Canada’s major stock exchange operator is considering a policy shift that would make it very challenging to trade shares of cannabis companies using U.S. assets. If this movie is adopted, it could disrupt the flow of millions of dollars into the Canadian marijuana industry.
Canadian Depository for Securities (CDS) is a clearinghouse which handles millions of trades per day and performs necessary tasks to execute transactions. Sources have reported that the CDS is considering a refusal to settle trades for Canadian cannabis firms with American investments.
The Canadian markets have attracted investors like bears to honey because of the impending adult-use legalization coming next year.
The concern is that there are some companies raising capital in Canada, but also conducting business in the United States. While Canada has a nationally legal medical marijuana system, as well as consumer pot on its way, the United States still outlaws all cannabis at the federal level.
Further concern has come over worries that the Trump administration will start enforcing U.S. federal drug laws in states that have, in varying degrees, legalized the use of cannabis.
Because of these challenges, the CDS is currently assessing potential liabilities regarding the use of American cash for any cannabis investment transactions. If the decision is made that there will be a halt on trades involving U.S. assets, then an alternative must be found.
“We’re going to have to find some other way for providing the clearing and settlement if we’re going to continue to trade those securities,” said Richard Carleton, the CEO of the CNSX. “It’s not immediately obvious how that would happen,” he added.
At the moment, there are a number of Canadian cannabis stocks performing well. SmallCap Power just highlighted four particularly healthy companies to consider investing in. They include three major licensed producers, Canopy Growth Corporation, Organigram, and Aphria.