CSE: Notice 2017-014 – Industry Guidance – Issuers with Assets or Operations in the U.S. Cannabis Industry
TORONTO, ONTARIO–(Marketwired – Aug. 4, 2017) –
CNSX Markets Inc. (“Canadian Securities Exchange”, “CSE” or the “Exchange”) has determined that there is a significant level of uncertainty in Canada about the listing of companies, whether Canadian or U.S. based, involved directly or indirectly in the cannabis industry in the U.S. Transparency in the listing requirements and consistency in the application of those requirements is one of the fundamental benefits of listing on the CSE. With this notice, the CSE provides certainty and clarity to its position on listing these companies.
There are particular risks related to the conflicting U.S. federal and state laws surrounding both medical and recreational use of cannabis. CSE maintains the position that appropriate risk disclosure for existing and potential investors should include a comprehensive discussion of the current legal framework, including the federal law and current enforcement initiatives, as well as the state and municipal laws pursuant to which an issuer will conduct its business.
The Exchange has an obligation, and a commitment to consider the public interest during the listing process. With appropriate disclosure provided by listing candidates, the Exchange will continue to accept applications from companies meeting the listing requirements as set out in Policy 2 Qualification for Listing. Issuers and advisors are encouraged to review recent prospectus filings and listing statement disclosure for examples of appropriate disclosure.
Frequently Asked Questions
My company is a U.S. company with a state licence to grow cannabis. May I list directly on the CSE?
The company must be a reporting issuer, i.e. a “public company” in at least one jurisdiction in Canada. For a company that otherwise meets the business requirements for listing, the preferred route is to file a prospectus with a securities regulator in Canada. While it is possible to become a reporting issuer by way of a reverse takeover or other business combination, such transactions can be subject to additional uncertainties, costs and delays. A company that is already a reporting issuer in Canada will use a Listing Statement (CSE Form 2A) for its primary disclosure document.
Do I need to have a pre-filing conference with the Exchange so there are no surprises?
There are no significant “unwritten rules” at the CSE. A pre-filing conference is not unwelcome, but it is generally not necessary.
The CSE is for junior issuers. How big can a company get on the CSE?
The CSE is for all issuers, with listing criteria designed to allow earlier access to public capital at the lowest possible costs. Other than minimum listing standards, there are no restrictions on how large a company can get, or how much capital it can raise at the time of listing or as a listed company.
How long will it take to get listed?
There are no shortcuts to listing, and from the initial filing to approval, the time is almost entirely based on the quality of the disclosure and timeliness of responses, whether be for a prospectus filing or a listing statement submission.
I have a CPC and I want to vend in a U.S. Company selling infused snacks in Colorado. How can I do that?
The CSE does not have a Capital Pool Company program. The transaction must be completed under the policies of the listing exchange, or the company must file a prospectus.
What are the listing fees for this industry sector? How much will cost if we raise additional funds after we’re listed? Is there a fee calculator available on the website?
CSE has a simple, fair fee structure that applies to all business sectors. The initial fee is $13,500, payable as a $3,500 non-refundable deposit and $10,000 upon approval. Ongoing fees are currently $500/month. There are no fees associated with filings, subsequent financings, or meetings with the Exchange. The monthly fee is flat fee, regardless of the size of the company or the number or value of the shares listed.
Questions about the listing process may be directed to Listings@thecse.com, or 416-367-7340