Who would have thought a stock exchange could be so uncool? This week officials from Nasdaq seriously harshed on the capitalistic mellow of MassRoots, a social network for marijuana fans, when they informed the company that it can’t list on the exchange. MassRoots execs claim Nasdaq made the decision based on the fact that marijuana remains illegal at the federal level, even though MassRoots doesn’t produce or sell any of the drug itself.
According to MassRoots co-founder and CEO Isaac Dietrich, a Nasdaq official privately informed him that the exchange would not accept a listing by the company, which Dietrich alleges it decided because the federal government might interpret this as abetting the distribution of an illegal drug.
MassRoots doesn’t currently offer any kind of transactional capability on the platform, limiting itself to content including reviews, technical advice, and directories listing legal cannabis dispensaries; however users who meet online through the network may choose to buy and sell the drug elsewhere.
Dietrich claims that MassRoots meets all the other criteria for listing on Nasdaq’s SmallCap market for smaller businesses, with a market capitalization of at least $40 million and over 300 shareholders from over-the-counter stock sales. However its current share price of under a dollar is short of the initial minimum bid price of $3, which seems like a pretty clear disqualifier (although Nasdaq does allow stocks which fall under that price to remain on the exchange in certain circumstances).
Nonetheless, MassRoots is presenting the decision as a clear case of anti-pot discrimination, stating in a letter to investors: “We believe this dangerous precedent could prevent nearly every company in the regulated cannabis industry from listing on a national exchange, making it more difficult for cannabis entrepreneurs to raise capital and slow the progression of cannabis legalization in the United States.”
Dietrich said the he plans to appeal the decision to Nasdaq and will even bring the case before the Securities and Exchange Commission if rebuffed again.
MassRoots currently claims a user base of more than 900,000 marijuana fans.