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IG Markets stops all trading in pot stocks, tells investors to sell by May 24
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IG Markets is stopping all trading in 19 cannabis stocks tomorrow, telling users by text message they need to sell by May 24.
Stockhead has confirmed the 19 companies are:
Aurora Cannabis (US)
Cann Global (ASX:CGB)
Canopy Growth (US)
Creso Pharma (ASX:CPH)
Elixinol Global (ASX:EXL)
ETFMG Alternative Harvest ETF
Innovative Industrial Properties
Lifespot Health (ASX:LSH)
Stemcell United (ASX:SCU)
Aphria (US)
Bod Australia (ASX:BDA)
CannTrust
Corbus Pharmaceuticals
Cronos Group (US)
eSense-Lab (ASX:ESE)
HEXO Corp
Insys Therapeutics
New Age Beverages
Tilray
It’s unclear what has upset IG Markets about this specific group of stocks.
For example, eSense-Lab (ASX:ESE) sells synthetic cannabis terpenes — the oils in plants that give them aromas — for vaping and is not in fact truly in the ‘cannabis business’.
Elixinol Global (ASX:EXL) is on the list but rival hemp grower EcoFibre (ASX:EOF), which also has its main operations inside the US, is not.
During an online live chat with Stockhead, an IG representative said the company “became aware of numerous financial institutions performing reviews of the regulatory and political implications of offering cannabis stocks in the UK with a recreational link”.
Sell, by tomorrow
IG Markets customers were first warned a month ago the company was taking this position.
In an email to Australian users today, IG said:
“Due to the evolving political and regulatory landscape surrounding recreational cannabis-related securities, we have decided to stop offering share trading on the below cannabis shares.
“Please note that CFD trading on cannabis shares and our soon-to-be-launched Cannabis Index will not be affected. You can continue to access these markets as normal.”
Via live the chat helpline, IG Markets told a Stockhead user of their platform: “the only option available right now is unfortunately closing off those positions”.
“You wont be able to transfer the shares.
“Given this uncertainty and differing views, we have decided not to effect transfers to alternative brokers but are giving clients plenty of notice to effect an orderly unwind of existing positions.
“This is a industry wide phenomenon.”
IG Markets will sell investors’ stocks on their behalf if they refuse to sell themselves.
Stockhead is seeking comment from IG Markets.
You don’t own your stock with IG Markets
Andrew Ward, the founder of Australian trading platform Self Wealth (ASX:SWF), says the reason why IG Markets can force users to sell is because those investors don’t own the stock — a custodian does.
The Australian custodian is Citicorp Nominees Pty Limited.
Ward says his understanding is that the custodian either has a moral problem with cannabis holdings or has a legal problem.
He says investors using Self Wealth, or indeed other platforms such as CommSec, own their stocks directly.
CBA declined to comment on whether they were a custodial service (they are not), whether they too have taken legal advice on trading in cannabis stocks, and indeed whether it has a position at all on trading in cannabis stocks with operations in countries such as the US, where cannabis is federally illegal.
ASX pot stock performance before midday May 23. Those highlighted are affected by the IG Markets ban.
| Ticker | Name | Price | % Chg | Market Cap | Volume |
|---|---|---|---|---|---|
| AEB | Affinity Energy and Health Ltd | 0.01 | 0% | Suspended | 883.0k |
| AGH | Althea Group Holdings Ltd | 0.62 | 2% | $124,000,000 | 32.3k |
| AC8 | Auscann Group Holdings Ltd | 0.38 | 0% | $119,040,000 | 173.5k |
| BDA | Bod Australia Ltd | 0.27 | -4% | $19,400,000 | 60.5k |
| BOY | Botanix Pharmaceuticals Ltd | 0.12 | 0% | $88,000,000 | 1.7M |
| CGB | Cann Global Ltd (suspended) | - | - | - | - |
| CAE | Cannindah Resources Ltd | 0.01 | 0% | $2,700,000 | 65.0k |
| CP1 | CannPal Animal Therapeutics Lt | 0.16 | 0% | $14,900,000 | 3.1k |
| CPH | Creso Pharma Ltd | 0.46 | -1% | $61,500,000 | 355.0k |
| CLI | CropLogic Ltd | 0.04 | 4% | $13,000,000 | 20.8M |
| DTZ | Dotz Nano Ltd | 0.06 | 0% | $14,000,000 | 2.5M |
| EOF | Ecofibre Ltd | 2.2 | -1% | $686,700,000 | 75.7k |
| EXL | Elixinol Global Ltd | 5.39 | -2% | $686,200,000 | 176.8k |
| EN1 | engage:BDR Ltd | 0.04 | 6% | $18,200,000 | 10.7M |
| ESE | eSense-Lab Ltd | 0.02 | 6% | $3,400,000 | 693 |
| EVE | EVE Investments Ltd | 0.01 | 10% | $12,000,000 | 1.7M |
| IDT | IDT Australia Ltd | 0.18 | -3% | $43,800,000 | 112.1k |
| IHL | Impression Healthcare Ltd | 0.02 | -5% | $12,800,000 | 434.4k |
| LSH | Lifespot Health Ltd | 0.08 | 10% | $5,300,000 | 52.7k |
| MDC | Medlab Clinical Ltd | 0.4 | -1% | $84,400,000 | 49.5k |
| MXC | MGC Pharmaceuticals Ltd | 0.06 | 0% | $70,300,000 | 781.8k |
| MMJ | MMJ Group Holdings Ltd | 0.23 | -25% | $54,000,000 | 88.7k |
| RNO | Rhinomed Ltd | 0.24 | 0% | $34,100,000 | 1.2k |
| ROO | Roots Sustainable Agricultural | 0.08 | -4% | $6,100,000 | 260.7k |
| RGI | Roto-Gro International Ltd | 0.17 | 0% | $22,700,000 | 60.2k |
| SCU | Stemcell United Ltd | 0.02 | -6% | $11,200,000 | 522.5k |
| SUD | Suda Pharmaceuticals Ltd | 0 | 0% | $13,000,000 | 3.1M |
| THC | THC Global Group Ltd | 0.44 | -2% | $60,000,000 | 185.9k |
| TPE | TPI Enterprises Ltd | 1.2 | 2% | $95,700,000 | 102.7k |
| WOA | Wide Open Agriculture Ltd | 0.12 | 0% | $8,500,000 | 31.4k |
| YPB | YPB Group Ltd | 0.01 | 0% | $7,300,000 | 149.3k |
| ZLC | Zelda Therapeutics Ltd | 0.05 | 5% | $32,500,000 | 311.7k |
