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News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean most to you as a Canadian investor.

1. Cannabis producers will inevitably face increased scrutiny from their bankers and other lenders in the wake of recent highly publicized regulatory breaches.

“The banks will have an increased need to understand what the rules (and regulations) are and how the companies are compliant,” said Jodi Avergun, a Washington-based partner at Cadwalader, Wickersham & Taft LLP.

“It will involve significant costs,” which the pot companies will bear, she said.

CannTrust fired its chief executive officer in the aftermath of the federal government’s discovery of unlicensed grow rooms. The company was also the first Canadian pot producer to have an equity offering led by a group of big U.S. banks.

Bank of America Merrill Lynch, Citigroup, Credit Suisse Securities and RBC Capital Markets coordinated the May offering, which raised about $170 million U.S. The shares have dropped 56% since the regulatory breach was disclosed.

Still, the CannTrust violation won’t likely lower the growing interest among U.S. lenders for cannabis investment, says Avergun. It will, however, make them more cautious.

“There will be more of a trust-but-verify attitude,” she said. “When you think of it, how would a bank, other than going there themselves to look at the grow operation, know that CannTrust’s Ontario operations had five rooms that weren’t compliant?”

2. As the rest of Canada prepares for the legal sale of cannabis “edibles” this fall, Quebec has decided to ban those candies, chocolates, brownies, etc., over safety concerns.

The province is branding Ottawa’s planned measures to regulate the upcoming edibles market insufficient and the reason why it needs to place the ban, along with implementing other more-stringent rules.

Quebec will outlaw the sale of cannabis candies, chocolates and “any other product that is attractive to minors.”

In addition, solid products containing cannabis will not be allowed to have levels of tetrahydrocannabinol (responsible for inducing the high associated with cannabis use) greater than five milligrams per unit or 10 milligrams per package. For liquids, Quebec will limit cannabis content to 5 milligrams per package.

The provincial government maintains that federal measures to regulate the new products when they become legal on Oct. 17, 2019, will stand in the way of Quebec achieving “its public health and safety objectives.”

Ottawa has said it will not allow the sale of edibles that are appealing to young people, but assessments of whether the line is crossed will be made on a case-by-case basis. Whether an edible cannabis product is reasonably considered to be appealing to kids would depend on various factors including its shape, colour, flavour, scent and how it is packaged, a federal government official said last month.

3. There’s more indication that soon-to-be-legalized cannabis vaping products will ultimately dominate industry sales.

Chris Damas, editor of the BCMI Cannabis Report, believes that of all the new products coming on line in October 2019, vape pens will make up half of all total sales. He’s not alone, with other analysts arguing vaping could become the driving force of the recreational cannabis market.

Auxly Cannabis Group CEO Chuck Rifici says when given a choice between rolled joints to smoke and vape pens, U.S. consumers have voted with their money.

“We’ve seen (that) from the market data south of the border and anecdotally across Canada in unlicensed dispensaries,” he said. “People seem to disproportionately choose vape devices.”

Part of that, he says, is the ease and discretion of using a vape pen. Once legal, the pens will come with pre-loaded cartridges of cannabis extract. With the push of a button, the extract is vaporized (hence the term “vape pen”). Instead of smoke, the user inhales vapour.

Vape pens and e-cigarettes have become wildly popular as an alternative to smoking cigarettes. They have also attracted growing concern about the rising number of teens using vaping to ingest tobacco. Those fears are only expected to rise when cannabis vaping becomes legal.

4. A lawyer working with the cannabis industry is blaming illegal dispensaries on the Ontario government’s lottery system for awarding retail licenses.

While Toronto police arrested 18 people in connection with illegal dispensaries last week—and later used cement blocks to shutter those operations—illegal retailers continued to sell from the street just outside their stores.

That persistence reflects industry concerns about the way the province’s limited number of cannabis licences have been awarded.

“The lottery system is perceived by many as an unfair entry point into [the] market,” cannabis lawyer Caryma Sa’d said on CTV’s Your Morning this week. “There have been people who have an immense amount of expertise and knowledge, these craft producers entrepreneurs, who are being shut out from the very industry they effectively helped legalize.”

Sa’d argues “the different levels of government need to take a step back and rethink ‘what are our objectives here?’ and ‘how can we make this a more inclusive market?’”

“It’s apparent from the civil disobedience that we’re seeing that people still want to participate in the industry,” said Sa’d. “They’re concerned about access, pricing, quality and that craft entrepreneurs may be the solution to that.”

5. New federal licensing requirements for cannabis growers will likely result in a more-phased-in approach for small producers as they focus on getting smaller grow sites up and running.

Recent changes to the licensing process now require a new cannabis grow facility to be fully built before its owner can apply for a licence. That moves away from a process under which a company could apply for approval after meeting certain milestones and before construction was completed.

As a result, says Dentons Canada lawyer Eric Foster, several of his clients are now looking to build relatively small growing facilities of just a few thousand square feet.

“This will help reduce the upfront capital costs and also speed up the licensing process as it will take less time to build a smaller facility than a larger one,” Foster said.

Once their licence is approved, the companies will be able to more easily raise additional capital for expansion and build out more, he said.

Still, there’s some fear that regulatory changes may ultimately discourage smaller operators from joining the business in the first place.