Nevada-licensed marijuana producer Friday Night made its public trading debut on the Canadian Securities Exchange (CSE) last week, making it the first Canada-listed, pure-US play that grows the plant in the US for both medical and recreational use.
“The company’s objective is to capitalize on the opportunities presented as a result of the changing regulatory environment governing the THC and marijuana industry in the United States,” the company said in a June 12 filing, according to the Financial Post
US marijuana companies are not allowed on public stock exchanges in their home country because on a federal level, the drug is treated as a Schedule I narcotic. While the Obama administration said it would not go after operators in states where the drug is legal, the Trump administration’s stance has been harder to read.
This has made it difficult for regulators and exchanges, such as the Toronto Stock Exchange (TSX), to make policy statements of their own. Because of this, many Canadian marijuana companies have been playing safe by sticking to the US medical market or related businesses that don’t touch the plant.
They have also been applying to get listed on the CSE, which requires only that issuers follow the laws of the state they operate in and disclose all the legal risks they face. “Companies since the early days of this industry have seen the TSX deeply ambivalent about the space,” Richard Carleton, CEO of the CSE told the Post
The TMX Group
, which owns and operates the TSX, reportedly told Canadian Bioceutical that as long as it was listed on the TSX Venture Exchange, it could not make an acquisitive investment in Arizona’s medical market in the US — even though the company would not be cultivating or selling cannabis under the terms of the deal.
“We had no choice, so we had to switch to the CSE,” Canadian Bioceutical CEO Scott Boyes told the Post.
According to a spokesperson from TMX Group, it reviews each listing based on their published policies and guidance. But many marijuana issuers have not seen any consistency in decisions, and they don’t know how existing guidelines apply to the nascent industry.
The TMX is under increasing pressure to release a clear policy on US investments. Several companies believe the operator will take a more liberal stance following its recent decision to allow Aphria, one of Canada’s largest marijuana producers, to invest in a Florida-based medical marijuana company through a CSE-listed subsidiary.
Before launching the world’s first cannabis ETF, Horizons ETFs was told by the TMX that it had a hard rule against listing securities doing “illegal operations” in the US.
“But the Aphria offering was a pretty strong catalyst for us to reopen discussions with the regulators and the TMX,” said Horizons ETFs president Steve Hawkins, who said the fund’s portfolio will be expanded to include companies deriving revenue from the US medical and recreational industry. “There can’t be a double standard out there.”
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