National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- issuer requires relief from requirement to file a business acquisition report -- the acquisition is significant under the thresholds applicable at the completion date of the acquisition -- the acquisition is not significant under the amended thresholds that will become effective on November 18, 2020.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.2, 13.1.
November 10, 2020
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF COLUMBIA CARE INC. (the "Filer")
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") granting relief from the requirement to file a business acquisition report within 75 days after the acquisition date (the "Exemption Sought") contained in paragraph 8.2(1) of National Instrument 51-102 -- Continuous Disclosure Obligation ("NI 51-102").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application (the "Principal Regulator"), and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon.
Terms defined in National Instrument 14-101 Definitions, NI 51-102 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer was incorporated under the Business Corporations Act (Ontario) (the "OBCA") on August 13, 2018 under the name "Canaccord Genuity Growth Corp." as a special purpose acquisition corporation. On April 26, 2019, the Filer completed its "qualifying transaction" with Columbia Care LLC and the Filer was continued out of Ontario under the OBCA and into the jurisdiction of British Columbia under the Business Corporations Act (British Columbia). The Filer's registered office is located in Vancouver, British Columbia.
2. The common shares and common share purchase warrants of the Filer trade on the Aequitas NEO Exchange and the Canadian Securities Exchange.
3. The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon.
4. The Filer is not in default of any requirement of securities legislation in any of the jurisdictions of Canada.
5. On November 5, 2019, the Filer announced that it had entered into a definitive agreement to acquire (the "Transaction") The Green Solution ("TGS") for approximately US$140M, excluding certain performance-based milestone payments. The Filer filed a material change report with respect to the Transaction on November 11, 2019.
6. On August 26, 2020, the Filer announced that the Transaction was expected to close on September 1, 2020. In its press release, the Filer included information with respect to the revenue, gross profit before fair value adjustments and adjusted EBITDA for both the Filer, TGS and on a pro-forma basis. The Transaction closed on September 1, 2020.
7. Part 8 of NI 51-102 sets out three required significance tests: the asset test, the investment test and the profit or loss test. The Transaction is considered significant under the required investment test as the Filer's consolidated investments in and advances to TGS exceed 20 percent of its consolidated assets as at the last day of the most recently completed financial year of the Filer. The Transaction is also considered significant under the required asset test, as the Filer's proportionate share of the consolidated assets of the business exceeds 20 percent of its consolidated assets, calculated using the audited annual financial statements of each of the Filer and TGS.
8. Part 8 of NI 51-102 also sets out three optional significance tests for reporting issuers that are not venture issuers: the asset test, the investment test and the profit or loss test. The Transaction is considered significant under the optional investment test as the Filer's consolidated investments in and advances to TGS exceed 20 percent of its consolidated assets as at the last day of the most recently completed interim period or financial year of the Filer. The remaining two optional significance tests, being the asset test and the profit or loss test, did not exceed the twenty percent threshold required under NI 51-102. As a result, in the absence of exemptive relief, the Filer is required to file a business acquisition report ("BAR") on or before November 15, 2020.
9. On August 20, 2020, the Canadian Securities Administrators published a Notice of Amendments to National Instrument 51-102 Continuous Disclosure Obligations and Changes to Certain Policies Related to the Business Acquisition Report Requirements (the "BAR Requirements"), which provided for amendments (the "Amended BAR Requirements") to the BAR Requirements for reporting issuers that are non-venture issuers. The Amended BAR Requirements are expected to come into effect on November 18, 2020.
10. The Amended BAR Requirements will change the criteria for determining whether a completed acquisition is significant, based on the three tests set out in NI 51-102. Under the BAR Requirements, a non-venture issuer would have to file a BAR if any one of the three significance tests (i.e. the asset test, the investment test or the profit or loss test) was met. Under the Amended BAR Requirements, an acquisition will be significant only if at least two of the three significance tests are satisfied. Under the Amended BAR Requirements, a non-venture issuer will not be required to file a BAR if only one of the three significance tests is met. The significance test threshold for acquisitions by non-venture issuers has been increased from 20% to 30% under the Amended BAR Requirements.
11. Under the Amended BAR Requirements, the Filer would not be required to file a BAR, as only one of the three required and optional significance tests would have been met, namely, the investment test.
The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.
The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted.