Canadian CANNAINVESTOR Magazine November 2017 - Page 244

TSX Delisting Review of Issuers with U.S. Cannabis-Related Operations

On the same day as the release of the CSA Staff Notice, the TSX released Staff Notice 2017-0009 (“TSX Staff Notice”) which expressed policy concerns regarding illegality and exposure to fraudulent financial transactions engaged in by U.S.-Related Cannabis Issuers. The TSX is of the view that any issuer that is directly or indirectly involved in such activities in the U.S. is not in compliance with the TSX requirements because it is in violation of U.S. federal laws and therefore may be delisted by the TSX.

The TSX Staff Notice listed examples of business activities that concern the TSX:

1. Direct or indirect ownership or investment in U.S.-Related Cannabis Issuers

2. Commercial interests or arrangements with U.S.-Related Cannabis Issuers that amount in substance to ownership or investment

3. Providing services or products that are designed for, or targeted at, U.S.-Related Cannabis Issuers

4. Commercial interests or arrangements with entities engaging in any of the foregoing businesses.

The TSX encourages listed issuers to proactively work to address any gaps in their compliance with any TSX listing requirements. Further, the TSX expects to conduct a listing review of all listed issuers in the cannabis sector and will contact said issuers by the end of 2017 for a more comprehensive review.

CSE Supports the CSA’s Disclosure-Based Approach

The Canadian Securities Exchange (“CSE”), a major venue for cannabis listings, first provided guidance on U.S.-Related Cannabis Issuers when it released Notice 2017-017 (“CSE Notice”) on August 4, 2017. Similar to the CSA’s Staff Notice, the CSE Notice required U.S.-Related Cannabis Issuers to disclose the risks by including a comprehensive discussion of U.S. federal law and the conflict with State laws.

2 Society of Trust and Estate Practitioners. 3 Mittal v The Queen, 2012 TCC 417.