Canadian based Tilray Inc. became the first marijuana company to complete an initial public offering (IPO) on a major U.S. Stock Exchange. Shares debuted at $17/share and reached as high as $34/share within the first week of trading.

Marijuana is big business in Canada, taking off in popularity with each passing law. Medicinal marijuana is already legal throughout the country, and on October 17, 2018, it will be the inaugural First World Country to legalize the production and sale of marijuana for recreational use. The Canadian marijuana industry will continue to grow with such legalization, as revenue from sales and investments gets poured back into the sector, with value estimates of the Canadian recreational market ranging from $5-$8 billion.

U.S. Federal Laws Dampen Marijuana Industry Growth

Canadian marijuana companies don’t face the same obstacles U.S. companies do. Even though two-thirds of the states have legalized medicinal marijuana, and nine states plus Washington, D.C. have legalized recreational use, it is still an illegal drug under federal law. Therefore, marijuana companies face many unique challenges such as :

  • They cannot be publicly traded on a U.S. stock exchange (though can be be traded in Canada).
  • Sales are stifled since employees can still be subject to marijuana drug tests as a term of employment, even in states where it is legal.
  • Marijuana use is prohibited in Section 8 (federally subsidized) housing.
  • Insurance companies can deny marijuana companies coverage.
  • Large institution banks and credit card companies won’t do business with them for fear of potential money laundering violations.
  • Marijuana companies are unable to advertise on many popular platforms, including Google and Facebook.
  • Active members of the military cannot legally smoke pot.
  • Marijuana users of any kind, even medicinal, cannot own a gun.

The Food and Drug Administration recently approved the first marijuana-based pharmaceutical drug, which may signify that the federal government is getting ready to legalize the medicinal marijuana industry.

Related Resources:

  • Setting Up a Marijuana Business: The Basics (FindLaw Learn About the Law)
  • State v. Federal Showdown Over Marijuana Laws (FindLaw Blotter)
  • Is It Too Late to Enter the Legal Marijuana Market? (FindLaw’s Free Enterprise Blog)

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