The uplisting question keeps coming up. There is a major barrier to doing so other than the normal $4.00 SP, reporting standards and whatnot, which are not easy requirements by themselves. If a company has direct contact with MJ and is operating on US soil, they will not be eligible to uplist until federal laws change. This is not in question. And I believe they do own stakes in several dispensaries. So that's a no go unless they only merge in the companies that don't touch MJ into the new corporation. Maybe that's their plan - just the banking stuff going public and the investment fund remaining private. In fact, the more I think about it, the more likely I think that is. Their status as a holding company may be a loophole, but I highly doubt it. There are other cannabis holding companies and none have uplisted; Curaleaf Holdings, for example, was a reverse merger on OTC and remain there.
All that being said, the laws WILL change sooner rather than later. The SAFE Act may allow it and that could happen next year. Perhaps by the time they would be prepared to uplist, it may be allowable. In the meantime, there's nothing holding them from being a powerhouse on the OTC.
Both exchanges prohibit listings from any company that breaks federal law in the jurisdiction they operate in. This is probably the best explanation I've seen. It's a lawyer's opinion:
Legal Opinion prepared for Amplify Seymour Cannabis ETF June 18, 2019 Page 6
NYSE AND NYSE AMERICAN
The NYSE is a worldwide market that lists about 80% of U.S. securities. The NYSE acquired the American Stock Exchange in 2008 now known as NYSE-MKT. The NYSE Market is open to listing companies involved in the cannabis industry who are involved in biotech (e.g., 22nd Century Group: XXII; AbbVie: ABBV); investment in the industry outside of United States (e.g., Canopy Growth Corp.: CGC; Compass Diversified Holdings: CODI; ETFMG Alternative Harvest: MJ); the agricultural sector (e.g., cbdMD Industries, Inc.: YCBD; Scott’s Miracle Grow Co.: SMG); and the real estate sector (e.g., Industrial Properties, Inc.: IIPR). United States-based companies that “touch the plant” (i.e., those that grow or distribute cannabis) are not eligible to list at this time. Canadian and other non-U.S. companies whose cannabis related activities are legal in their home jurisdiction are eligible to list if they meet the exchange’s listing requirements, such as number of shareholders, earnings and stock price. The NYSE rules govern listing requirements and continued listing requirements. Listed issuers must comply with its agreements with the NYSE and SEC requirements in all material respect.
NASDAQ
The Nasdaq Stock Market requires the companies listing on its exchange to comply with U.S. federal laws. The following paragraph is from its website under FAQ:
In determining whether to initially list a company or continue a company’s listing when it changes its business activities, Nasdaq does not make subjective or value judgements about the business the company operates. However, Nasdaq cannot initially list or continue the listing of a company whose current or planned activities are in violation of U.S. federal law or the law in a jurisdiction where the company operates. In assessing the legality of a company’s activity, Nasdaq largely relies on the risk factors and other disclosures made in the company’s filings with the Securities and Exchange Commission, although Nasdaq may also request additional information from the company where necessary.2
TSX Venture
This exchange mostly contains small-cap Canadian stocks. TSX Venture provided a Notice to Issuers bulletin dated October 16, 2017 (the “Bulletin”)4 that specifically addressed business activities related to marijuana in the United States. The Bulletin clarified its requirements to list and to continue listing on its exchange. The Bulletin states the general requirements “that (i) the business of applicants or listed issuers will be conducted with integrity and in the best interests of the issuer’s security holders, and (ii) applicants or listed issuers will comply with all laws, rules and regulations applicable to their business or undertaking.” These requirements apply to all applicants and listed issuers. Due to the “significant number of inquiries received regarding entities engaging in activities related to the cultivation, distribution or possession of marijuana in the United States” (“Subject Entities”), TSX Venture issued the Bulletin to provide clarity regarding the application of the requirements to applicants and listed issuers in the marijuana sector. The Bulletin notes that although a number of U.S. states have legalized the cultivation, distribution, or possession of marijuana to various degrees and subject to various conditions, marijuana remains a Schedule I drug under the CSA and cannabis financial transactions are subject to regulation under the MCA.
According to the Bulletin, companies listed on TSX Venture with ongoing business activities that violate United States federal law regarding marijuana do not comply with the requirements of TSX Venture. These business activities may include, among other things:
(i) direct or indirect ownership of, or investment in, Subject Entities; (ii) commercial interests or arrangements with Subject Entities that are similar in substance to ownership of, or investment in, Subject Entities; (iii) providing services or products that are specifically designed for, or targeted at, Subject Entities; or (iv) commercial interests or arrangements with entities engaging in the business activities described in (iii).
The Bulletin states that, as part of TSX Venture’s standard continued listing review of listed issuers, TSX Venture selects issuers for in depth reviews based on their continuous disclosure records. As required by the TSX Venture manual, each listed issuer is required to disclose material information regarding its business and affairs. As part of its continued listing review of listed issuers in the marijuana sector, TSX Venture contacted listed issuers at the end of 2017 for a more comprehensive review of their marijuana-related activities (if any) in the United States. If a listed company engages in activities that are contrary to TSX Venture’s requirements, TSX Venture has the discretion to initiate a delisting review of that company.
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