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 29 pered by the fact that, under U.S. federal law, marijuana is an illegal controlled substance. Investors are nervous about putting their money into a cannabis business elsewhere even if they can't figure out which laws they're afraid of violating, McVay adds. "It just feels like an extra step," McVay continues. "So I think businesses are really interested, but I also think they're going to be a little bit hesitant before they jump in and start dumping money and technology [into Canada]." To Szweras, that barrier is an opportunity for plenty of "fascinating" cross-border work. "There are things you can do to get ready and I've been working with companies that are look- ing for partners in this sector. You have a flurry of activity — Americans coming here and Canadians trying to break into the American market," he says. "There's a slew of cross-border issues that makes this much more fascinating." One of those issues will be anti- money laundering, Szweras says. Even companies that are legally involved in the cannabis industry in the U.S. are vio- lating federal law, he says. U.S. banks are allowed to take cannabis companies as clients if they're in certain states where recreational use is legal, but banks have to file reports for those clients, Szweras says. "So the question is, when you have a cross-border movement of money or even a cross-state movement of money, what does that mean? It's one thing for a Canadian to invest in a marijuana business in the U.S., [but] the question is is it legal to get any money back?" he continues. "There are legal ways of approaching this, but it's something that's complex and has to be done very carefully. I think the anti-money-laun- dering issues are going to keep people busy." Lingering stigma The opportunities in legal pot may be lush, but not every law firm is rushing to promote its work in the area. John Fowler is president of Supreme Pharma- ceuticals Inc., a licenced medical mari- juana producer. A lawyer himself, he says when his company was first looking for help from external law firms, many of them told him they weren't interested. Some firms are worried about offending other clients by facilitating a line of busi- ness that many still associate with crimi- nals. Others don't want to be seen to be promoting the use of cannabis from a moral standpoint. Fowler says things are slowly changing, but some lawyers are still unwilling to show off their work in this industry. "I'm sure there's lots of lawyers doing the work, but they keep it private and that's very telling to me," Fowler says. "I know a few lawyers who have done reasonably sizable transactions that you'd think would be on their short web site bio but it's not." Hugo Alves, a corporate and commer- cial partner at Bennett Jones LLP, repre- sents several participants in the industry, including Supreme Pharmaceuticals. His firm decided to pursue this practice area three years ago, he says. "Every firm has a culture; every firm has an outlook. Our firm is hugely entrepreneurial. That's sort of engrained in our culture," he says. When Bennett Jones decided to pursue medical marijuana-related work, Alves says the firm was willing to say, "Look, we trust your judgment to not go and put the firm's reputation or other clients in a dif- ficult position." The stigma around doing work relat- ed to cannabis extends across industries. Traditional banks, for example, don't typically lend to marijuana companies. "Right now, apart from a few small credit facilities provided by Farm Credit Canada and maybe some of the smaller credit unions, there's really no business of secured lending, traditional services for the cannabis industry," Alves says. "As cannabis use becomes integrat- ed from a social perspective, the same way alcohol is not really stigmatized if it's used responsibly, you'll see kind of a broader acceptance of cannabis use among some key industry stakeholders, like insurance providers and banks," Alves adds. Szweras says the banks are aware of the opportunity the cannabis industry presents, but they want to weigh the risks before getting involved. "They look at it and say, 'If we piss off one client and we lose one big client as a result of this, is it worth it?'" he says. As the regulations here in Canada and in the U.S. begin to evolve over time, lawyers say some of the traditional credit providers will enter the industry more readily. The harbingers of change are already here with both banks and insur- ance companies making serious inqui- ries about the industry. Weinstein says that, perhaps two or three years ago, "it was almost embarrassing" to be involved in the cannabis business. "Today, there's very little of that. It's seen as a cutting- edge, new industry that's growing and people are very eager about it. I think those who are still looking at it as a taboo are going to miss out," she says. pere law om As cannabis use becomes integrated from a social perspective, the same way alcohol is not really stigmatized if it's used responsibly, you'll see kind of a broader acceptance of cannabis use among some key industry stakeholders, like insurance providers and banks. Hugo Alves, Bennett Jones LLP

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