There has been some discussion lately whether Aphria is compliant with TSX regulations because of their U.S. investments.  I am of the opinion they are and I will briefly explain why. 
 
TMX is feeling the pressure to write a clearer policy on U.S. cannabis investments because it has seen a number of Canadian companies making investments in the US even as it has prevented US companies from listing in Canada.  TMX is signaling it has "deep concerns" about listing companies with U.S. exposure and is reviewing eligibility for listing. 
 
There is an unwritten rule that companies traded on the Toronto Stock Exchange or the TSX Venture Exchange are not permitted to have investments in the U.S. cannabis sector.  Historically, the TSX doesn’t want their listed issuers to be making these investments. The CSE will permit it, but they are requiring detailed disclosure of risk factors regarding their investments in the United States.
 
The CSE believes that as long as an issuer complies with the laws in the state in which it operates and adequately discloses the legal risks it faces, the company meets the exchanges listings standards. The TMX is following the same philosophy, although they haven’t publicly acknowledged it.
 
TMX Group is known for its ownership of Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV).  Canadian Securities Exchange (CSE), is an alternative stock exchange
 
The TMX mandates that all listed companies are expected to comply with relevant laws and regulations in the jurisdictions in which they operate.
 
Aphria first dipped its toes into the U.S. market over a year ago with an investment in Copperstate Farms, a medical marijuana producer in Arizona. Vic Neufeld is on record as having said the company fully disclosed the investment.  “The regulators knew everything,” Neufeld said. “We didn’t hide anything. In fact, we over-disclosed.”  In Aphria’s AIF for fiscal year ended May 31, 2017 filed on SEDAR, at page 8 in reference to the Copperstate transaction it states, “The transaction received final approval from the TSXV on December 21, 2016”.
Following the Copperstate decision, the TMX allowed Aphria to invest in Chestnut Hill Tree Farms; a Florida based medical marijuana company through a CSE listed subsidiary. 
 
Prior to TMX’s decision in Copperstate and Chestnut Hill Farms, Horizon ETF approached the TMX before launching the country’s first marijuana exchange traded fund and was told the exchange had a hard rule that it would not list any securities carrying on illegal operations in the US. 
 
The Copperstate and Chestnut Hill Farm decisions by TMX were a strong catalyst for Horizon to reopen discussions with the regulators and the TMX.  As a result in minor shift in TSX policy, Horizon opened their ETF.  
 
Earlier this year the Canadian Bioceutical Corporation voluntarily delisted from the TSX Venture Exchange when it was told by TMX it could not complete a US acquisition as long as it was pursuing opportunities in the U.S. recreational market.  The Canadian Bioceutical Corporation course of action, in my opinion, would have been different had they not been pursuing opportunities in the U.S. recreational market. 
 
The Copperstate, Chestnut Hill Farm and Horizon decisions by the TMX can all be distinguished from Canadian Bioceutical Corporations decision in that they aren’t pursuing opportunities in the U.S. recreational market.
 
It appears that there is now a double standard and the TMX needs to clean this up. They don’t want to get in the way of Canadian commerce, but they also understand in the U.S. cannabis is not federally allowed.
 
To further support TMX’s decisions in Copperstate, Chestnut Hill Farm, and Horizon, earlier this week the Senate Appropriations Committee on Thursday approved a budget amendment that would prevent the U.S. Department of Justice from cracking down on state-legal medical marijuana.  
 
I expect the TMX will, sooner rather than later, establish a written policy as to what is and what isn’t allowed when it comes to the U.S. cannabis market.  As long as there is complete disclosure to shareholders and companies are pursuing opportunities in state legal medical cannabis jurisdictions, the TMX has already signaled what they are prepared to allow.  
 
All they need to do now is put pen to paper.