The US medical cannabis company MedMen Enterprises Inc. (CSE:MMEN) began trading on the Canadian Securities Exchange (CSE) on Tuesday because the company cannot register on any Wall Street Exchange, as cannabis is illegal in US federal law.
According to a recent article from CNNMoney, MedMen is not the first cannabis company to move and jump ship to Canada.
Medical cannabis is legal in 30 different states and is legal for recreation use in ten of them, but it is still illegal through the eyes of federal law. The best way for these US companies to legally enter the market is to go through Canadian exchanges, where there is no federal ban on the sale of cannabis.
The same CNNMoney article has said that Canadian cannabis companies are able to register on Wall Street exchanges because they are not subjected to the same restrictions of their US counterparts.
MedMen was able to avoid filing for an Initial Public Offering (IPO) by organizing a reverse takeover of Ladera Ventures, which was already listed on the CSE.
Bruce Linton, the CEO of Canopy Growth (NYSE:CGC) (TSX:WEED), an Ontario-based medical cannabis company that started trading on the New York Stock Exchange (NYSE) on May 24, had this to say about trading on the US financial market:
“You can list here [in the US] if you’re not breaking any of the rules in any of the jurisdictions that you operate, and I don’t break any rules because I don’t operate in any jurisdictions where it’s federally illegal, which unfortunately includes the US.”
Some analysts have suggested that the US is avoiding tapping into a huge market, with CNNMoney stating that “the US market is bigger than Canada’s, even with federal prohibition.”
MedMen saw shares rise by approximately 2.68% to a share value of $4.21 CAD on Friday, after opening at $4.18.
Do you think US law will change any time soon to benefit the cannabis industry? Let us know in the comments below.
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