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Whether it’s ego or just a desire for legitimacy, cannabis companies have often viewed a Nasdaq listing as a sign of success. It was a badge of honor and a step above the OTC Marketplace. You were selling at Bloomingdale’s not Dollar General.

But as the saying goes, be careful what you wish for.

Just this year, at least seven cannabis-related companies either been delisted from the exchange or warned that they are in danger of being delisted. That risk comes primarily form the price that the companies’ shares have traded at.

Stocks that trade under a dollar for more than 30 days get a friendly reminder from Nasdaq that this isn’t allowed. Companies get 180 days to try to get the share price back up, but if they can’t, they can get a 180-day extension. After that, they can request a hearing on the matter.

One common tactic is the reverse split, which usually buys some time. After all, fewer shares automatically ratchets up the price. Unfortunately, telling investors about a potential delisting often spooks them, and the selling just continues, further driving down stock valuations.

“It makes sense for certain companies to be listed on Nasdaq if they are a certain size. It provides them with improved trading liquidity, and if a company has M&A as a strategy, their equity could be seen as more valuable by a target if shares are listed on Nasdaq,” Fred Gomes, director of institutional research in life sciences at ATB Capital Markets.

“On the other hand, if the company is too small, the added costs may not be worth it.”

Just how much are those added costs?

According to Nasdaq, companies must pay a fee of $295,000 – which includes an application fee of $25,000 – to initially list. Then there are annual fees that range from $52,500 to $182,500 for companies other than ADR issuers. When a company is counting pennies, that’s a big check to write.

In 2023, Springbig announced it was leaving Nasdaq because it couldn’t meet the minimum bid price requirement. It also noted the high cost of staying on the exchange. Springbig stock now trades at 8 cents a share on the OTC.

2024 delistings

Several companies have had to make the embarrassing confession to investors this year as cannabis stock prices continue to fall in the face of an uncertain political landscape.

• WM Technology Inc., the parent company of Weedmaps (Nasdaq: MAPS), told investors that it had until April 7, 2025, to regain compliance with the minimum closing bid price requirements. That might prove difficult as the company is also facing a variety of legal challenges, from SEC settlements to a class action investor lawsuit.
• Village Farms International (NASDAQ: VFF) was out of compliance with the minimum bid price requirement between Sept. 6 and Oct. 17. The company has until April 16 to get the price higher.
• Leafly also recently confessed it was in trouble with the Nasdaq, but not because of its share price, which was lately trading at $1.95. Instead it failed to meet Nasdaq’s requirement of $500,000 in net income from continuing operations in its most recent fiscal year or in two of the last three years.
• Bright Green Corp.‘s (Nasdaq: BGXX) shares were suspended from the Nasdaq after the exchange canceled a Sept. 26 appeal hearing.
• Hempacco Co. (Nasdaq: HPCO) announced in August that it was delinquent in filing its financial reports and hadn’t had an annual shareholder meeting. The company just reported it was able to hold an annual shareholder meeting, but the stock continues to trade below a dollar.
• Clever Leaves (Nasdaq: CLVR) voluntarily chose to leave the exchange in April when it said it doubted it could meet the minimum requirement.
• Lucy Scientific was delisted on July 1 when it failed to convince the exchange during an appeal hearing to keep the beleaguered company.

If the political landscape improves for cannabis, many of the troubled companies could see their share prices swing out of the danger zone. However, until then, investors will be watching the clock to see if the fortunes improve for some of these names.

Nasdaq opted not to comment on this story.