said the project remains in development, although Canada Post could deliver recreational marijuana by mail, as it currently does with medical marijuana.

The federal legislation will be inspired in large part by a task force led by former Liberal cabinet minister Anne McLellan, which proposed a complete legalization model in a well-received report last year.

The task force urged the government to allow Canadians to buy or carry 30 grams of marijuana for personal use, and to grow up to four plants at home. The task force also recommended a system that would feature storefront sales and mail-order distribution, and allow a wide range of producers to operate legally, including “craft” growers and the current producers of medical marijuana.

Prime Minister Justin Trudeau has already endorsed one of its key recommendations: that marijuana should be legal for people who are of legal drinking age – 18 or 19 years old, depending on the province they live in.

Original Article: DANIEL LEBLANC, Ottawa — The Globe and Mail, Published Tuesday, Apr. 11, 2017 12:31PM EDT

The Liberal government will announce legislation next month that will legalize marijuana in Canada by July 1, 2018.

CBC News has learned that the legislation will be announced during the week of April 10 and will broadly follow the recommendation of a federally appointed task force that was chaired by former liberal Justice Minister Anne McLellan.

Bill Blair, the former Toronto police chief who has been stickhandling the marijuana file for the government, briefed the Liberal caucus on the roll-out plan and the legislation during caucus meetings this weekend, according to a senior government official who spoke to CBC News on condition of anonymity.

Bill Blair, parliamentary secretary to the minister of justice, briefed the Liberal caucus on new marijuana legislation, which leaves the provinces to decide how marijuana is distributed and sold, according to a senior government official. (Sean Kilpatrick/Canadian Press)

Provinces to control sales

The federal government will be in charge of making sure the country's marijuana supply is safe and secure and Ottawa will license producers.

But the provinces will have the right to decide how the marijuana is distributed and sold. Provincial governments will also have the right to set price.

While Ottawa will set a minimum age of 18 to buy marijuana, the provinces will have the option of setting a higher age limit if they wish.

4 plants per household

As for Canadians who want to grow their own marijuana, they will be limited to four plants per household.

Legalizing marijuana was one of the more controversial promises Justin Trudeau made as he campaigned to become prime minister.

But in their platform the Liberals said it was necessary to "legalize, regulate and restrict access to marijuana" in order to keep drugs "out of the hands of children, and the profits out of the hands of criminals."

The Liberals had promised to introduce legislation by the Spring of 2017. Announcing the legislation the week of April 10 will allow the party to hit that deadline.

Raids raise questions

Trudeau referred again to that rough timetable a few weeks ago when he said the legislation would be introduced before the summer. But at the same time he also warned that it wasn't yet open season for the legal sale of marijuana.

"Until we have a framework to control and regulate marijuana, the current laws apply," Trudeau said in Esquimalt, B.C. on March 1.

That warning became more concrete a week later, when police in Toronto, Vancouver and other cities carried out raids on marijuana dispensaries and charged several people with possession and trafficking, including noted pot advocates Marc and Jodie Emery.

Trudeau's promise to legalize marijuana was seen as one of the reasons for the Liberals' strong showing among youth voters in the 2015 election. 

But at the NDP's leadership debate in Montreal Sunday, which was focused on youth issues, several of the candidates pointed to marijuana legislation as an example of a broken Liberal promise.

"I do not believe Justin Trudeau is going to bring in the legalization of marijuana and as proof that ... we are still seeing, particularly young, Canadians being criminalized by simple possession of marijuana," said B.C. MP Peter Julian.

Federal marijuana legislation to be introduced in spring 2017, Philpott says

Original Article By David Cochrane, CBC News Posted: Mar 26, 2017 9:00 PM ET

A former Liberal cabinet minister who recently chaired a panel guiding Ottawa’s push to legalize cannabis says police everywhere should enforce the existing prohibition of marijuana, despite several communities in British Columbia choosing to regulate – not raid – illegal pot shops.

