Marijuana industry insiders say they have met with the operators of Canada's largest stock exchange to devise a policy on investing in the U.S., where growing and selling cannabis violates federal laws.

Lawyers who work with publicly traded Canadian marijuana producers say 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.

TMX Group — the company that operates both the TSX and Venture Exchange — is now looking to codify that policy, particularly given the uncertainty since stemming from the change in administration in the U.S., according to industry observers.

"The big issue that's got the exchanges taking a harder look really relates to the change in administration since President Trump's election," said Hugo Alves, corporate and commercial partner at Bennett Jones LLP.

"That is causing a bit of a chilling effect."

Grappling with U.S. federal law

Although more than two dozen U.S. states have decriminalized the drug, either for medicinal or recreational use, marijuana remains a Schedule 1 narcotic in America and its possession, cultivation, usage and sale contravene federal laws.

When Barack Obama was president, the U.S. government was choosing not to enforce the federal marijuana laws in states that had voted to decriminalize the drug. But the new administration has a much harsher, anti-marijuana stance, creating risk for shareholders who have exposure to the U.S. cannabis space.

U.S. attorney general Jeff Sessions has spoken out against the legalization of marijuana, despite its legality for medical or recreational purposes in an increasing number of U.S. states. (Carolyn Kaster/Associated Press)

TMX Group would not confirm that it is holding meetings with the marijuana sector in order to formulate a policy regarding U.S. investments, saying in an email that it does not comment on "individual issuer affairs."

"We evaluate all issuers and their eligibility to list, and to remain listed on our markets, according to our published policies and guidance," said spokesman Shane Quinn.

But Vic Neufeld, the president and CEO of Aphria, says he has attended such meetings.

The Leamington, Ont.-based company 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. Neufeld said the company fully disclosed the investment.

"The regulators knew everything," Neufeld said. "We didn't hide anything. In fact, we over-disclosed."

It wasn't until Aphria started making headlines about an investment in Florida — through a new company it is creating called Liberty Health Sciences Inc. — that the regulators started to take notice, Neufeld said.

Now, the company is in meetings with the TSX to discuss investing in jurisdictions whose regulations differ from Canada's, Neufeld said.

"The exchange is in the process of trying to develop the policy," Neufeld said.

Other licensed producers are also meeting with the exchange to discuss the issue, as many of them would like to expand south of the border, according to lawyers familiar with the discussions.

Interest in cross-border investment

Bennett Jones partner Aaron Sonshine said there are also dozens of U.S.-based companies who want to list their companies on Canadian exchanges in order to raise funds.

"We've had a number of clients interested in listing U.S. companies up here," said Sonshine, adding that anecdotally he's heard there may be close to 100 U.S. marijuana companies looking to list in Canada.

That poses a dilemma for the exchange, which could use the revenue at a time when listings are lagging, but also wishes to protect investors from political uncertainty, Sonshine said.

Kristen Rose, a spokeswoman for the Ontario Securities Commission, said the watchdog is "aware of the concerns raised" and has been "actively engaging with the TSX."

The Canadian Securities Exchange, or the CSE, has been more permissive, says Andrew Powers, a partner with Borden Ladner Gervais LLP.

"They are focused more on disclosure rather than prohibition," says Powers.

"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. I guess the concept is 'Buyer beware."'