CSA Confirms Disclosure-Based Approach to U.S. Cannabis

The Canadian Securities Administrators (CSA) released revised guidance on February 8 confirming its disclosure-based approach to reporting issuers with interests in the U.S. cannabis industry and setting out additional required disclosures.1

CDS Clearing and Depository Services Inc. (CDS) has confirmed it will clear U.S. cannabis-related securities listed on recognized Canadian exchanges.2

What You Need To Know

  • Issuers with U.S.-based cannabis interests are permitted to participate in the Canadian public markets, subject to new and expanded disclosure requirements.
  • Securities exchanges remain free to establish their own listing requirements.
  • CDS has entered into a memorandum of understanding with the Canadian securities exchanges confirming it relies on the exchanges to review the conduct of listed issuers and will clear securities of issuers with cannabis related activities in the U.S.


CSA Staff Notice 51-352 (Revised) sets out clear disclosure expectations for all reporting issuers with existing or planned cannabis-related interests in U.S. states where cannabis activities are authorized by state law. The CSA's revised guidance arrives after Attorney General Jeff Sessions' rescission of the Cole Memorandum, which had outlined the Obama administration's policy of non-interference in respect of state cannabis laws.

Among the new and revised requirements, issuers must disclose any statements by U.S. federal authorities or prosecutors regarding the risk of enforcement action in any state where the issuer conducts cannabis-related activities. Issuers must also now quantify their balance sheet and operating statement exposure to U.S. cannabis-related activities.

Canadian securities exchanges remain free to establish, interpret and apply their own listing requirements, which may be more restrictive than those of the CSA.

CDS has entered into a MOU with TSX Inc., TSX Venture Exchange Inc., CNSX Markets Inc. and Aequitas NEO Exchange Inc. confirming that it relies on such exchanges to review the conduct of listed issuers. The MOU notes that securities regulation requires that the rules of each of the exchanges must not be contrary to the public interest and that the rules of each of the exchanges have been approved by the securities regulators. Pursuant to the MOU, CDS will not ban accepting deposits of—or transactions for—clearing and settlement of securities of issuers with cannabis-related activities in the U.S.


1 See http://www.osc.gov.on.ca/documents/en/Securities-Category5/csa_20180208_51-352_marijuana-related-activities.pdf.

2 See https://www.cds.ca/resource/en/249/.

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