TMX leaves door open for clearing trades of marijuana stocks with U.S. exposure

News:

In August, the Globe and Mail reported that Canadian Depository for Securities Ltd. (subsidiary of TMX Group Inc.) was contemplating a ban on clearing cannabis stocks with U.S. exposure. Currently, only medical cannabis use is legal in Canada and recreational use will be legalized in July 2018. South of the border, both medical and recreational cannabis use are illegal under federal legislation. However, it is legal to consume cannabis in thirty-one states under their state law.

TMX announced that there is no ban on clearing securities of cannabis companies with U.S. interest. Instead, TMX would focus on applying strict listing and compliance requirements. The Canadian Securities Exchange said that pot companies must disclose risks when they invest in U.S.

"This is a positive development for CannaRoyalty and for any issuer with U.S. marijuana-related activities traded on the Canadian Securities Exchange ("CSE")," said Marc, Lustig, CannaRoyalty CEO. 

Comments:

With the rapid growth of cannabis industry, many Canadian financial institutions face the dilemma of whether to invest in the industry due to different legal status in U.S. and Canada. This conflicts could develop further after Canada legalized recreational use of cannabis in July next year, as many large corporations expressed their interests in the distribution of cannabis. FIs should move carefully as the cannabis industry expose participated FIs to heavy reputation and legal risks.

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