Cannabis practice 2019 - Allen & Overy
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Cannabis practice
2019
allenovery.com
2 Cannabis practice | 2019
Cannabis markets
According to UN estimates, the global cannabis market is currently
worth approximately USD150 billion annually.
At present, much of this market is illegal, but what is most interesting is the rate at which new products
are being developed for the growing sections of the medicinal and recreational market that are legal
(or anticipated to be authorised in the near future).
Many companies, from industries as diverse as beverages, food, pharmaceuticals, cosmetics and
tobacco, are actively investing in this market which, in recent research, Barclays suggests could almost
double to USD272bn by 2028. For example, we recently advised.
We advised Imperial Brands Ventures Ltd, a subsidiary of Imperial Brands PLC on its equity
stake in Oxford Cannabinoid Technologies (OCT). OCT is a biopharmaceutical company
focused on researching, developing, and licensing cannabinoid-based compounds and therapies.
Its activities are licensed for operation by the UK Home Office. Imperial is just one of the
companies making a mark in the sector by taking stakes in innovative companies. A number
of joint venture and collaborations are also happening – for example Novartis’ strategic
alliance between its subsidiary Sandoz and Tilray, a Canadian company developing
cannabis-based medications.
Allen & Overy LLP’s ‘top tier’ multidisciplinary team is ‘responsive, extremely
knowledgeable about the healthcare industry, the client’s needs and the relevant technolog y’
Legal 500 EMEA, Health and Life Sciences 2017
Strong European offering with noted expertise in IP and patent litigation
matters. Well regarded for its impressive client portfolio, which spans the
pharmaceutical, biotechechnolog y, medtech, diagnostics and healthcare industries.
Chambers Global guide 2018 Global-wide: Life Sciences
Allen & Overy LLP covers the full spectrum of advice on
governance, regulatory compliance and risk management issues
Legal 500 UK 2019 Corporate Governance
© Allen & Overy LLP 20193
Why the shift?
The main reason for greater activity in this market is the softening regulatory
environment worldwide.
Cannabis is now authorised for medicinal use in more than 25 countries, including Canada,
Israel, Germany and the UK.
Cannabis is proven to be effective in a number of areas of unmet clinical need including
the treatment of chronic pain – a market currently experiencing significant challenges as
governments, lawmakers and healthcare practitioners respond to the epidemic of abuse and
addiction associated with opioids. Another significant treatment area is anxiety, depression and
sleep disorders.
Cannabis-based products have also been used to treat the nausea and vomiting associated
with chemotherapy and a wide range of conditions associated with inflammation (eg eczema).
One of the most high profile areas is the treatment of epilepsy (indeed in June 2018, the FDA
approved GW Pharma’s Epidiolex – the first approved drug to contain CBD and one of a
category of antiepileptic drugs targeting early onset of the condition).
On 17 October 2018, Canada also became the first G7 country to legalise cannabis for
recreational use. Interestingly, few traditional players seem interested in exploring commercial
production of “joints” or cannabis cigarettes. The most active part of the market so far is for
edibles such as ice-cream, sweets, and cookies. There is also growing interest in the potential
for products which are infused with cannabis including beverages and beauty and skin-care.
Vaporisers are another active segment of the market.
Advises on many of the most significant transactions of the day. Draws on its international
footprint to handle work in multiple jurisdictions including the emerging markets.
Chambers UK Guide 2019: UK: Life Sciences
Heavyweight corporate and M&A practice that boasts an
exceptional coverage across Europe.
Chambers Europe-Wide 2018 Corporate/ M&A Department
allenovery.com4 Cannabis practice | 2019
Why does this matter?
As the cannabis market opens up, it signals both opportunity and disruption for our clients – for example,
if the recreational marijuana market liberalises, will this impact the size of the alcoholic beverage market?
However, one of the key risks for new market entrants is the changing regulatory landscape.
Our regulatory team is developing particular expertise in understanding the nuances of regulation in
different markets and helping our clients to assess how their products may be affected. Our team is
actively monitoring the changing status of regulations of cannabinoid-containing products around the
globe and thinking about the impacts this will have on our clients’ businesses. Our experience includes
advising key industry players, on:
– national regulations related to hemp-based ingredients (such as cannabidiol/CBD), when included in
regulated products such as food supplements, cosmetics, vaping and medicinal products;
– agreements for the supply and licencing of cannabis for medical use;
– sale of cannabis-based products on e-commerce platforms;
– legal opinions to support investment strategy;
– working with industry bodies and liaising with regulators to shape the definition of the law; and
– securities and reporting requirements for companies involves in the manufacture, distribution or sale of
cannabis-based products.
