Feedback Friday: Your Question About Curaleaf and OTC Stocks

Improvement is a key goal for all of us here at Money & Markets.

We want to make sure we are providing sound investment advice to both new and longtime readers.

And the best way to do that is to go to the source: you.

That’s what our new “Feedback Friday” feature is all about.

We’ll take a moment each week to go into the mailbag and respond to your questions or concerns. Or maybe we’ll just highlight a comment that brightens our day.

Is there a stock that you have been dying to see more analysis on? Or maybe you’d like some advice about the best ways to invest in ETFs or bonds. We’ll do our best to give our take.

We also just love to hear from you. Money & Markets has changed a lot in the past few months, and we truly want to know what you love — or how we can make your experience better.

If you have a question, comment or concern, you can email our team anytime at feedback@moneyandmarkets.com.

We might feature your comment in a future installment of Feedback Friday! (Note that we’ll never use your full name.)

Feedback Friday: A Cannabis Stock Question

On a recent episode of his Marijuana Market Update, Research Analyst Matt Clark asked you why you’re interested in cannabis stocks.

Reagan W. sent this fantastic response:

I decided to take $2k and start a hobby “potfolio” to invest in until I’m 65 (10 years). …

I see an unusual opportunity to learn about the market and support the industry and enjoy growth as legalization spreads. I now have about $3,800 invested. …

I watch your podcast to keep up to date on what’s going on with the companies I have invested in, but also emerging ones or ones we can just now invest in, etc. I enjoy recommendations such as GrowGeneration.

I would love to buy more Curaleaf — but Merrill Edge won’t let me anymore. And Robinhood doesn’t do OTC. Any ideas? When do stocks go from OTC to “regular”?

I appreciate your reminders that this is a volatile market. I have managed a stop-loss spreadsheet as Matt Badiali recommended. … I am watching and learning the industry. I am trusting experts such as yourself who say Canopy Growth is a good investment, though it doesn’t look like a great one yet! Ha. But I’ve come to understand the reasoning. Heck, maybe I’ll pick up a few more shares since it is around $16 today.

Thank you, I’ll be watching!

Reagan W.

Thank you so much, Reagan, for the glimpse into your journey with cannabis stocks. I’m glad we’re a valuable resource for you.

I ran your question by Matt about trading over-the-counter stocks (OTC) and how they are added to U.S. stock exchanges.

Here’s what he had to say:

Those are great questions, Reagan.

Let me start with the first one.

Several brokerages allow OTC stock purchases on their desktop or mobile platforms. You can do a quick Google search for those and open an account, if that is the direction you choose to go.

As for your second question, when stocks move from OTC exchanges to U.S. listings…

The main reason a company trades over-the-counter is because it can’t meet listing requirements of a major market such as the NYSE or Nasdaq. Here are some of those requirements.

NYSE listing requirements:

1 million publicly held shares.

Minimum share price of $4.

Average monthly trading volume of 100,000 shares.

Market value of publicly held shares of at least $100 million ($40 million for IPOs).

Nasdaq listing requirements:

Shareholder equity of at least $2 million.

At least 100,000 shares of public float.

At least 300 shareholders.

Total asset value of at least $4 million.

Minimum share price of $3.

There are other rules and regulations companies have to follow before being considered for any major exchange. I’ve just listed some generalities. But you get the idea … there’s a lot.

There are some other hoops to jump through regarding applications. But once everything is in order, the move is pretty seamless.

The only change may come in the ticker. If a company moves from OTC to the Nasdaq, there usually isn’t a ticker change because the Nasdaq allows five symbols. The NYSE, on the other hand, only allows four … so there could be a ticker change.

I hope that answers your questions.