Pubdate: Tue, 21 Nov 2017
Source: Calgary Herald (CN AB)
Copyright: 2017 Postmedia Network
Author: Reid Southwick
Page: A7


A Vancouver cannabis firm with holdings in Alberta and a greenhouse
under construction in California expects to debut its shares on a
Canadian stock exchange in the coming weeks - with big warnings to

Sunniva Inc. will be the first pot stock to hold an initial public
offering after securities regulators set out new rules for companies
with assets in the United States, where cannabis remains federally

While several U.S. states have liberalized cannabis laws, securities
watchdogs in Canada say there are risks with investing in cannabis
stocks that have American assets, including that the companies face
potential asset seizures and prosecution by federal U.S.

Last month, the Canadian Securities Administrators, the umbrella group
for provincial and territorial securities watchdogs, issued a notice
outlining the warnings that publicly traded pot companies with
American holdings must make to investors.

Sunniva, which has received conditional approval to list its shares on
the Canadian Securities Exchange, said Monday it is confident it has
jumped through all the various hoops to satisfy concerns from the 

Leith Pedersen, the firm's Calgary-born president, said investors and
big lenders financing construction of its production facilities in
Canada and the U.S. don't appear to be fazed by any risks of operating
in a legal grey area.

"Follow the big money," Pedersen said. "They seem to be comfortable
financing these facilities for us."

Still, due to the risks south of the border, publicly traded cannabis
firms with operations in the U.S. generally trade at a discount to
their Canadian competitors, said Vahan Ajamian, analyst at Beacon 

Sunniva is building a 325,000-square-foot greenhouse in Cathedral
City, Calif., that will produce 80,000 kilograms of medical marijuana
per year once it's operational next spring.

The company expects to break ground early next year on a
400,000-square-foot greenhouse in the southern British Columbia town
of Oliver, also exclusively serving the medicinal market.

Sunniva already owns a vaporizer manufacturer and Calgarybased Natural
Health Services, which runs eight medical clinics offering advice to
patients in Alberta, Saskatchewan and Ontario.

Like other cannabis players, Sunniva is backed by executives with
varied backgrounds, including Pedersen, a former investment banker,
and chief executive Dr. Anthony Holler, who led the vaccine maker ID
Biomedical Corp., which sold to a British pharmaceutical giant in 2005
for $1.7 billion.

"What Tony did back then was build out very large-scale, lowcost,
high-quality, scalable flu vaccine manufacturing plants," Pedersen

"That's exactly what we're trying to do today in the cannabis space.
It's from flu vaccines to cannabis," he added.

In its filings with securities regulators, Sunniva says cannabis
companies operating in states with approved medical and recreational
use currently enjoy some protections from federal prosecution.

But the documents warn these protections may not last forever, noting
Attorney General Jeff Sessions' opposition to legalization.

The filings say that because pot remains federally illegal in the
U.S., banks and other lenders involved with the industry risk
violating anti-money laundering laws. The company may also face
difficulties enforcing contracts.

The filings say the U.S. cannabis market may "become the subject of
heightened scrutiny by regulators, stock exchanges, clearing agencies
and other authorities in Canada."
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