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Toronto Stock Exchange Warns Companies with U.S. Marijuana Dealings

Canada’s securities regulator coalition put out a press release Monday demanding that companies fully disclose the risks to their investors.

Companies Expected to Warn Investors if the United States Federal Government Starts to Enforce Federal Law

The group that manages the Toronto Stock Exchange are warning businesses with ties to the U.S. cannabis industry to make sure they are in compliance. The TMX Group advised companies who are in violation of U.S. federal laws regarding marijuana could be delisted pending review.

Canada’s securities regulator coalition put out a press release Monday demanding that companies fully disclose the risks to their investors. Any business that isn’t fully compliant runs the risk of being delisted from the stock exchange.

Louis Morisset is the chairman of the Canadian Securities Administrators. He said in the release that “We expect issuers with marijuana-related activities in the U.S. to address the current legal and regulatory environment in their disclosures, including any risks that result from changes in the approach to enforcement of U.S. federal law.” The press release also cautioned that those in violation of U.S. federal law are also in violation of the Toronto Stock Exchange rules.

Companies will also be expected to warn investors of probable outcomes if the United States federal government starts to enforce federal law on the state level and the potential impact on businesses. The disclosure must list the risks for both direct and indirect contact relations with the American cannabis industry. Third party businesses involved with distribution or cultivating must also disclose state and federal regulations.

The press release also said that enforcement of federal law in the States could happen anytime, which means that people that have dealings with U.S. companies could have assets seized and risk being prosecuted. The Obama Administration was lenient on enforcing federal law in legal marijuana states, however, the current administration has indicated that they will criminalize marijuana.

The director of corporate finance at the Ontario Securities Commission also said in an interview that it was the right thing to give full disclosure. “Disclosure is the foundation for fair and efficient markets for public companies,” said the director Huston Loke. Canada plans to legalize recreational marijuana by July of next year.

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