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ARTICLE · 18 APRIL 2022

What To Know About ESG And Cannabis

Davis+Gilbert LLP
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Investors and lenders focused on environmental, social and governance (ESG) principles will find opportunities for "green" financing in cannabis, but risk abounds as the truthfulness of ESG claims...

United StatesCannabis & Hemp
Joseph Cioffi
Joseph Cioffi
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Investors and lenders focused on environmental, social and governance (ESG) principles will find opportunities for "green" financing in cannabis, but risk abounds as the truthfulness of ESG claims and disclosures are on the SEC's radar. Last month the SEC put out a proposed rule that if adopted could lead to increased climate-related disclosures for companies subject to SEC oversight.

While cannabis businesses can improve their prospects for funding by emphasizing their ESG-related activities and achievement of ESG standards, financiers must do their diligence before incorporating an issuer's or borrower's ESG claims in their own disclosures.

At a high-level, cannabis may be viewed as ESG-friendly given its natural benefits to both mind and body, but each element of E, S and G must be considered to determine if a given project or company is holistically meeting ESG goals.

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