Monteviale wrote: Thanks Mike,
Yes, if Aphria spins off assets, than I suspect other companies listed on either the TSX or TSXV wanting to do business in the US would set up separate entitites on the CSE to own U.S. operations.
However, Aphria being grandfathered in is still a viable solution. If Aphria gets grandfathered in, it really gives them a competitive first mover advantage over companies listed on the TSX or TSXV. It protects their first mover position while blocking other listed companies from entering the U.S. This would be an unbelievable result and one in which if I were Vic I would not back down from. It would make no difference to Canopy if Aphria gets Granfathered in because Linton is on record stating "that he won't enter the US market until the Fed vs Sate debate is resolved. So even if TSX were to open the floodgates, Canopy is on record that they will remain on the sidelines. So dont expect to see Canopy doing busienss in the US anytime soon. Sorry Doobie.
There is a very strong argument that can be advanced that Aphria should be grandfathered in and if the TSX disagrees, then Aphria should remove the decsion making process from the TSX and put it in the hands of the courts.
TSX has way more to lose in a court challange than Aphria. For one, the decsion making process no longer remains in their hands, they are now at the mercy of the courts. The Courts could easily rule that the TSX polciy is too vague to enforce, which would then open the doors for other listed companies to possibly enter into the US, which is something the TSX is trying to avoid. They could just as easily rule that the policy is not vague, but grandfather Aphria in because of prior consent given by TSX.
Worst possible sceanrio for Aphria in any court challange is that they are forced to spin-off their U.S. assets into a separate CSE listed company. Blue nailed this option months ago.
Even though everyone and media included like to think the option of "delisting" is a possibility, in reality it's not. If you read the press release put out by the TSX earlier in the week they leave themselves enough wiggle room in that they never say "delisitng" is a certainy.
Again, it's important to remember why we are having this discussion in the first place. The TSX consented to Aphria's acitivities in the US from day one. Now they want to dial it back because there was a flood of applicants that want to follow in Aphria's footsteps.
No court is going to penalize Aphria for what is a TSX created probelm. Especially after Aphria abidded by all the listing requirements and the TSX approved their application. It's actually fairly straight forward despite all the drama this week. M
MiikeD wrote: Nice post Monte,
If Aph has to spin off its US assets in a CSE company... then there's nothing really stopping other companies from doing the same. If Aph is successful, others will copy them I guarantee. Though, competitors will probably wait and see how Aph's situation plays out first.
Monteviale wrote: For the most part the new guidelines remove much of the uncertainty, especially with those companies already listed on the CSE or want to be listed on the CSE.
Clarity offered will give cannabis companies better access to capital.
CSA is now onside with “enhanced disclosure”, but will leave it up to the individual exchanges to outline listing requirements.
If anything, the cloud that has been hanging over the industry since TMX group failed to develop a clear policy for publicly listed companies is starting to lift. Opens the door for TMX to take action, what action will be taken remains unknown.
"Executives" believe (doesn't matter what they believe) the TMX announcement levels playing field for MJ companies by treating them" all equally". Only Aphria and Maple Leaf Green World (possesses assets in California and Nevada) seem to be affected at first glance by having assets in the US. Despite what executives say delisting would not be fair to companies that followed the rules of the TMX.
As it stands now, companies on the TSX or TSXV are barred from participating in the U.S. marijuana industry, except those companies already been approved (ie. Aphria). No new companies are allowed to list if they have U.S. based operations. This clearly gives Aphria a competitive advantage over their competitors in the U.S.. A true, "First Mover" advantage.
The only question for the TMX to decide is what to do with listed companies that they've "approved” prior to announcing their new policy statement.
If TMX is adamant that they are not going to change their policy, then there are two possible outcomes for Aphria: - Grandfathered Aphria in. The more I read about this issue, the more I think this option is the most likely outcome. Treats Aphria fair and they now have a first mover advantage into the US. Under this scenario Aphria is rewarded for being a first mover. That’s what first mover advantage is all about, having a competitive advantage over your competitors because you were smart enough to be first out of the gate. You snooze you loose. We know the CSA and OSC is okay with this. Allows TMX to adhere to their policy without punishing Aphria for TMX's mistake.
- Second option would be for Aphria to spin off their US assets. This is probably the worst-case scenario. Aphria remains listed on TSX and spins off US assets to the CSE exchange.
For all those people hoping to see Aphria delisted from the TSX, I'm sorry to say, it will not happen. Even if it winds its way through the legal channel and a decision goes against Aphria, even then, Aphria will be afforded the opportunity to spin off their US assets.
So for all those cheerleaders wanting to see Aphria delisted, all I can say is continue shaking your pom poms. DELISITNG IS NOT GOING TO HAPPEN, EVEN IN WORST CASE SCENARIO.
So now it's up to the TMX. If they want to treat all companies fairly they must open the doors for everyone and provide same opportunity to list that was provided to Aphria. .
If TMX insists on enforcing their "new policy", then the only fair decision they can make is to Grandfather Aphria in. Sorry cheerleaders.
If the TMX decides that they want the new policy to apply to everyone including Aphria then this issue will not be resolved anytime soon. In fact the TMX said the only decision they will make in the next few months is to decide which companies need to be further reviewed. So nothing material is going to be decided before the New Year.
The only reasonable and sensible solution is for a negotiated resolution between Aphria and the TMX. It would be great if they could negotiate a settlement, which is a win-win for all parties involved that gets announced in January 2017, because if you follow Blue's post, you all know what happens in January.
DON'T BE SURPRISED TO SEE APHRA GRANDFATHERED IN.