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.
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.