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TMX Provides Update on Clearing Securities of Issuers with Cannabis-Related Activities in the United States

On November 24, 2017, the TMX Group (TMX) issued a news release updating the ongoing engagement that the CDS, which is owned and operated by the TMX, has with the Canadian Securities Administrators (CSA) to address the clearing of trades of issuers with cannabis-related activities in the United States. While little substantive developments were announced, the TMX emphasized that the final decisions will be based on each exchange’s role in assessing listing requirements, particularly analyzing an issuer’s compliance with applicable laws. This announcement comes just over a month after the TMX and CSA issued substantially different standards that each entity will apply to assess listed cannabis companies with activities in the United States (as summarized in our blog post dated October 17, 2017).

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Quebec Introduces the Quebec Cannabis Regulation Act

On November 16, 2017, the Government of Quebec released its proposed cannabis legislation, Bill 157, an act to constitute the Société Québécoise du Cannabis (the SQC), to enact the Cannabis Regulation Act and to amend various highway safety-related provisions (the Act). The Act elaborates on the Quebec Government’s plan to establish the SQC, a subsidiary of the Société des alcools du Québec, as the sole distributor of cannabis in the province. If passed, the Act will lay the foundations for a stricter cannabis regime as compared with other provinces.

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Ontario Introduces the Ontario Cannabis Act, 2017

On November 1, 2017, the Government of Ontario released its proposed cannabis legislation, Bill 174, Cannabis, Smoke-Free Ontario and Road Safety Statute Law Amendment Act (the Act). The substance of this bill is Ontario’s Cannabis Act, 2017, but the bill also details amendments to related legislation in the form of a new Smoke Free Ontario Act, 2017 and amended Highway Traffic Act. If passed, the Act would regulate the use and distribution of recreational cannabis in Ontario upon the enacting of the federal Cannabis Act in July 2018.

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Canadian Securities Regulators Provide Guidance on Issuers Engaging in Cannabis Related Business Activities in the US

On October 16, 2017, the Toronto Stock Exchange and the TSX Venture Exchange (collectively, the Exchanges) issued notices providing guidance to those companies with business activities related to the cultivation, distribution or possession of marijuana in the United States (the Subject Entities). In particular, the Exchanges’ notices provide that the Subject Entities could be subject to an in-depth review based on their continuous disclosure records, which could result in de-listing on the applicable Exchange. In contrast, the Canadian Securities Administrators (the CSA) took a more lenient approach in its Staff Notice issued on October 16, 2017, addressed to issuers engaging in cannabis related activities in the US.

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Federal Government Introduces its Cannabis Tax Proposal; Alberta Unveils Proposed Provincial Framework

On Tuesday, October 3, 2017 the Government of Canada unveiled its proposal for a federal excise tax on the sale of cannabis. Under the proposal, a $1 tax would be levied on prices up to and including $10 per gram and a 10% tax would be levied on prices over $10 per gram. The proposal is for the tax revenues to be evenly split between the Federal and Provincial Governments.

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