Marijuana industry insiders say they have met with the operators of Canada’s largest stock exchange to devise a policy on investing in the U.S., where growing and selling cannabis violates federal laws.
Lawyers who work with publicly traded Canadian marijuana producers say there is an unwritten rule that companies traded on the Toronto Stock Exchange or the TSX Venture Exchange are not permitted to have investments in the U.S. cannabis sector.
TMX Group — the company that operates both the TSX and Venture Exchange — is now looking to codify that policy, particularly given the uncertainty since stemming from the change in administration in the U.S., according to industry observers.
“The big issue that’s got the exchanges taking a harder look really relates to the change in administration since President Trump’s election,” said Hugo Alves, corporate and commercial partner at Bennett Jones LLP.
“That is causing a bit of a chilling effect.”
Although more than two dozen U.S. states have decriminalized the drug, either for medicinal or recreational use, marijuana remains a Schedule 1 narcotic in America and its possession, cultivation, usage and sale contravene federal laws.
When Barack Obama was president, the U.S. government was choosing not to enforce the federal marijuana laws in states that had voted to decriminalize the drug. But the new administration has a much harsher, anti-marijuana stance, creating risk for shareholders who have exposure to the U.S. cannabis space.
TMX Group would not confirm that it is holding meetings with the marijuana sector in order to formulate a policy regarding U.S. investments, saying in an email that it does not comment on “individual issuer affairs.”