Canadian CANNAINVESTOR Magazine August / September 2017 - Page 148

In addition to the attractiveness of low cost production, Sutton says investors should be drawn to greenhouse growers for another reason altogether:

“the opportunity to touch a consumer base who are buying more than just a product; they are buying the sustainability of our production methodology to protect our natural environment for generations to come.”

There is no doubt that the industry is anxiously awaiting to see what quality of product Tantalus’ SunLab can churn out. If Sutton is right, and the SunLab is capable of producing cannabis of a quality level that rivals or surpasses that of other traditional indoor growers, many more might start marching to the beat of Sutton’s mantra:

“Sungrown is the future. Adapt or perish.”

To read more from the Cannabis Industry Practice Group at Minden Gross LLP, visit Canada Cannabis Legal (“CCL”) at www.canadacannabislegal.com. CCL brings its readers timely content about legal developments that impact stakeholders in the Canadian cannabis industry. CCL covers any topic that touches the Canadian cannabis industry, whether the topic is municipal, provincial, federal or international in nature. Whether you are a novice with no prior knowledge of the laws that shape the Canadian cannabis industry, or an experienced industry participant looking to stay current with legal developments as they happen, CCL is your online destination to become and stay informed about the laws affecting the Canadian cannabis industry.

In 2005, Ottawa amended the rules to make certain derivatives eligible as qualified investments. Prior to 2005, only call options could be purchased and sold in your RRSP. Now, put options may also be purchased in your RRSP. Thus, purchasing calls (instead of buying stocks), covered call writing and purchasing puts (instead of short-selling stocks) are now allowed in RRSPs.

Precious Metals. Investment-grade gold and silver bullion, coins, bars, and certificates on such investments are qualified investments. These investments must be acquired either from the producer or issuer of the investment or from a regulated financial institution.

Debt Obligations. Some common debt obligations that are qualified investments include bonds, debentures, notes, mortgages or similar obligations issued by: the Government of Canada (e.g. Canada Savings Bonds); a province or municipality in Canada; or a federal or provincial Crown corporation. Debt obligations issued by a corporation, trust or limited partnership listed on a designated stock exchange are also qualified investments, assuming that certain conditions are met. Bankers’ acceptances, commercial paper and debt that has an investment grade rating and that was issued as part of a minimum $25 million issuance. It should be noted that strip bonds or coupons are generally considered to be qualified investments, provided the original bond itself is a qualified investment.

Mortgages. While real estate itself is not a qualified investment, a loan secured by a mortgage in respect of Canadian real estate does qualify. The rules permit such “private mortgages” to be made on an arm’s length basis or non-arm’s length basis and the requirements between the two are different. In a nutshell, with an arm’s length mortgage, you would use the money in your RRSP to advance a mortgage loan to a third party that you deal with at arm’s length (i.e. they are not related to you by blood marriage or adoption) and the value of the property must be sufficient to cover the full amount of the principal and interest outstanding under the loan (ignoring any decline in the fair market value of the property after the mortgage was given). Alternatively, under a non-arm’s length mortgage, the borrower is also the annuitant – in other words, you could hold your own (or a family member’s) mortgage in your RRSP. In order for a non-arm’s length mortgage to qualify, the mortgage must be insured and the interest rate and terms must reflect market rates and terms in effect when the loan was advanced.

To read more from the Cannabis Industry Practice Group at Minden Gross LLP, visit Canada Cannabis Legal (“CCL”) at www.canadacannabislegal.com

3 when selling call options in an RRSP, the underlying security must be held in the RRSP.

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