MassRoots, Inc. just received word that the Nasdaq has denied the company’s application to be listed on the stock exchange.
MassRoots is a cannabis tech company that’s created a cannabis social media app. The program lets cannabis users connect with each other and with other cannabis companies. MassRoots stocks are currently traded on the Over the Counter Market. But the company apparently wanted to be listed on the bigger, more trusted market. And last August, MassRoots applied to be included on the Nasdaq.
According to a press release published this morning, the Nasdaq refused MassRoots’ application because the company was “aiding and abetting” the distribution of an illegal substance.
MassRoots CEO Isaac Dietrich is not happy with the Nasdaq’s decision. He thinks it could set back the entire legal cannabis industry.
“With this decision, we believe that the Nasdaq has set a dangerous precedent that could prevent nearly every company in the regulated cannabis industry from listing on a national exchange,” Dietrich said.
“This will have ripple effects across the entire industry, making it more difficult for cannabis entrepreneurs to raise capital and slow the progression of cannabis legalization in the United States.”
Dietrich went on to say that if MassRoots were a social media app for alcohol or tobacco, there’d be no problems.
He also said that alcohol and tobacco are far more dangerous than cannabis. Despite this, companies in those spaces have fewer hoops to jump through than cannabis companies.
MassRoots has asked for the Nasdaq’s denial letter in writing.
The company plans to appeal the decision shortly after it gets the letter.
But market experts so far don’t think an appeal will be all that useful. That’s because nobody wants to get close to something that’s still illegal at the federal level.
Even if MassRoots appeals to the U.S. Securities and Exchange Commission (SEC), it’s unlikely anything will change.
The way many financial institutions see it, there’s still too much risk involved when it comes to doing business with companies operating in the cannabis space.
Even if cannabis is legal at the state level, and even if a cannabis company follows all state laws, many financial organizations don’t want to work with cannabis companies.
That’s why dispensaries around the country have had so many problems finding banks.
The one thing that could change all this would be if the DEA were to reschedule cannabis.
Last month, the agency said it might consider doing just that. In a memo sent to lawmakers, the DEA said it could reach a decision as early as July of this year.