Anne McLellan, head of an official task force that submitted recommendations to Ottawa on how best to legalize cannabis, said Thursday that Vancouver crafted Canada’s first municipal marijuana bylaw in response to what was a “growing difficult situation for them.”

But the former minister of public safety, health and justice in the Liberal governments of Jean Chrétien and Paul Martin said other cities should not follow suit before the current laws change, echoing what the federal government has repeatedly said when asked about the rise of illegal dispensaries.

“Nobody would deny that there are some practical problems at street level, absolutely, nobody denies that,” said Ms. McLellan, who was in Vancouver speaking at Simon Fraser University’s downtown campus on the work the task force did last year.

“Cities should wait until the law changes instead of making their own rules now and hoping to adapt them to a federal framework later on,” she said. “I cannot advocate that anybody break existing laws. We are a nation of law-abiding citizens.”

Ottawa is expected to table legislation this spring that will legalize and regulate recreational marijuana over the next two years. While the stores are still illegal under federal law, they have proliferated in cities such as Vancouver and Victoria, where local politicians argue their rules can eventually be adapted to any national framework regulating the storefront sale of the drug.

All dispensaries and compassion clubs across Canada still operate outside the federal government’s medical-marijuana program, which permits about 30 industrial-scale growers to sell dried flowers and bottles of cannabis oil directly to patients through the mail.

The federal government has said its two core priorities behind legalizing the recreational sale of marijuana are: to keep the drug out of the hands of young people and to stop the flow of money to organized criminals involved in the production and sale of the drug on the black market.

Vancouver’s approach to regulating its dispensaries stands in stark contrast to Toronto’s, where police and politicians say a continuing crackdown has become more urgent as these pot shops have become a magnet for violent thieves because some owners are reluctant to report robberies.

Civic and provincial politicians across the country are waiting on the coming legalization bill to give some guidance as to where the drug may be sold once it is legalized.

Vancouver councillor Kerry Jang, architect of the local dispensary bylaw, said he was disappointed in Ms. McLellan and Ottawa’s rhetoric, noting they both appear to be eschewing the public-health approach of his city, and that of other communities in B.C. also licensing these illegal stores.

“It’s sort of like we’re in purgatory,” he said Thursday. “And when you’re in purgatory, it’s not about allocating our resources, it’s about advocating what’s right for our citizens – that’s what Vancouver has done.”

He said he wants Ms. McLellan to push federal ministers to implement the new legislation faster because local governments across the country are wasting millions of dollars containing the grey cannabis market.

“When it comes to resources, the federal government better provide good resources for us to help enforce and help manage what they want us to do,” said Mr. Jang, a clinical psychiatrist. “Otherwise, we’re going to be back to square one.”

The Union of B.C. Municipalities has long advocated that cities deserve to receive some of the eventual tax revenue from recreational cannabis sales if they are expected to enforce federal cannabis laws.

The federal Liberals have said any pot proceeds would be directed to addiction treatment, mental-health support and education programs, and that provinces and territories will also have a significant say in how cannabis revenues are spent. A recent study from the parliamentary budget watchdog predicted that about 60 per cent of marijuana taxation will flow to the provinces.

Ms. McLellan, now in the public-policy division of Bennett Jones, one of the Canada’s leading law firms operating in the cannabis sector, said different communities have different concerns about the drug, as evidenced by Toronto and Vancouver’s contrasting approach to dealing with illegal dispensaries.

Original article by: MIKE HAGER, VANCOUVER — The Globe and Mail. Published Thursday, Mar. 23, 2017 10:04PM EDT

As investors flock to Canada’s burgeoning marijuana sector, Prime Minister Justin Trudeau’s government is signaling recreational pot sales aren’t imminent.

Lawmaker Bill Blair -- the former Toronto police chief leading Trudeau’s legalization effort -- confirmed a bill is due in parliament this spring, but it won’t be the last hurdle as ample regulatory work remains. The federal government will take its time and work with provinces, territories and cities to build a framework and develop specific regulations, he said.

