An umbrella organization for Canada’s securities regulators issued new guidelines requiring Canadian companies with marijuana-related activities in the United States to spell out the potential risks for investors.
Among other things, company disclosures should note that marijuana remains illegal under U.S. federal law, the Canadian Securities Administrators (CSA) said in a special notice.
The notice removes months of uncertainty for investors and paves a path forward for around a dozen of Canada’s approximately 70 publicly listed medical cannabis companies that also do business in the U.S.
The rules apply to all publicly-traded domestic companies with U.S. marijuana-related activities, including any with direct and indirect involvement in cultivation and distribution, as well as suppliers to firms in the marijuana industry.
However, it is up to each stock exchange in Canada to apply its own listing requirements when determining whether to list companies with U.S. marijuana-related activities.
TMX Group, parent of the Toronto Stock Exchange and TSX Venture Exchange, said in a news release that it could delist marijuana stocks that break U.S. federal law by doing business there.
On the other hand, the Canadian Securities Exchange (CSE) welcomed the “significant clarity” provided by the CSA notice. The CSE, home to 48 cannabis listings, welcomes companies with U.S. marijuana-related exposure, provided they meet strict risk disclosure expectations for investors.
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