Subject: CSE Comments on CSA Staff Notice Regarding Issuers with U.S. Cannabis-Related Activities
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<html><head> <title>CSE Comments on CSA Staff Notice Regarding Issuers with U.S. Cannabis-Related Activities</title
--->></head><body><div style="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt;"><table><tr><td width=270><img s
--->rc="http://www.newsfilecorp.com/images/newsfile-wire-logo.jpg" width="248" height="54" alt="Newsfile Corp." /></td><td
--->><h2 style="font-family: Arial, Helvetica, Sans-Serif;color:#0C2081;">CSE Comments on CSA Staff Notice Regarding Issue
--->rs with U.S. Cannabis-Related Activities</h2></td></tr></table><hr style="color: #0C2081; background-color: #0C2081; h
--->eight: 5px; margin: 20px 0px;" /><h3 style="font-family: Arial, Helvetica, Sans-Serif;color:#0C2081;margin-top:5px;">
---><i></i></h3><p>Toronto, Ontario--(Newsfile Corp. - October 16, 2017) - The Canadian Securities Exchange ("CSE") notes
--->today that the Canadian Securities Administrators ("CSA") have issued a staff notice clarifying specific disclosure ex
--->pectations for issuers that have, or are currently in the process of developing, exposure to cannabis-related activiti
--->es in U.S. states that have legalized such activities.</p><p>The CSE is very pleased that the CSA has issued this deta
--->iled notice, which provides significant clarity for all stakeholders in this sector. Some of the notable disclosure ex
--->pectations are listed below.</p><p>All issuers with U.S. cannabis exposure:</p><ul><li>Must explain that cannabis rema
--->ins illegal under U.S. federal law and that the approach to enforcement of U.S. federal laws is subject to change. The
---> resultant risks, including the risk of adverse enforcement action, must be discussed;</li><li>Must state whether and
--->how their activities are conducted in a manner consistent with any U.S. federal enforcement priorities;</li><li>Must d
--->iscuss their ability to access both public and private capital, and indicate whether financing options are available o
--->r are not available in order to support continuing operations, given the illegality of cannabis under U.S. federal law
--->.</li></ul><p>Issuers with direct involvement in U.S. cannabis cultivation or distribution:</p><ul><li>Must outline th
--->e regulations in the U.S. states in which they operate, and confirm how they are complying with applicable licensing r
--->equirements and the regulatory framework enacted by the applicable state;</li><li>Must discuss their program for monit
--->oring compliance with U.S. state law on an ongoing basis and outline internal compliance procedures. They also must di
--->sclose any material non-compliance as well as material citations or notices of violation.</li></ul><p>Issuers with ind
--->irect involvement in U.S. cannabis cultivation and distribution:</p><ul><li>Must outline regulations in the U.S. state
--->s in which their investee(s) operate;</li><li>Must provide reasonable assurance that the investee's business is in com
--->pliance with the applicable licensing requirements and regulatory framework enacted by the applicable U.S. state. (A s
--->imilar requirement also applies to issuers with material ancillary involvement in the U.S. cannabis sector, as defined
---> by the CSA.)</li></ul><p>The CSA also noted that they may re-examine their views on the U.S. cannabis sector should t
--->he U.S. federal government change its "forbearance-based enforcement approach."</p><p> "We are grateful to the CSA for
---> issuing timely and carefully considered guidance regarding current and prospective reporting issuers focused on the U
--->.S. cannabis sector," commented Richard Carleton, CEO. "This document provides significant comfort to these issuers th
--->at their Canadian listings will remain in good standing as long as they provide the disclosure that is rightly require
--->d by regulators."</p><p>"We are also committed to ensuring that there is no disruption to the central clearing, deposi
--->tory and settlement services provided for these issuers. We are working with the relevant stakeholders on this matter
--->and are very confident that companies will continue to have trades in their securities cleared and settled."</p><p>The
---> CSE strongly recommends that market participants read the entire CSA notice, which is available here: <a href="http:/
--->/www.osc.gov.on.ca/documents/en/Securities-Category5/csa_20171016_51-352_marijuana-related-activities.pdf">http://www.
