October 17, 2017 / 3:04 PM / 2 years ago

Shares of Canada's Aphria slump as marijuana faces regulatory risk

TORONTO (Reuters) - Shares of Canadian marijuana company Aphria Inc sank on Tuesday, after the operator of the Toronto Stock Exchange said cannabis companies with U.S. interests would come under heightened scrutiny and could be delisted.

Aphria tumbled 9 percent to C$7.21 in morning trading, after TMX Group Ltd said after the bell on Monday it would launch a review of marijuana companies this year, with a focus on those with interests in the United States, where their operations are illegal under federal law.

The company’s chief executive, Vic Neufeld, said in a statement on Tuesday that the TSX guidance “does not properly apportion the weight and context” that should be applied when looking at the variance between U.S. federal and state law.

Neufeld later told Reuters the company is not contemplating a move away from the Toronto Stock Exchange and that it would discuss the issue with Canadian securities regulators. The regulators said on Monday Canadian companies are not prohibited from involvement in the U.S. marijuana business but must clearly disclose the risks to investors and potential backers.

Aphria bought a Florida-based medical marijuana earlier this year and has agreed to share its expertise with an Arizona company in return for a share of their cash flow.

Aphria’s joint venture partner for U.S. operations, Liberty Health Sciences Inc, is listed on the smaller Canadian Securities Exchange.

Reporting by Alastair Sharp; Editing by Bernadette Baum

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