MassRoots, a social networking platform which markets itself as “The Social Platform for Marijuana” announced on Tuesday that its attempt become a publicly traded stock on the Nasdaq had been rejected by the exchange.
The Denver-based startup which was the first cannabis related company to be publicly traded did also hope to become the first cannabis company to have its listing up-listed to the Nasdaq.
Nasdaq said that listing the company could be viewed as aiding the distribution of an illegal drug. Despite medical marijuana now being legal in 23 states and the District of Columbia although it is still illegal under U.S. federal law.
Co-founder of the company, Isaac Dietrich said the assessment outlines a “dangerous precedent” which could hinder other legal marijuana organisations from being listed on national stock exchanges.
“This [will make] it more difficult for cannabis entrepreneurs to raise capital and slow the progression of cannabis legalization in the United States,” Dietrich.
Nasdaq has said that it does not make comments on listing application decisions.
MassRoots began in 2013 and markets itself as a Facebook for marijuana users whilst also having an advertising portal with 1,000 clients as of June 2015.
Dietrich said “I thought up MassRoots when I was smoking weed in my college friend’s apartment.” The business now has 33 staff with financial backing of $6.5 million.
He also allows marijuana in the workplace and says “our general philosophy is that we need to be as productive and creative as possible, everyday. If cannabis facilitates that, then we’re allowing it.”
Dietrich said that MassRoots did meet requirements to apply to be listed on the Nasdaq as the company has a market capitalisation of over $40 million and over 300 shareholders. Current shares are listed on over the counter markets with the ticker MSRT.
He said that MassRoots was given offered to withdraw its application and to leave the rejection private although he said outlined that it was an important precedent that must be made public.
MassRoots has stated that it will appeal Nasdaq’s decision with the Securities and Exchange Commission if required.
“In the cannabis industry, we face setbacks everyday that other industries don’t face. But we move forward.”