--->osc.gov.on.ca/documents/en/Securities-Category5/csa_20171016_51-352_marijuana-related-activities.pdf</a></p><p><b>Abou
--->t the Canadian Securities Exchange:</b></p><p>The CSE is home to more than 300 uniquely listed issues covering a broad
---> range of industry sectors. The CSE provides trade execution, smart routing, risk management, compliance and market in
--->formation services for Canadian listed instruments.</p><p>Recognized as an exchange by the Ontario Securities Commissi
--->on in 2004, the CSE is designed to facilitate the capital formation process for public companies through a streamlined
---> approach to company regulation that emphasizes disclosure and the provision of efficient secondary market trading ser
--->vices for investors.</p><p>For more information, please visit <a href="http://www.thecse.com">www.thecse.com</a> and o
--->ur blog at <a href="http://blog.thecse.com">http://blog.thecse.com</a> </p><p>Contact:<br />Richard Carleton, CEO<br /
--->>416-367-7360<br /><a href="mailto:richard.carleton@thecse.com">richard.carleton@thecse.com</a></p></div></body></html
--->><p>If you no longer want to receive messages from us <a href='http://orders.newsfilecorp.com/unsubscribe.aspx?id=news
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<meta http-equiv="Content-Type" content="text/html; charset=utf-8"><title>CSE Comments on CSA Staff Notice Regarding I
--->ssuers with U.S. Cannabis-Related Activities</title></head><body><div style="font-family: Arial, Helvetica, Sans-Serif
--->; font-size: 10pt;"><table><tr><td width="270"><img src="http://www.newsfilecorp.com/images/newsfile-wire-logo.jpg" wi
--->dth="248" height="54" alt="Newsfile Corp."></td><td><h2 style="font-family: Arial, Helvetica, Sans-Serif;color:#0C2081
--->;">CSE Comments on CSA Staff Notice Regarding Issuers with U.S. Cannabis-Related Activities</h2></td></tr></table><hr
--->style="color: #0C2081; background-color: #0C2081; height: 5px; margin: 20px 0px;"><h3 style="font-family: Arial, Helv
--->etica, Sans-Serif;color:#0C2081;margin-top:5px;"><i></i></h3><p>Toronto, Ontario--(Newsfile Corp. - October 16, 2017)
--->- The Canadian Securities Exchange ("CSE") notes today that the Canadian Securities Administrators ("CS
--->A") have issued a staff notice clarifying specific disclosure expectations for issuers that have, or are currentl
--->y in the process of developing, exposure to cannabis-related activities in U.S. states that have legalized such activi
--->ties.</p><p>The CSE is very pleased that the CSA has issued this detailed notice, which provides significant clarity f
--->or all stakeholders in this sector. Some of the notable disclosure expectations are listed below.</p><p>All issuers wi
--->th U.S. cannabis exposure:</p><ul><li>Must explain that cannabis remains illegal under U.S. federal law and that the a
--->pproach to enforcement of U.S. federal laws is subject to change. The resultant risks, including the risk of adverse e
--->nforcement action, must be discussed;</li><li>Must state whether and how their activities are conducted in a manner co
--->nsistent with any U.S. federal enforcement priorities;</li><li>Must discuss their ability to access both public and pr
--->ivate capital, and indicate whether financing options are available or are not available in order to support continuin
--->g operations, given the illegality of cannabis under U.S. federal law.</li></ul><p>Issuers with direct involvement in
--->U.S. cannabis cultivation or distribution:</p><ul><li>Must outline the regulations in the U.S. states in which they op
--->erate, and confirm how they are complying with applicable licensing requirements and the regulatory framework enacted
--->by the applicable state;</li><li>Must discuss their program for monitoring compliance with U.S. state law on an ongoin
--->g basis and outline internal compliance procedures. They also must disclose any material non-compliance as well as mat
