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The new guidance requires cannabis companies to disclose such material information to investors in a variety of documents — from prospectuses to takeover bid circulars, listing statements, and material change reports. Guidance from securities regulators lays the groundwork for enforcement action if companies do not adhere to the expectations that have been spelled out.

There were about 80 publicly traded cannabis companies headquartered in Ontario at last count, said Sonny Randhawa, director of corporate finance at the Ontario Securities Commission. He added that there has been a lot of merger and acquisition activity in the sector, which exploded with the legalization of recreational cannabis a little over a year ago, and more consolidation is expected.

Cross-ownership between cannabis companies in M&A deals “results in conflicts of interest that may lead investors to re-examine… variables such as the purchase price, transaction timing or contingent payments,” the regulators said in Tuesday’s notice from the Canadian Securities Administrators, an umbrella group for the country’s provincial and territorial securities watchdogs.

“Strengthening governance-related disclosures that address concerns about potential conflicts of interest will provide investors with the information they require to make informed decisions,” the regulators said in the document.

The OSC’s Randhawa declined to reveal the number of cases where a lack of transparency was found, or identify specific cases flagged by staff at the regulator.