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4 Things to Know About The CSE's Statement on U.S. Cannabis Issuers

August 4, 2017


This morning, we released a piece regarding concerns that the Canadian Depository for Securities, Canada's only equity clearinghouse, may ban the clearing and settlement of Canadian-listed companies that have assets or operations in the U.S. cannabis industry. This has led to increased uncertainty regarding the exchange policies and regulations relating to the listing and trading of companies that operate in the U.S. cannabis industry. 


Related: Settlement Troubles Ahead for Canadian Cannabis Stocks?


A few hours ago, the CSE came out with a statement regarding its policies on issuers with assets or operations in the U.S. cannabis industry. Read the CSE's full statement here, or check out four of the most important points for cannabis investors below: 


  1. The CSE maintains their position that issuers must disclose the particular risks pertaining to the conflicting U.S. federal and state laws regarding both the medical and recreational use of cannabis to current and potential investors. They go on to say that this disclosure 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."

  2. They also restated their obligation and commitment to consider the public interest during the listing process. As long as appropriate disclosure is provided, the CSE will continue to accept applications from companies meeting their listing requirements (as described in Policy 2 Qualification for Listing).

  3. They note that although it is possible to become a reporting company through a reverse merger or the like, these transactions can be subject to additional uncertainties, costs and delays. To companies that meet the CSE's business requirements for listing, the exchange recommends that they file a prospectus with a securities regulator in Canada (a step in the process of 'going public' the traditional way as opposed to via a reverse merger). 

  4. In response to the question; Do I need to have a pre-filing conference with the Exchange so there are no surprises? the CSE had a somewhat witty reply.


"There are no significant 'unwritten rules' at the CSE. A pre-filing conference is not unwelcome, but it is generally not necessary."


This prods at the TSX and TSX Venture exchanges which have been recently accused by industry participants and the media of having 'unwritten rules' relating to cannabis companies with U.S. operations and/or those that seek to establish U.S. operations. 




This is still a developing story. As more information is released, we'll be sure to bring it to you. 


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Now, take a quick break from the markets and check out: Cards Against Humanity Helping End Marijuana Prohibition





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