--->erial citations or notices of violation.</li></ul><p>Issuers with indirect involvement in U.S. cannabis cultivation an
--->d distribution:</p><ul><li>Must outline regulations in the U.S. states in which their investee(s) operate;</li><li>Mus
--->t provide reasonable assurance that the investee's business is in compliance with the applicable licensing requirement
--->s and regulatory framework enacted by the applicable U.S. state. (A similar requirement also applies to issuers with m
--->aterial ancillary involvement in the U.S. cannabis sector, as defined by the CSA.)</li></ul><p>The CSA also noted that
---> they may re-examine their views on the U.S. cannabis sector should the U.S. federal government change its "forbe
--->arance-based enforcement approach."</p><p> "We are grateful to the CSA for issuing timely and carefully cons
--->idered guidance regarding current and prospective reporting issuers focused on the U.S. cannabis sector," comment
--->ed Richard Carleton, CEO. "This document provides significant comfort to these issuers that their Canadian listin
--->gs will remain in good standing as long as they provide the disclosure that is rightly required by regulators."</
--->p><p>"We are also committed to ensuring that there is no disruption to the central clearing, depository and settl
--->ement services provided for these issuers. We are working with the relevant stakeholders on this matter and are very c
--->onfident that companies will continue to have trades in their securities cleared and settled."</p><p>The CSE stro
--->ngly recommends that market participants read the entire CSA notice, which is available here: <a href="https://mandril
--->lapp.com/track/click/30568383/www.osc.gov.on.ca?p=eyJzIjoic3BwSTZRQjlDOFQ1WEkxNFJNODNwTnF6d3pnIiwidiI6MSwicCI6IntcInVc
--->IjozMDU2ODM4MyxcInZcIjoxLFwidXJsXCI6XCJodHRwOlxcXC9cXFwvd3d3Lm9zYy5nb3Yub24uY2FcXFwvZG9jdW1lbnRzXFxcL2VuXFxcL1NlY3VyaX
--->RpZXMtQ2F0ZWdvcnk1XFxcL2NzYV8yMDE3MTAxNl81MS0zNTJfbWFyaWp1YW5hLXJlbGF0ZWQtYWN0aXZpdGllcy5wZGZcIixcImlkXCI6XCI0NTYxZDNj
--->Yzc5ZmM0Nzk0YTYzMDE2ZmNhOTEyMjI0ZFwiLFwidXJsX2lkc1wiOltcIjJiZWI3ZDVkMDQzNjJhZDdkMjJkZTViY2U3NDVhMDM2NGNiNDkwNWFcIl19In
--->0">http://www.osc.gov.on.ca/documents/en/Securities-Category5/csa_20171016_51-352_marijuana-related-activities.pdf</a>
---></p><p><b>About the Canadian Securities Exchange:</b></p><p>The CSE is home to more than 300 uniquely listed issues co
--->vering a broad range of industry sectors. The CSE provides trade execution, smart routing, risk management, compliance
---> and market information services for Canadian listed instruments.</p><p>Recognized as an exchange by the Ontario Secur
--->ities Commission in 2004, the CSE is designed to facilitate the capital formation process for public companies through
---> a streamlined approach to company regulation that emphasizes disclosure and the provision of efficient secondary mark
--->et trading services for investors.</p><p>For more information, please visit <a href="https://mandrillapp.com/track/cli
--->ck/30568383/www.thecse.com?p=eyJzIjoiSF9oR0Z0Ylc1T0tYRlpHcFdLeVk3b3BUWk9VIiwidiI6MSwicCI6IntcInVcIjozMDU2ODM4MyxcInZcI
--->joxLFwidXJsXCI6XCJodHRwOlxcXC9cXFwvd3d3LnRoZWNzZS5jb21cIixcImlkXCI6XCI0NTYxZDNjYzc5ZmM0Nzk0YTYzMDE2ZmNhOTEyMjI0ZFwiLFw
--->idXJsX2lkc1wiOltcImJhYzU1MmJmYjUxYjA2YWVhMGI5YjY5M2QyNWJhYWE0NDY3ODc5OGFcIl19In0">www.thecse.com</a> and our blog at <
--->a href="https://mandrillapp.com/track/click/30568383/blog.thecse.com?p=eyJzIjoiS0VGYXpBakpnOUdrdjFuTm5TdWRvcUgzNmxZIiw
--->idiI6MSwicCI6IntcInVcIjozMDU2ODM4MyxcInZcIjoxLFwidXJsXCI6XCJodHRwOlxcXC9cXFwvYmxvZy50aGVjc2UuY29tXCIsXCJpZFwiOlwiNDU2M
--->WQzY2M3OWZjNDc5NGE2MzAxNmZjYTkxMjIyNGRcIixcInVybF9pZHNcIjpbXCIzYTM1NWFjNjVmMDA0NDU1NzM2OWE3N2Y0OGE3ZThjNDFlODliMDM5XCJ
--->dfSJ9">http://blog.thecse.com</a> </p><p>Contact:<br>Richard Carleton, CEO<br>416-367-7360<br><a href="mailto:richard.
--->carleton@thecse.com">richard.carleton@thecse.com</a></p></div><img src="https://mandrillapp.com/track/open.php?u=30568
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