Cannabis is becoming an earner for once reluctant Toronto law firms

The legalization of cannabis in Canada may have diminished the need for criminal lawyers, but it’s created a booming business for the country ’s most prestigious corporate law firms.

The cannabis sector has seen 27 major deals worth US$10.6 billion announced this year, according to data compiled by Bloomberg.

Add in 127 stock sales worth US$2.65 billion, and advice to clients on how to navigate a complex new regulatory environment, and it’s been a boon for Toronto’s biggest law firms, many of whom had regarded it with trepidation for years.

“I’ve never seen an industry start to dominate our practice in the way that this one has,” said Patricia Olasker, partner at Davies Ward Phillips & Vineberg LLP. “It’s unprecedented in the lifetime of most practicing lawyers.”

Davies ranks first among its peers for working on US$5.8 billion worth of cannabis M&A this year, including advising Canopy Growth Corp. on Constellation Brands Inc.’s $5-billion investment in the Smiths Falls, Ont.based pot producer.

Like many of Canada’s corporate law firms, Davies entered the sector because its traditional clients needed to understand the implications of recreational legalization on Oct. 17.

“It’s not so much that we sat down one day and thought, we need a cannabis strategy, but rather that our clients were getting into this space and so they dragged us there,” Olasker said in a phone interview.

“They’re lenders, they’re investment banks, they’re retailers and shareholder activists, so our work is coming from conventional sources but addressing this new industry.”

Davies started off early in the pot space and is now advising “a few of the more senior cannabis players” on tax law, branding, marketing and compliance. It’s also educating the next generation about cannabis law through a new course at York University’s law school taught by Olasker and her colleague Mindy Gilbert.

It was a similar story at Osler, Hoskin & Harcourt LLP, which advised Constellation Brands on the Canopy deal and was the bankers’ counsel for Tilray Inc.’s initial public offering, the first and so far only marijuana IPO on a major U.S. stock exchange.

Osler is tied for second place with McCarthy Tetrault and Sullivan & Cromwell LLP, advising on US$3.6-billion worth of deals this year, according to Bloomberg data.