Canadian Lawyer

October 2019

The most widely read magazine for Canadian lawyers

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Page 49 of 55

LEGAL REPORT 50 REAL ESTATE Cannabis conversion Facilities used by pharmaceutical companies are a natural home for new cannabis businesses A YEAR into legal weed smoking, as edibles, extracts, lotions and other forms of cannabis enter the marketplace, cannabis companies would be wise to purchase old pharmaceutical processing facilities and earn a leg up with regulators, say lawyers. Cheryl Satin is a partner at Blake Cassels & Graydon LLP in Toronto whose practice focuses on M&A, divestitures, private equity investments and corporate reorganization. She says she is seeing pharmaceutical companies moving or outsourcing manufacturing processes and selling their facilities. For cannabis companies, repurposing old pharmaceutical or health research facilities, which have a history being regulated with Health Canada, is the logical choice for their own processing sites, says Satin. When converting a facility that has no history of being regulated by Health Canada or starting anew with a fresh site, the necessary capital is significant compared to making use of a facility familiar to the federal government, says Satin. "Health Canada, as they're doing the review, is going to be starting at a baseline of zero with that facility — versus familiarity," she says. "The familiarity is positive as long as the relationship and Health Canada's view of that facility to date has been a positive one. If there's a bad track record, then that's not going to be helpful." Manufacturing and security practices and the equipment used in old pharmaceutical operations could be maintained for the cannabis operation, says Laura Weinrib, also a partner at Blake Cassels & Graydon LLP in Toronto, whose practice includes regulatory issues concerning cannabis, pharmaceuticals and natural health products. Many facilities that serve the pharmaceutical industry and health sector would be dealing with controlled substances and, "while not identical, are not wholly dissimilar to the cannabis environment," she says. Often, cannabis companies are not taking just the buildings but also inheriting the employees — and those with experience in

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