Canadian Lawyer - sample

w w w . C A N A D I A N L a w y e r m a g . c o m S E P T E M B E R 2 0 1 6 27 shakes out, but, ultimately, the oppor- tunity will turn on what the law says. So the question is where will the barrier to entry fall?" No one can, of course, answer that question with certainty at this moment. But even with many unknowns, the lawyers Canadian Lawyer spoke to aren't shying away from advising clients who come knocking on their doors. "Remember, we are in the business of what ifs," Reicin says. "We come up with the metrics of potential issues, then we work with clients to decide which ones we want to address and how we address them, and they decide how much risk they're willing to take." The (pot)ential What lawyers seem to be sure about is the potential for a flurry of mergers and acquisitions. There are currently only 34 licenced producers across Canada, and 19 of them are in Ontario. For some 1,200 other applicants, the coveted per- mit may never come, according to Wein- stein. And that, she says, is why many consolidations will happen. Given that it's "extremely difficult" to get licenced, Weinstein says 90 per cent of the companies on the waiting list will probably never be licenced. But those companies may have technologies or other attributes that could make them interesting acquisitions or partners, she says. In the last two years alone, Tweed has done a public offering, three public financings and two acquisitions, Wein- stein adds. "For lawyers like myself, this new industry presents a very, very good opportunity if you're representing the bigger companies because what will hap- pen is they'll consolidate. They will con- tinue to acquire businesses," she says. "So, for a lawyer, there's partnership agreements, there's commercial agree- ments, there's public fundraising and mergers and acquisitions." There are also ample opportunities to advise ancillary businesses. In fact, that's where many predict a huge chunk of the work will be for lawyers. There will be builders, agro producers, technology providers and others that will become involved in the industry and require legal advice of their own. "When I look at the clients that I have, they're spending millions and millions of dollars on infrastructure to build up this industry," Weinsten says. "And this is just step one; this is really at its infancy. This industry is really just beginning and will only take hold within the next one to two years, after the federal government comes out with legislation to legalize the selling of cannabis not just for medical purposes but [also] for occasional and recreational use." Barbara Miller, a partner at Fasken Martineau DuMoulin LLP, says her firm is advising a client on the delivery side of the business. Currently, licenced produc- ers ship their products to customers via courier services such as Canada Post and Purolator. "But other delivery services are entering the market," she says, and they have to follow rules around storage, delivery and insurance. Some questions have also come from unexpected places, Miller says. Her firm, for example, has received an inquiry from an insurance company about the risks of insuring the cannabis market, asking what happens in case of mould, theft or fire. "There are several insurance companies now entering this space," Miller says, and the number is only going to grow with legalization of recre- ational use. Lawyers working within the Food and Drug Act also stand to gain from pot's big leap into the mainstream mar- ket. McMahon says lawyers will be advis- ing on packaging details for edible prod- ucts such as chocolate and sodas that contain cannabis. "There will be very strict guidelines, I think in time, about the quantity and quality of products; what's in there so that there is uniform product packaging," she adds. Cross-border work Investor interest in the cannabis industry is a cross-border matter. As pot inches toward legality in Canada, American investors are watching with anticipative interest, says Robert McVay, lawyer at Seattle-based law firm Harris Moure LLP. The states of California and New York, two of the biggest investment sources in the U.S., have not offered investors opportunities to throw their money into the cannabis business. Even in Washington State, which has decrim- inalized recreational marijuana, out-of- state investors face various limitations, McVay says. "They [investors] have wanted expos- ure to the market, but it's actually been hard for them to find places to put their capital," McVay adds. "So, [in] Canada, it's still to be seen what type of limita- tions there will be on out-of-country investment into the Canadian market; but assuming it's a relatively open mar- ket, I think you have money out there that's eager to be thrown into this." The first movers from the U.S. are those who want to tap into the edible products segment of the business, according to McVay. They'll come bear- ing their unique packaging, design and technology, he says, and they're looking to partner with local growers and pro- ducers. American rapper Snoop Dogg is among the first to wade into the Cana- dian pot market. In February, Snoop announced he had entered into a part- nership with Tweed that will allow the Canadian producer exclusive rights to use content and brands from his com- pany, LBC Holdings. There's already a connection between Canadian and U.S. companies in this business. Some Canadian companies that haven't succeeded in becoming licenced producers here have sent their cash down south. They're investing in extraction technologies and in real estate in the American cannabis industry, according to McVay. "As the Canadian market on the med- ical side was kind of starting and stop- ping, there were a number of Canadian public companies that were raising a bunch of money but weren't able to real- ly spend it in Canada on the marijuana side," McVay says. "So there's actually been a lot of Canadian investment into the U.S. industry, especially here in the West Coast." In other cases, Canadian companies were doing well enough in the Can- adian medical cannabis business that they sought to expand into the U.S., McVay also says. American interest in the Canadian market is, however, tem-

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