Understanding OTC Markets

Public stock investors in the cannabis industry are largely relegated to the over-the-counter marketplace. This is much different from stocks trading on an exchange, and far less expensive for companies to access. Therefore many small, micro-capitalization companies choose to offer shares of their company through this market.

We are believers of free markets and access to efficient forms of capital; from that standpoint, we see OTC as a potential option for companies. However, regulators cannot keep up with the biggest scams, think Enron and Madoff, let alone effectively monitor the thousands of small companies. This gap in oversight creates opportunities for the ill-inclined to pounce, get rich and rob the everyday investor. We see this malfeasance all the time.

However, information is now readily available and the “everyday investor” is waking up to the snake oil salesman. We all have a duty to the markets and ourselves to take the...

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