The Canadian Depository for Securities (CDS), Canada’s main securities clearing house, will continue to clear trades in the securities of public companies that are engaged in U.S.-based marijuana activities, the Toronto-based TMX Group announced on Friday.
CDS is continuing to work with the Canadian Securities Administrators (CSA) and securities exchanges to clarify issues that arise from the clearing of trades in the securities of these firms. “This is a complex matter which touches multiple aspects of Canada’s capital market system, and as such requires close examination and careful consideration,” TMX says in a news release.
The ultimate solution, TMX adds, “will be founded on each exchange’s role in applying listing requirements, including exchange rules related to issuers’ compliance with applicable laws.”
For now though, CDS has not banned the clearing of the securities of these issuers.
Last month, both TMX (which owns CDS) and the CSA issued guidance on their approaches to listing and regulating public companies involved with the marijuana business, given the drug’s shifting legal status. At the time, the CSA said that it expects issuers in the marijuana business in the U.S. to disclose their legal risks. Certain U.S. states have legalized the drug, yet it remains illegal as far as the U.S. federal government is concerned.
“The federal law relating to marijuana could be enforced at any time, and this would put issuers with U.S. marijuana-related activities at risk of being prosecuted and having their assets seized,” the CSA said.
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