On Tuesday (February 27) a public cannabis company with assets in the US decided to switch public exchanges in order to maintain those interests and avoid getting delisted by the TSX Venture.
Maple Leaf Green World (TSXV:MGW) decided it was more important to maintain its operations in the US by voluntary delisting from the TSXV and moving its common shares to the Aequitas NEO Exchange–the same exchange that offers one of the most recent marijuana exchange-traded fund (ETF).
The company was signaled by the TSXV for holding interests in cannabis operations below the Canadian border, where uncertainty rules the regulatory landscape as the drug remains illegal at the federal level. However, several states have introduced legislation policies for marijuana.
Dale Shirley, investor relations for Maple Leaf Green World, told the Investing News Network (INN) he had been responding to calls all morning from curious investors wanting clarification on what the exchange situation means for the company and their shares.
“The US part of our operations is a big piece of the company, so divesting it really was not an option and being delisted would not go over too well with the shareholders,” Shirley said.
TSXV requested Maple Leaf to dump US assets or face delisting
“TSX and TSXV provided clarity regarding the application of our requirements for applicants and existing listed issuers in the marijuana sector in the TSX staff notice and TSXV bulletin issued in October 2017,” a TMX spokesperson told INN. “We continue to welcome qualified applicants in all sectors who are operating in compliance with our exchanges’ requirements, including marijuana companies that operate within Canada and comply with applicable Canadian law.”
In February the company revealed the TSXV exchange sent a notice challenging the validity of the company’s listing because of its assets in Nevada. Maple Leaf contended since the production of cannabis had not yet begun and said that its shares still belonged on the exchange.
The TSXV asked the company to divest the asset or transfer its shares into another exchange that would allow that business.
“[Maple Leaf] is of the view that it is currently in compliance with the Exchange Bulletin and has made a submission to the TSXV clarifying the state of its current operations in the United States,” the company wrote on February 6.
As part of Tuesday’s announcement the company said the NEO exchange offers “an innovative trading venue and a value added listing venue for capital raising companies and investment products.”
Maple Leaf expects the exchange switch to take place by the end of March pending meeting the conditions from both exchanges.
A representative from NEO told INN the exchange confirmed the information shared by Maple Leaf. However, it could not provide any other comments at this stage of the process.
Last year Aphria (TSX:APH; OTC:APHQF) held a similar dispute with the exchange for their interest in the US by having a stake in an Arizona producer and Liberty Health Sciences (CSE:LHS), a Canadian company operating cannabis businesses in the US.
After months of back and forth between the company and the TMX Group, Aphria finally announced it would dump its US assets.
Maple Leaf closed Monday’s (February 26) trading period with a share price of $0.94. By Tuesday the stock was losing value early. As of 11:00 a.m. EST, the company’s share price dropped to $0.75, the lowest value the stock has seen this year.
That said, so far this year, Maple Leaf’s shareholders have seen positive returns, with an 8 percent increase year-to-date. By the closing time in the public markets, the share price for Maple Leaf had decreased 13.83 percent since Tuesday’s open representing a loss of $0.13 per share.
In an attempt to clear the situation for its shareholders, Maple Leaf issued a statement on Wednesday (February 28) to clarify its reasoning for leaving the TSXV.
“In management of the company’s view, the NEO Exchange has an exceptional focus on understanding and helping meet the needs of public companies,” Maple Leaf said.
The company called the switch in exchanges an important milestone for its progress. According to Maple Leaf, the NEO has a simple value proposition for them that attracted them.
“As a company deeply entrenched in the North American cannabis sector, it was important for management of the Company to select to partner with an exchange that has clear views on where it stands in relation to the industry,” Maple Leaf explained.
Early on Wednesday, the company has seen a bounceback for its share price. As of 12:30 p.m. EST Maple Leaf’s stock has gone up 2.47 percent since the markets opened, returning its price per share back to $0.83 cents.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editor’s Note: This article was updated on February 28 to include new information provided by Maple Leaf Green World.
Editorial Disclosure: Maple Leaf Green World is a client of the Investing News Network. This article is not paid-for content.