We may be required to obtain additional licenses, authorizations, approvals and permits in connection
with our U.S. business.
We may be required to obtain and maintain certain U.S. federal or state permits, licenses and approvals in
the United States relating to the manufacture, marketing and sale of CBD products. We may be unable to obtain or maintain any necessary licenses, permits or approvals. To the extent such permits and approvals are required and not obtained, we may be
prevented from operating and/or expanding our U.S. business, which would have a material adverse effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of operations more generally.
We are subject to a variety of regulatory limitations related to marketing and advertising of our CBD products.
In the U.S., advertising is subject to regulation by the FTC under the Federal Trade Commission Act as well as the FDA under the FFDCA,
including as amended by the U.S. Dietary Supplement Health and Education Act of 1994, and by similar state and local regulation. In recent years, the FTC, the FDA and state regulators have initiated numerous investigations of food and dietary
supplement products both because of their CBD content and based on allegedly deceptive or misleading marketing claims and have, on occasion, issued Warning Letters due to such claims. Some U.S. states also permit content, advertising and
labeling laws to be enforced by state attorneys general, who may seek civil and criminal penalties, relief for consumers, class action certifications, class wide damages and recalls of products sold by us. There has also been a recent increase in
private litigation that seeks, among other things, relief for consumers, class action certifications, class wide damages and recalls of products. Any actions against us by governmental authorities or private litigants would have a material adverse
effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of operations more generally.
Our participation in the industrial hemp industry could subject us to unexpected enforcement action.
There is uncertainty concerning the legal status of industrial hemp and industrial hemp products containing industrial hemp-derived
ingredients, including CBD. The status of products derived from the hemp plant, under both federal and state law can depend on the THC content of the plant or derivative (including whether the plant meets the statutory definition of industrial
hemp), whether the cultivator, processor, manufacturer or product marketer engages in cannabis-related activities for research versus purely commercial purposes, as well as the form and intended use of the product. Under U.S. federal law,
products containing CBD may be unlawful if derived from cannabis, including hemp, with a concentration greater than 0.3% on a dry weight basis or if derived from industrial hemp grown outside the parameters of an approved industrial hemp pilot
program or industrial hemp cultivated in violation of the 2018 Farm Bill. Even after enactment of the 2018 Farm Bill, the DEA may not treat all products containing industrial hemp-derived ingredients, including CBD, as exempt from the U.S.
Controlled Substances Act. If the DEA takes action against us or other participants in the industrial hemp industry, this would have a material adverse effect on our U.S. business and could have a material adverse effect on our business, financial
condition and results of operations more generally.
We, or the industrial hemp industry and CBD products more generally, may receive unfavorable
publicity or become subject to negative consumer perception.
We believe the industrial hemp industry and the manufacturing,
marketing and sale of CBD products are highly dependent upon broad social acceptance and consumer perception regarding the safety, efficacy and quality of the products, as well as consumer views concerning regulatory compliance. Consumer perception
of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, market rumors or speculation and other publicity regarding the consumption of CBD products. There can be no
assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to industrial hemp or CBD markets or any particular product, or consistent with
earlier publicity. Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a
material adverse effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of operations more generally. Further, adverse publicity reports or other media attention regarding the safety,
efficacy and quality of industrial hemp or CBD in general, or our products specifically, could have a material adverse effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of
operations more generally. Additionally, the industrial hemp industry and CBD products may be impacted by perceived similarities or differences between industrial hemp and CBD, on the one hand, and cannabis that is subject to the U.S. Controlled
Substances Act, on the other hand. Consumers, vendors, distributors, channel partners, retailers, landlords/lessors, industry partners or third-party service providers may incorrectly perceive industrial hemp and CBD products as cannabis that is
subject to the U.S. Controlled Substances Act, thereby confusing them for goods that are illegal under U.S. federal law, which could adversely impact our ability to sell our CBD products in the United States or to obtain the necessary services or
supplies to manufacture, market and sell our CBD products in the United States. Additionally, the parties with which we do business, may perceive that they are exposed to reputational risk as a result of our
non-U.S. legal cannabis business activities. For example, we may face challenges making U.S. dollar wire transfers or engaging any third-party supplier. While we have other banking relationships and believe
that the services can be procured from other institutions, we may in the future have difficulty maintaining existing, or securing new, bank accounts or clearing services. Failure to establish or maintain business relationships in the United States
would have a material adverse effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of operations more generally.
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