Alongside our regulatory and compliance lawyers, we have built a multidisciplinary group focused on the
cannabis market and offering expertise in key areas including investment, M&A and commercial alliances;
intellectual property (brands, patents and trade secrets); distribution and licencing; marketing and
advertising; and employment, among other areas. We can offer strategic and practical legal advice from
practitioners who understand the specific sector and the particular challenges it may bring
(including reputational issues).
Tier 1: Pharmaceuticals
and biotechnolog y Tier 1: Commercial litigation
Legal 500 UK 2019
Legal 500 UK 2019
Allen & Overy LLP is ‘top of the game’
Legal 500 EMEA Healthcare and Life Sciences
They are excellent; it was a proper partnership.
Chambers Global, Life Sciences 2017
Top multidisciplinary firm recognised for its expertise in life sciences.
Chambers Europe, Life Sciences 2016
© Allen & Overy LLP 20195
Case study: Acquisition of HemPoland
by The Green Organic Dutchman
Allen & Overy advised Green Organic Dutchman Holdings Slovenia, Lithuania, and Estonia, and e-commerce
Ltd., a Canadian cannabis research & development company, platform and product sales in over 700 locations. In 2017,
(TGOD) on its USD 15.5 million acquisition of 100% of the company produced over 32,000 kgs of organic dried
shares in HemPoland sp. z o.o., (HemPoland), a leading flower and 310 kgs of organic CBD oils.
European manufacturer and marketer of premium organic
Our involvement in the transaction included the due
CBD oils. The acquisition provides access to HemPoland’s
diligence of the target, negotiations of the transaction
vast distribution network, premium Cannabigold brand,
documentation and the assessment of the regulatory regime
state-of-the-art hemp oil extraction technologies, and
in the EU and more than 13 EU jurisdictions governing
provides a strategic pathway into the European market
the production and sale of HemPoland’s products
for TGOD’s medical & recreational products and
(ie CBD-derived products) in the EU. The transaction
licensing deals.
was required to be cleared before the Toronto Stock
Founded in 2014, HemPoland was the first company in Exchange and the process included TGOD to
Poland to obtain a state licence allowing the company providing: (i) an overview of the regulatory framework;
to grow hemp and manufacture CBD oil products. and (ii) opinions confirming the legality of marketing and
HemPoland’s management is comprised of experts in distributing HemPoland’s products for each jurisdiction to
cultivation, oil extraction, and marketing of high-quality which HemPoland exports its products. We also advised
organic CBD oil. The company is vertically integrated, TGOD on the EU regulatory framework relating to sales
with over 1,250 acres of cultivation leveraging third parties, of CBD products across the EU, and our opinion was
multiple commercial scale extraction units, local distributors instrumental in having the deal cleared. Projects of this
in Poland, Austria, Netherlands, Germany, United Kingdom, nature demonstrate the unique strength and capabilities of
Italy, Switzerland, Portugal, Ireland, Czech Republic, our network; and the depth of our knowledge of this area.
Definitions
– Cannabis: a broad term used to describe organic products (eg cannabinoids, marijuana, hemp) derived from the
Cannabis genus of plants.
– Cannabinoids: a class of diverse chemical compounds that act on cannabinoid receptors in cells that alter
neurotransmitter release in the brain, spinal cord and peripheral nerves. Cannabinoids can be naturally derived
from the cannabis plant, or manufactured. Non–psychoactive examples include cannabinol and cannabidiols.
Source: Report reviewing the current evidence on of the medicinal benefits of cannabis–based products by the Chief Medical Advisor to the UK Government, June 2018
allenovery.com6 Cannabis practice | 2019
Other Relevant Expertise
Licensing of cannabis for Patient access to CBD Review of regulatory
medical use based medicines status CBD in EU
We have assisted several pharmaceutical We have provided general advice on issues We have reviewed the regulatory status of
companies with the drafting and negotiating related to patient access to cannabis based CBD in food, cosmetics and medicinal
of supply and licence agreements for the medicines, and the interpretation of ECHR products in the EU and several EU MS.
supply and licencing of cannabis for case law in this respect.
medical use.
