Canada
The Cannabis Act (Canada) (Bill C-45) came into force on October 17, 2018 and Canada became the first major industrialized nation to legalize adult-use cannabis at the federal level. The Cannabis Act provides an overall framework for the legalization of adult-use cannabis in Canada, including in respect of medical cannabis. The Cannabis Regulations promulgated under the Cannabis Act sets out a detailed regime for the licensing of various activities in the industry, including cultivation, industrial hemp, processing, sales, distribution, packaging and labelling, as well as promotional and marketing activities. On June 14, 2019, the Federal Government announced amendments to the Cannabis Regulations, that will come into effect October 17, 2019. A limited selection of products (extracts and topicals) will appear in physical stores mid-December 2019. The new regulation has created three new classes of cannabis products: edibles; cannabis extracts; and cannabis "topicals." Federal license holders are required to provide 60 days' notice to Health Canada of their plan to sell these products.

While the Cannabis Act provides for the regulation of the commercial production of cannabis for recreational purposes and related matters, it also provides the provinces and territories of Canada with the authority to regulate other aspects of recreational cannabis (similar to what is currently the case for liquor and tobacco products), such as sale and distribution, minimum age requirements, places where cannabis can be consumed and a range of other matters. Provincial and territorial governments have enacted differing legislation and regulations for the distribution and retail of adult-use cannabis. The models differ and range from a government-run model for retail and distribution to a fully private system.

United States of America
In the United States, cannabis is largely regulated at the state level. To our knowledge, 47 U.S. states, plus the District of Columbia, Puerto Rico and Guam, have enacted at least one law that permits manufacturing, distribution, dispensing or possession of cannabis or concentrates. Specifically, we believe more than 33 U.S. states (and the District of Columbia) permit the production and possession of cannabis for a broad range of medical purposes. Around 20 states have enacted narrow CBD/limited laws that permit possession of small amounts of low-THC/high-CBD cannabis products for the treating of a few serious medical conditions. Meanwhile, we understand that 18 U.S. states (and the District of Columbia) have enacted laws that permit the production and sale of cannabis for adult-use purposes. Notwithstanding the permissive regulatory environment of medical cannabis at the state level, cannabis continues to be categorized as a Schedule I controlled substance under the Controlled Substance Act (the "CSA") in the United States and as such, elements of its production, distribution and use violates federal law in the United States. As a result of the conflicting views between state legislatures and the federal government regarding cannabis, investments in cannabis businesses in the United States are subject to inconsistent legislation and regulation. The Supremacy Clause of the United States Constitution establishes that the United States Constitution and federal laws made pursuant to it are paramount and in the case of conflict between federal and state law, the federal law must be applied. Notwithstanding the paramountcy of U.S. federal law, enforcement of such laws may be limited by other means or circumstances. Unless and until the United States Congress amends the CSA with respect to cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current federal law, which may adversely affect the U.S. cannabis sector.

Europe
We are aware of at least 12 European countries where cannabis is currently legal for medical purposes. It is estimated that progressive views with regards to cannabis use across certain European countries will result in further legalization of medical cannabis allowing this market to continue to grow. With a total market of over 742 million people, and total healthcare spend of €2.3 trillion, Europe is estimated to become the largest medical cannabis market in the world.

South America
South America is a growing market for cannabis and is expected to become a large global player in the medical cannabis market. Based on various publicly available sources, a number of countries in South America currently have legalized cannabis for medical use in some form, including: Argentina, Brazil, Chile, Colombia, Peru, Paraguay and Uruguay. Additionally, cannabis is legalized for recreational use in Uruguay, and the following countries have taken legislative steps towards decriminalizing cannabis use: Brazil, Chile, Colombia, Ecuador, Peru and Paraguay.