Banking, intellectual home, meals and beverage (and cosmetics), international trade, domestic trade, state laws, ag production contracts, and so forth., and so forth. When it comes to industrial hemp, the 2018 Farm Bill upended all of these points. Our cannabis organization lawyers have been busy advising a big quantity of new hemp and hemp-CBD corporations finding in on the fray, as effectively as some big and effectively-established businesses exploring choices in the space. All told, the quantity of private capital flowing into hemp and hemp-CBD is extraordinary. And public cash is on the way.
Prior to federal legalization of hemp final December, a handful of pioneering hemp businesses had gone public. These businesses acquired listings on secondary Canadian exchanges like the CSE, which is an option stock exchange with simplified reporting needs and lowered barriers to listing. That exchange requires U.S. marijuana businesses, as well, and there are fairly a handful of of them these days. The CSE caters to micro cap and emerging businesses and it does not have the restrictive policies of the old-guard TSX (and TSXV) which is the principal Canadian exchange (and the eighth biggest in the planet, by industry cap). In contrast to the CSE, the TSX / TSXV does not enable for the listing of businesses invested in activities which violate U.S. law with respect to cannabis.
Nonetheless, a lot of businesses would like to be listed on the TSX / TSXV. Whilst the listing needs are intensive by comparison, issuer possibilities are extra expansive on almost everything from international institutional investment to specialized indices to general visibility. Provided all of that, it was exciting final month when we got word from a multi-national Canadian law firm we function with that TMX Group had advised its lawyers that the TSX / TSXV is open to the listing of US hemp and CBD Issuers that operate in states exactly where such operations are legal.
The TSX / TSXV is apparently taking the position that this is not a alter in policy, as an issuer have to nevertheless satisfy the exchange that the issuer complies with all applicable laws in the jurisdictions in which it operates. Nonetheless, the exchange is now usually happy that Hemp / CBD activities are now legal in the US at the federal level in light of the 2018 Farm Bill. It appears unlikely that the TSX / TSXV will situation a formal notice on this improvement (provided its position that it has not changed its policy), but we believe the exchange got it suitable this time.
So what does this imply for U.S. hemp businesses? A lot more possibilities. A lot more attain. A lot more access to institutional capital. A lot more legitimacy. A lot more visibility. We may perhaps also commence seeing specific businesses divest themselves from marijuana completely in favor of hemp, and we may perhaps see a rash of uplisting in the close to future. As far as big U.S. exchanges, like the NYSE and Nasdaq, we may perhaps see some northern influence with respect to these exchanges’ policies on the acceptance of hemp-only and CBD-only listings. To date, these exchanges have only agreed to list Canadian cannabis producers, but with native businesses like Walgreens moving into the CBD space, it is only a matter of time till we see a U.S. hemp-co listing.
The U.S. exchanges need to be place to a choice incredibly quickly, but for now the TSX / TSXV joins the CSE as wide open for U.S. hemp and CBD businesses operating as per the 2018 Farm Bill.