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TMX Group clarifies CDS position on issuers with U.S. marijuana-related activities

December 7, 2017

A recent press release from TMX Group announced that The Canadian Depository for Securities Limited (CDS) is working with Canadian securities regulators and stock exchanges to craft a solution to clarify the treatment of public companies with marijuana-related activities in the U.S. In the meantime, CDS will defer to the rules of each stock exchange in determining whether to clear securities connected to public companies with marijuana interests south of the Canadian border.

CDS is Canada’s equities and fixed income clearing house and is currently the only platform to process trades in Canada. CDS is owned and operated by TMX Group. There has been a concern that CDS would follow the lead of the TSX and TSXV, both TMX Group exchanges, and impose a ban on clearing securities for affected companies. These concerns have been temporarily put to rest with the TMX Group announcement.

As noted in our October MarketCaps, which discussed Canadian securities regulators’ treatment of marijuana issuers with ties to the U.S. and related detailed disclosure requirements, the TSX and TSXV have stood firm in their position that the illegal status of marijuana under U.S. federal law automatically puts public companies with U.S. marijuana-related activities in breach of their minimum listing requirements. The CSE, on the other hand, remains open to listing companies with marijuana-related activities in the U.S. CSE-listed companies should, at least for the moment, face no restriction on clearing through CDS.

Our Team

Gowling WLG’s Capital Markets team has significant expertise navigating the path to public markets and works closely with marijuana companies considering a new listing. We regularly assist at all stages, including the evaluation of exchanges and going-public transactions. If you have any questions or require assistance entering the public markets, please feel free to reach out to our Gowling WLG professionals.


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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