Seizure of hemp products
Advertising related to cannabis Regulatory cannabis monitoring
(> 0.2% THC)
We have provided a legal risk assessment We have assisted a client with respect to the We perform a regulatory monitoring
on cannabis related advertising and claims seizure of hemp tea (containing more than of evolutions with respect to the
(eg use of the slogan “keep calm and” 0.2% THC) by the customs authorities, and regulations regarding cannabis based
together with a cannabis leaf) as well as the related potential classification of hemp as products in Europe, the U.S., and Canada,
sponsorship restrictions under EU member narcotic under EU and local legislation and for different clients.
state law. case law
Sale and cultivation of hemp seeds Legal highs monitoring
We have advised on the legality of the sale We perform a regulatory monitoring of
of cannabis/hemp seeds for (i) food/feed evolutions with respect to “legal highs”
purposes and (ii) cultivation purposes; as well for some of our clients.
as the actual cultivation of those seeds in
several EU jurisdictions.
Global reach and cross-border approach
We are one of the few firms able to put at our clients disposal a truly global and “one firm”
cohesive network now spanning 44 offices in 31 countries from Europe, Asia Pacific, the Middle East
and Africa to the Americas, as well as selecting a network of leading regulatory specialists in places where
we do not currently have a physical presence or the specific expertise which our clients require. This unified
approach enables us to offer a “one-stop-shop” mechanism, where our clients have one main point of contact
able to coordinate regulatory advice across multiple jurisdictions.
Our firm is regularly acknowledged as market leader for life sciences (eg in Chambers & Partners and Legal 500).
550 2,800 5,500 44 31
Partners Lawyers People Offices Countries
© Allen & Overy LLP 20197
A&O Life Sciences Hub
A blog where experts from Allen & Overy analyse the latest EU and
national legal and regulatory developments in the life sciences sector.
For relevant news, visit us here.
Cannabis Legal & Regulatory Update
Our monthly selection of handpicked news and legal developments.
For relevant news, visit us here.
Subscribe here to our dedicated Cannabis newsletter.
KEY CONTACTS
Cannabis Sector Lead M&A & Investments IP (Patents) IP (Brands)
Eveline Van Keymeulen Jeremy Parr Marc Doring David Stone
Head of the Life Sciences Partner – Corporate Partner – IP Partner – Litigation/IP
Regulatory Practice Tel +44 20 3088 3383 Tel +44 20 3088 4197 Tel +44 20 3088 2920
Tel +33 1 40 065 566 jeremy.parr@allenovery.com marc.doring@allenovery.com david.stone@allenovery.com
eveline.vankeymeulen@allenovery.com
Commercial Disputes & Investigations Trade & Regulatory
Jim Ford Hippolyte Marquetty Matthew Townsend Isabella Kelly
Partner – Corporate Partner – Litigation/Corporate Partner – Corporate Associate (adnitted in Victoria-Australia)
Tel +44 20 3088 4797 Tel +33 1 40 06 53 98 Tel +44 20 3088 3174 – Corporate
jim.ford@allenovery.com hippolyte.marquetty@allenovery.com matthew.townsend@allenovery.com Tel +44 20 3088 1717
isabella.kelly@allenovery.com
allenovery.comGLOBAL PRESENCE Allen & Overy is an international legal practice with approximately 5,500 people, including some 550 partners, working in 44 offices worldwide. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi Bucharest (associated office) Ho Chi Minh City Moscow Seoul Amsterdam Budapest Hong Kong Munich Shanghai Antwerp Casablanca Istanbul New York Singapore Bangkok Doha Jakarta (associated office) Paris Sydney Barcelona Dubai Johannesburg Perth Tokyo Beijing Düsseldorf London Prague Warsaw Belfast Frankfurt Luxembourg Riyadh (cooperation office) Washington, D.C. Bratislava Hamburg Madrid Rome Yangon Brussels Hanoi Milan São Paulo Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP’s affiliated undertakings. © Allen & Overy LLP 2019 | CS1811_CDD-53099_ADD-80776 allenovery.com
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