With cannabis still being illegal on the federal level – classified as a Schedule 1 controlled substance with “no currently accepted medical use” – companies in the sector find it difficult, if not impossible, to list on major U.S. stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ.
Neither of these stock exchanges accepts companies that sell cannabis in the U.S., even when operating in states where adult-use consumption is now legal. That’s because federal law trumps state law. And, with the feds and the state not being in sync on this important issue, confusion and controversy pop up on a regular basis. Is medical marijuana legal in nursing homes and assisted living facilities? Can sports leagues allow athletes to medicate with cannabis? What about the V.A.?
Why Choose NYSE Or NASDAQ Over OTC? What’s The Difference?
Some might argue that a public company is a public company, no matter which stock exchange its shares are being traded on. Most companies, however, strive to place their stock on well-established and prestigious markets such as the NYSE or NASDAQ. Of course, these two exchanges are harder to get into because they have special requirements like minimum stock prices and total market capitalization.
Markets like the OTC – over-the-counter market, however, have fewer restrictions. This often makes them the only choice for smaller and less well-known companies.
It should be noted that some OTC stocks can be more volatile, with swings that result in quick losses or gains. In addition, small-capitalization stocks are often less controlled and checked by the Securities and Exchange Commission.
This is why investors tend to feel more secure about investing in companies that trade on the two traditionally prestigious markets.
Worth The Legwork?
To say that the NYSE and NASDAQ are complicated venues for Canadian marijuana companies …