February 8, 2018 / 9:40 PM / 4 months ago

Canada regulator repeats call for weed firms to disclose U.S. risks

TORONTO (Reuters) - Canadian regulators on Thursday reiterated their call for listed cannabis producers with U.S. businesses to clearly disclose risks of operating there, and warned of potential punishment if U.S. federal anti-marijuana laws are more strictly enforced.

Flowering marijuana plants are pictured at the Canopy Growth Corporation facility in Smiths Falls, Ontario, Canada, January 4, 2018. Picture taken January 4, 2018. REUTERS/Chris Wattie

The Canadian Securities Administrators (CSA) staff notice said stricter U.S. enforcement could result in “material consequences for any issuer with U.S. marijuana-related activities, including prosecution and asset seizure.”

The CSA notice, similar to one it issued in October, stopped short of taking any action against listed marijuana producers with U.S. operations.

In January, the U.S. Justice Department rescinded an Obama-era policy that had eased enforcement of federal marijuana laws in states that have legalized the drug. This raised fears that Canadian companies with U.S. operations could be open to prosecution.

The CSA urged marijuana companies to describe their involvement in the U.S. industry and prominently state that the substance is illegal under federal law. It also urged them to “carefully consider” any regulatory actions or changes that would result in changes requiring disclosure obligations.

“The notice reiterates that different exchanges may make their own judgments in the application of their listing requirements,” said Beacon Securities research analyst Vahan Ajamian in an e-mailed note. “Bottom line: Looks ‘all clear’. These stocks will continue to trade as usual.”

Canada has a national, regulated medical marijuana industry and plans to legalize pot for recreational use by mid-2018.

After the U.S. move in January, the Canadian Securities Exchange, which hosts most of the country’s marijuana producers with U.S. operations, said it had contacted 17 companies to ask them to provide details about risks related to those businesses.

Aphria Inc, Canada’s third-biggest weed producer, which is listed on the primary exchange, last week agreed to sell its minority stake in U.S.-based Copperstate Farms to Liberty Health Sciences, which is listed on the CSE, for C$20 million

Reporting By Nichola Saminather; Editing by David Gregorio

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