Securities law requirements for issuers linked to US-based marijuana-related activities may be about to change.
In October 2017, the Canadian Securities Administrators (CSA) published Staff Notice 51-352, outlining disclosure requirements for issuers that have (or are engaged in developing) marijuana-related activities within US states that have authorized such activity. At that time, the CSA indicated that it would re-examine those requirements if the US federal government’s forbearance-based enforcement approach were to change. We discussed this topic in a prior posting.
On January 12, 2018, the CSA announced that it was reconsidering whether the disclosure requirements outlined in Staff Notice 51-352 remain suitable. The CSA’s announcement comes on the heels of US Attorney General Jeff Sessions’ decision to rescind the Cole Memorandum, effective January 4, 2018.
What is the Cole Memorandum?
In 2013, former US Attorney General James M. Cole drafted a memorandum which announced a shift in the US federal government’s marijuana policy. The Cole Memorandum announced that the enforcement of marijuana prohibitions under the Controlled Substances Act would take a lower priority and that, moving forward, the US federal government would take a hands-off approach to enforcing certain federal prohibitions under the Act.
The Cole Memorandum enumerated a new set of priorities for federal prosecutors with respect to marijuana. These priorities included, for example, preventing the distribution of marijuana to minors as well as preventing state-authorized marijuana activity from being used to conceal trafficking or other illegal activity. The Cole Memorandum indicated that in states that have legalized marijuana and implemented a strong and effective regulatory system, prosecutors should focus only on the enumerated priorities.
Although various US states have legalized marijuana, the use and possession of marijuana has, for all purposes, continued to remain illegal under US federal law. The Cole Memorandum had cleared up some of the uncertainty about how the federal government would respond to state-level legalization. However, with the repeal of the Cole Memorandum, the marijuana-industry may be once again left to deal with a renewed degree of uncertainty.
The CSA is expected to communicate further details about its position in the near future. We will continue to monitor developments in this area and provide updates as they develop.
The author would like to thank Blanchart Arun, articling student, for his contribution to this article.
 Canadian Securities Administrator (CSA), “CSA Staff Notice 51-352: Issuers with U.S. Marijuana-Related Activities” <http://www.osc.gov.on.ca/documents/en/Securities-Category5/csa_20171016_51-352_marijuana-related-activities.pdf>.
 Michael Bookman, “CSA Clarifies Disclosure Requirements for Issuers with U.S.-Based Marijuana Activities” <https://www.securitieslitigation.blog/2017/10/csa-clarifies-disclosure-requirements-for-issuers-with-u-s-based-marijuana-activities/>.
 Canadian Securities Administrators (CSA), “Canadian securities regulators issue statement following rescission of the Cole Memorandum” <https://www.securities-administrators.ca/aboutcsa.aspx?id=1647>.
 Office of the US Attorney General, “Memorandum for all US Attorneys: Marijuana Enforcement ”, January 4, 2018, <https://www.justice.gov/opa/press-release/file/1022196/download>.
 Office of the US Attorney General, “Memorandum for all US Attorneys: Guidance Regarding Marijuana Enforcement ”, August 29, 2013, <https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf>.
Controlled Substances Act of 1970, 21 USC 13.