The government is also looking for ways to control production, distribution and consumption of legalized marijuana, while testing it for quality and keeping it out of the hands of minors, Mr. Blair said.

“We will take as much time as it takes to do it right,” Mr. Blair, the parliamentary secretary to Canada’s justice minister, said in an interview Monday. “I’m pretty reluctant to suggest a specific time frame, frankly, because I don’t know how long this will take in each of our 10 provinces and three territories.”

Mr. Blair’s comments come as Canada’s nascent marijuana industry balloons, with investor optimism being fueled by analyst estimates that recreational sales could start as early as 2018.

The government’s plan to introduce legislation in the spring of 2017 “could pave the way for the legal sale of recreational cannabis by 2018,” Canaccord Genuity analysts Matt Bottomley and Neil Maruoka said in a November research note. Canada’s recreational pot industry has the potential to reach $6-billion in sales by 2021 if legalization occurs along “expected timelines,” according to the note.

Canopy Growth Corp. became the first marijuana unicorn in 2016 and had a valuation of $1.9-billion on Monday. Other producers, including Aurora Cannabis Inc. and Aphria Inc.Inc., have seen their share prices surge more than 400 per cent in the past 12 months.

Canopy shares fell as much as 7.5 per cent in Toronto while Aurora tumbled 5.1 per cent and Aphria slid 3 per cent.

Dampened Buzz

“If they delay, there’s going to be a lot of eggs that are going to break in this business,” Chris Damas, an analyst at BCMI Research in Barrie, Ont., said by phone Monday. “The valuations are extreme.”

Licensed marijuana producers are in the midst of expanding their capacity and there will be a “huge amount” of excess cannabis if Canada delays legalization, Damas said. The analyst said Mr. Blair’s previous comments suggest it’s unlikely the government will introduce a bill by June and companies with huge valuations “won’t have any serious business” if the recreational market takes longer to come to fruition.

“There could be a lot of disappointment,” he said.

In a separate interview Monday with the Canadian Broadcasting Corp., Mr. Blair said the government was going to design a legalized marijuana system that included measurement and testing of products, as well as enforcement. While the proposed legislation is due this spring, “it’s not sufficient to simply come forward with a bill,” he said.

The government may also explore ways to direct revenue from marijuana sales to funding additional drug treatment, including for fentanyl as Canada grapples with an opioid crisis, he added.

Since taking a position on legalization ahead of the 2015 election, Trudeau has gradually turned toward emphasizing safety, saying regularly it shouldn’t be easier for youth to buy marijuana than to buy beer. Putting the file in the hands of a prominent law-enforcement veteran is another signal the government is approaching legalization with an eye to tight regulation.

Blair declined to comment on whether the regulations could be finalized by 2018 -- an expected election year in Ontario, home to Canopy and other companies -- or 2019, when the next federal election is scheduled.

The Task Force on Cannabis Legalization and Regulation issued a report in December that recommends the Canadian government regulate the production of marijuana while provinces control the distribution and retail sales, including through dedicated storefronts with well-trained staff or by mail.

Original Post: JEN SKERRITT AND JOSH WINGROVE

Bloomberg News, Published Tuesday, Mar. 07, 2017 2:10PM EST

Germany’s lower house of parliament passed a bill legalizing the production, sale and use of medical marijuana Thursday, Jan. 19 in Berlin.

The bill limits the sale and use of cannabis to those patients “in very limited exceptional cases,” such as with patients suffering from multiple sclerosis, epilepsy, chronic pain, and lack of appetite or nausea related to cancer treatments. Those patients will not be allowed to grow their own medicine at home.

As restrictive as this program might sound, it is an improvement to what existed. Until this law was passed, medical cannabis was only available on a case-by-case basis, as allowed by German authorities. This bill allows patients to get a prescription from their doctor, which can be filled at local pharmacies.