CSA Investor Alert: Caution urged for those looking to invest in medical marijuana stocks

Investor warnings - News

 

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 This link will open in a new window.

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 This link will open in a new window 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.

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For more information:

 

Mark Dickey
Alberta Securities Commission
403-297-4481

Sylvain Théberge
Autorité des marchés financiers
514-940-2176

Carolyn Shaw-Rimmington
Ontario Securities Commission
416-593-2361

Richard Gilhooley
British Columbia Securities Commission
604-899-6713

Kevan Hannah
Manitoba Securities Commission
204-945-1513

Wendy Connors-Beckett
Financial and Consumer Services Commission
New Brunswick
506-643-7745

Tanya Wiltshire
Nova Scotia Securities Commission
902-424-8586

Janice Callbeck
Office of the Superintendant of Securities
P.E.I.
902-368-6288

Don Boyles
Office of the Superintendent of Securities.
Newfoundland and Labrador
709-729-4501

Rhonda Horte
Office of the Yukon Superintendent of Securities
867-667-5466

Louis Arki
Nunavut Securities Office
867-975-6587

Gary MacDougall
Northwest Territories
Securities Office
867-873-3318

Daniela Machuca
Financial and Consumer Affairs
Authority of Saskatchewan
306-798-4160