Nasdaq’s $5M Delisting Rule: Frozen, Not Finished

WASHINGTON – The Securities and Exchange Commission (SEC) approved a new Nasdaq listing requirement on July 22, stayed it seven days later after receiving petitions, and on September 11 formally granted those petitions for full agency review. Comments are accepted through October 6.

Filed as SR-NASDAQ-2026-004, the rule would require all companies listed on the Nasdaq Global Select Market, the Nasdaq Global Market, and the Nasdaq Capital Market to maintain a minimum Market Value of Listed Securities (MVLS) of at least $5 million. A company falling below that floor for 30 consecutive trading days would face immediate suspension and delisting, with no cure period. Unlike the $1.00 minimum bid price requirement, which provides a compliance period, a company breaching the MVLS threshold will not receive any cure or compliance period.

That design marks a clear break from how Nasdaq has historically handled non-compliance. Nearly every other listing deficiency gives issuers a formal window and a path back. This one offers neither.

Nasdaq argued, and the SEC ultimately agreed, that companies maintaining an MVLS below $5 million for a sustained period frequently exhibit signs of financial distress, are more likely to become non-compliant with other listing standards and may be more susceptible to manipulative trading activity.

The SEC’s own analysis found that 65% of companies that would have failed the MVLS requirement still had market values below $5 million six months later, with a median valuation below $3.7 million. Critics countered that stripping the cure period could incentivize short sellers to push at-risk companies below the threshold, accelerating the very conditions the rule intends to flag. Bloomberg data showed nearly 180 Nasdaq-listed companies trading below $5 million at the time of the rule’s approval, with roughly one-third of those businesses based in Asia.

Why This Is a Tier 2 Problem

The rule applies across all three Nasdaq tiers, but the real concentration of risk runs to the Capital Market – the exchange’s lowest tier and the one where smaller, capital-constrained issuers cluster. That is precisely where the most exposed Сannabis-related Nasdaq listings sit.

Federal law still bars plant-touching U.S. Сannabis companies from national exchange listings. Trulieve’s June NYSE debut required a structural separation of its medical and adult-use operations first. Green Thumb Industries, Curaleaf, Cresco Labs, and Verano remain on OTC markets or Canadian exchanges. The Cannabis companies with real Nasdaq exposure are smaller, more thinly capitalized, and already managing multiple compliance flags.

IM Cannabis Corp. (IMCC), a Cannabis operator listed on the Nasdaq Capital Market, disclosed this year that its shares trade at levels below the $5 million aggregate MVLS threshold, and that if the new rule comes into effect, its common shares could be subject to Nasdaq delisting proceedings. SHF Holdings (SHFS), a cannabis financial services firm, cited the rule as a material delisting risk in multiple recent SEC filings while simultaneously managing a bid price deficiency.

By April 2026, CRB Monitor’s securities analysis noted that no Cannabis sector stock could reasonably be categorized as small-cap. The entire sector had contracted to microcap territory, non-investable by most institutional mandates.

Attorneys at Sheppard Mullin and Honigman advise Nasdaq-listed companies to monitor their MVLS and prepare capital structure options now, regardless of timing. The SEC’s review process could take several months, and for the immediate future, the proposed $5 million MVLS continued listing requirement remains stayed and unenforceable. The public comment window closes October 6.

The SEC review is unlikely to retract this rule outright. Modification is the more probable outcome. For Cannabis companies holding Nasdaq listings, exposure sits squarely at the Capital Market tier, exactly where equity capital is hardest to raise and a forced delisting runs deepest. With major MSOs still structurally ineligible for national exchange listings and the sector carrying significant debt obligations through year-end, any new barrier to public equity markets warrants close attention from operators, investors, and advisors.