After Nasdaq Blocks Listing, Cannabis Firm Gears Up For A Fight

massroots nasdaq news

Nasdaq has denied MassRoots’ application for listing on the public exchange, a move execs warn will endanger the entire nascent legal cannabis industry.

UPDATED 24 May 1:32 PM ET — Nasdaq has denied a cannabis company’s efforts to list its stock on the public exchange, citing fear of federal penalties, company execs told aNewDomain this morning.

Had its August application been accepted, MassRoots would have been the first cannabis firm to be listed on the US public stock market.

The exchange refused MassRoot’s application for listing because its staff found that to do otherwise “may be aiding and abetting the distribution of an illegal substance,” according to the Massroot’s CEO, Isaac Dietrich. Nasdaq refused comment, saying it doesn’t comment on listing decisions.

The Denver-based social platform company, which claims to link some 900,000 cannabis activists, users and growers in states where it’s legal, vows to appeal the decision to the exchange’s review board. Plan B, said Dietrich, is to continue to trade over over the counter (OTC: MSRT) and bide time until another national exchange accepts it.

 “This decision should not be allowed to stand,” said Dietrich. The decision creates a precedent that will not only thwart access to US capital markets for the nation’s state-regulated cannabis businesses, but Nasdaq’s decision could also potentially slow the pace of cannabis law reformation across the US, he said.

Federal law has long prohibited cannabis use or sale in any form. It’s a schedule-1 substance under the Controlled Substances Act of 1970, the toughest classification possible under current federal law.

Department of Justice officials have indicated they won’t stand in the way of states who move to decriminalize cannabis, whether for recreational or medicinal use, as long as states have appropriate regulatory systems in place. So far, federal prosecutors haven’t intervened. As a result, the regulated cannabis industry hit $5 billion in 2015, according to data from ArcView Market Research. By 2018, it’s expected to double in size.

But with the rancorous US presidential election ahead — and now, the pushback from Nasdaq — the outlook for the cannabis industry is anything but certain.

what states have legalized medical marijuana chart massroots
So far it’s been smooth sailing for the states that have reformed their marijuana laws. Twenty-four US states have already moved to legalize medical marijuana, with four states (Colorado, Oregon, Washington and Alaska) lifting prohibitions against recreational use, too. And this year, three states could well join their ranks. Florida, Louisiana and South Carolina each have pending ballot measures or legislation ahea
In addition to the 24 states that have legalized medical or recreational use, 16 US states have legalized Cannabidiol (CBD), one of the some 400 chemicals that comprise cannabis.  CBD, a non-psychoactive oil most typically prescribed for seriously ill children at risk for seizures, is mild. There’s hardly any in THC, marijuana’s primary psychoactive ingredient, for instance, which is why it doesn’t generally classify as medical marijuana.
One of MassRoot’s chief complaints against Nasdaq likely will center around issues of unfair or discriminatory treatment.
“If we were a social network for tobacco users or alcohol consumers, the Nasdaq would likely be moving forward on our application even though alcohol and tobacco cause far more deaths and societal damage than cannabis ever will,” said Dietrich.
The firm won’t stop at appealing Nasdaq’s decision with its review board, either, he added. MassRoots intends to take its fight all the way to court — the court of public opinion.
Here’s a link to the letter it’s asking cannabis activists, supporters, businesses, and investors to send over to Nasdaq …
For aNewDomain, I’m David Street.
 
Gina Smith and Tom Ewing contributed to this report.
 
Chart: 24 Legal Medical Marijuana States and DC, via ProCon.org, All Rights Reserved 

About the author

David Street