Agri-tech developments in the cannabis sector
The cannabis sector is a growing and exciting sector.
Welcome to the 20th Issue of Norton Rose Fulbright’s flagship journal for the food and agribusiness sector, Cultivate. In this edition, we explore cannabis and its legalization for medical and recreational use in various countries of the world. Ever since the Single Convention on Narcotic Drugs was signed in 1961, cannabis has been considered an illegal drug and its negative impact on society has been explored and publicized more often than its potentially beneficial effects. Countries around the world are easing the restrictions on the drug to ensure it is more readily available to people who can benefit from it and to address mounting health and safety concerns in connection with the unregulated drug. Throughout this edition we examine the emerging issues and trends in the cannabis sector.
As the cannabis industry expands, new products and technologies are being created. Our first article discusses what new technology is being invented, why it is important to protect these ideas and why this means that a “Culture of IP” is crucial to any business in the cannabis sector.
Pressure on companies from investors and consumers to adopt comprehensive environmental, social and governance (ESG) practices and standards continues to mount and emerging industries like cannabis must ensure they are adequately addressing these and sustainability matters. Our second article in this edition explores why a company’s ESG practices matter and the strategies cannabis companies should be considering to mitigate ESG factors.
Our third and feature article provides an overview of the current and proposed regulatory regimes for cannabis in various jurisdictions. Canada is a clear forerunner in the legalization program but many are following suit and there is a clear pattern towards legalization worldwide. Many countries are looking to reverse laws which have previously prohibited the cultivation and distribution of cannabis.
In the months leading up to the legalization of cannabis in Canada there was great excitement surrounding cannabis companies and many companies in the sector experienced exponential growth. Unfortunately, more than one year post–legalization, this excitement has given way to investor disillusionment as many public companies are still struggling to be profitable and share prices have plummeted. The fifth article in this edition focuses on securities class actions against cannabis companies and the benefits of a unified defense strategy for dual-listed companies.
Our next article provides some practical advice on what sellers of cannabis companies should consider when a buyer makes an offer to ensure that they get the deal that aligns with their interests.
Finally, our last article looks at food safety concerns relating to edibles and the steps companies need to take to adhere to the strict rules of Health Canada, including recall rules.
Whether you are a cannabis company, investing in the cannabis industry or facing the daunting challenge of establishing a new regulatory regime, we hope this edition will provide you with some new insight. We look forward to connecting with you; if you see something of interest and want to learn more, please contact the relevant author or member of the wider food and agribusiness team.
The link between positive environmental, social and governance (ESG) performance and economic growth is not new.
In the 12 months leading to legalization in October 2018, Canadian public companies already in the medical cannabis space experienced “jaw-dropping growth” in their market capitalizations, notwithstanding that many reported negative earnings.
The maturation of the cannabis sector is presenting an array of opportunities to private producers and retailers.
Edibles, extracts, and topicals are now part of Canada’s legal cannabis offerings.