Legality Risk
Some Canadian companies would rather stay out of the U.S. than take the legality risks associated with the market.
Institutional investors should be able to feel confident that funds from Canadian marijuana operations are not going toward illegal activities, and disclosing U.S. operations in a prospectus is not a sufficient way “to explain away breaking a law,” said Bruce Linton, the CEO of pot producer Canopy Growth Corp. The company isn’t pursuing any U.S. investments, he said.
“If there’s a doubt, err on the side of clarity,” Linton said.
A new TMX policy would give licensed producers clarity on how to proceed for the number of of companies that are considering expansion in the U.S. or embarking on deals with brands that produce infused products in states such as Colorado and Washington, Aphria’s Neufeld said.
Aphria shares rose 0.5 percent to C$6.46 at 10:31 a.m. in Toronto.
In TMX’s review, the company is examining both companies that are directly investing in U.S. marijuana production and those that have more passive investments, such as marketing agreements, Neufeld said.
“I just hope when the new policy comes down it’s not punitive to my shareholders,” Neufeld said by phone. “We feel very, very confident what we’ve done is all legal in the concept of Canadian law.”
This article was provided by Bloomberg News.