TSX Threatens to Delist Canadian Companies with U.S. Cannabis Operations

The Toronto Stock Exchange issued a bulletin today regarding “Business Activities Related to Marijuana in the United States.” It provided clarity of its policy, suggesting that “Issuers with ongoing business activities that violate U.S. federal law regarding marijuana are not
complying with the Requirements.” The exchange cited direct or indirect ownership of direct cannabis companies, arrangements with them, providing goods or services to them and any sort of commercial interests as contrary to its policy.

Over the balance of the year, the TSX will be reviewing listed companies that are engaged in direct or ancillary services:

The Exchange notes that if a listed issuer is engaging in activities that are contrary to the Requirements, the Exchange has the discretion to initiate a delisting review under Policy 2.9 of the Manual.

Most Canadian LPs have not pursued U.S operations, with the exception of Aphria (TSX: APH) (OTC: APHQF), which has investments in Arizona (Copperstate Farms) and in Florida, through ownership of and licensing to Liberty Health Sciences (CSE: LHS) (OTC: LHSIF), which is also vying for licenses in Ohio. A handful of other companies listed on the TSX or TSX Venture have U.S. operations, but most Canadian companies with cannabis business in the United States are listed on the Canadian Securities Exchange (CSE), which has no similar issue. If the TSX were to delist Aphria, the company could move to the CSE or adopt the OTC in the U.S. (or a higher exchange) as its primary listing.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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