The Cannabis space is one of the most exciting areas of business in Canada and increasingly around the world. The sector has generated $11 billion of annual sales within a few short years and some analysts expect that to increase anywhere from $50 to 200 billion within a decade.Millionaires and billionaires will be created similar to the .Com era in the early 2000s but like that era there will also be heartache, financial loss and ruin. The opportunity for failure is even greater because Cannabis will be one of the most regulated products on the planet. Conflicting regulations will abound for years.
Recently a public medical marijuana company in Canada, which was thought of as a leader in regulatory compliance, has gone up in smoke and could face closure. The sector generally is still operating in rudimentary ways when it comes to establishing and utilizing governance, risk and control frameworks. There is so much complexity to the industry and growth is so dramatic that many companies are running hard just to stand still. It is exciting to be building new facilities, introducing tasty edibles, serving epileptic patients, growing revenues exponentially, and watching that stock price; but there is a need for - the often neglected - controls.
The penalties for inadequate controls, besides financial, can include serious regulatory sanctions to the company and its board and management. For example, Health Canada has the authority to close operations, stop production and destroy inventory. Company boards can fire executives with cause if they breach securities regulations and cancel stock options, potentially a very large pecuniary loss. Cannabis companies are operating in uncharted and perilous regulatory territory
There is also the possibility of sanctions, fines or criminal proceedings against individuals. Some experts on Ontario Securities Commission (OSC) regulations highlight that executives who fail to provide adequate disclosure and trade ahead of bad news could be prohibited from being an officer or director for life and may have to cease trading for life, in the most egregious cases. Securities Acts in North America require material information to be disclosed to the public and that it be accurate and truthful.
And now to the really exciting topic - controls. Imagine a company that is growing dramatically but in a controlled way. This should be the objective of all CEOs and Boards and this can be achieved with a corporate resilience program. A corporate resilience program supports fast growth, creates awareness of risks, instills strong governance, an ethical culture and all within an umbrella of effective controls.
Strategic governance, risk and control is generally known as "IaS" - the medicinal edible for the Cannabis sector.
IaS advises Cannabis companies on corporate resilience programs which includes best practices in - corporate governance | code of conduct | management of strategic, enterprise, operational, security and reputational risks | monitoring and reporting | crisis management | and maximizing shareholder value. The IaS team integrates deep specialization for effective holistic solutions. Our goal is to prevent companies lose hundreds of millions of dollars in market capitalization and to drive success to greater heights.
