For Immediate ReleaseJune 16, 2014
Toronto – The Canadian Securities Administrators (CSA) is urging investors to be cautious when considering investing in medical marijuana stocks. A significant number of reporting issuers have announced their intention to begin growing and selling medical marijuana, in conjunction with new regulations enacted by the Government of Canada as of April 1, 2014.
While some have touted medical marijuana as a significant new sector for investment, the CSA has observed a number of small or inactive reporting issuers announcing medical marijuana business plans. In many of these cases, just the announcement of intent to develop a medical marijuana business has resulted in an immediate rise in a company’s stock price. The CSA is concerned investors may face financial harm by purchasing such shares at an inflated price before there is a viable business.
Investors should be aware that companies cannot legally conduct a medical marijuana business without a licence from Health Canada, and that there is likely significant time and cost required to obtain such a licence. For a list of companies that have been granted a licence, please see: www.hc-sc.gc.ca/dhp-mps/marihuana/info/list-eng.php.
If a company is discussing or publicizing its intention to enter the medical marijuana industry, investors should understand what resources it has committed to its plan, as well as the related risks, cost implications and time required before it can begin licenced operations. There is no assurance that a company announcing its intent to enter the medical marijuana industry will be successful in obtaining a licence, or in creating shareholder value.
The United States Securities and Exchange Commission has also issued an alert on this topic. All investors should conduct significant due diligence when considering an investment in the medical marijuana sector, regardless of where the company is located or on which stock exchange it trades.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
Carolyn Shaw-Rimmington Ontario Securities Commission416-593-2361
Mark DickeyAlberta Securities Commission403-297-4481
Richard GilhooleyBritish Columbia Securities Commission604-899-6713
Sylvain ThébergeAutorité des marchés financiers514-940-2176
Kevan HannahManitoba Securities Commission204-945-1513
Wendy Connors-BeckettFinancial and Consumer ServicesCommission, New Brunswick506-643-7745
Tanya WiltshireNova Scotia Securities Commission902-424-8586
Janice CallbeckOffice of the Superintendent of SecuritiesP.E.I. 902-368-6288
Don BoylesOffice of the Superintendent of SecuritiesNewfoundland and Labrador709-729-4501
Rhonda HorteOffice of the Yukon Superintendent ofSecurities867-667-5466
Louis ArkiNunavut Securities Office867-975-6587
Gary MacDougallNorthwest TerritoriesSecurities Office867-873-3318
Daniela MachucaFinancial and Consumer AffairsAuthority of Saskatchewan306-798-4160
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