Popular cannabis play India Globalization Capital Inc. (IGC) is getting kicked off the New York Stock Exchange (NYSE).

The NYSE said it has immediately suspended trading of the company’s stock and is now in the process of delisting its shares. In a brief press release, the exchange added that it reached its decision after identifying several red flags.

“The issuer [IGC] has substantially discontinued the business that it conducted at the time it was listed or admitted to trading, and has become engaged in ventures or promotions which have not developed to a commercial stage or the success of which is problematical,” the NYSE wrote.

Regulators also claimed that IGC, which specializes in infrastructure commodities and, more recently, the development and commercialization of cannabis-based therapies to treat Alzheimer’s, pain, nausea, eating disorders, several end points of Parkinson’s and epilepsy in humans, dogs, and cats, “engaged in operations which…are contrary to the public interest.”

IGC’s stock rocketed in September after it revealed that it had entered into a distribution and partnership agreement for several products including a sugar free, energy drink called "Nitro G." Within a week of the announcement, IGC’s share price rose 458% to $13, propelling the once largely unknown stock into the spotlight. 

Red Flags

Increased visibility led a number of investors to take a closer look at the company. What they eventually discovered raised suspicions.

Citron Research, the stock commentary website founded by activist short-seller Andrew Left, began by labeling IGC “the poster child of a cannabis bubble.” Around the same time, investors began poking holes in the company on social media, uploading photos they claimed were of the address listed on the company’s 10-K filing. The Google Street View images from September 2017 showed a small suburban home called Arbol House, a child care center that Google lists as permanently closed.

MarketWatch then began to dig even deeper, analyzing the company’s history and regulatory filings. That research led them to find sufficient evidence undermining IGC’s claims.

Journalists discovered 10 red flags. Among them was an observation that IGC has a history of pivoting to new businesses as they become popular in order to boost its popularity among investors.

An investigation into IGC’s latest venture, the cannabis market, revealed plenty of inconsistences. MarketWatch unearthed information showing that the company assigned very little funding to research and development — roughly $150,000 a year — and none to clinical studies or any of the other steps needed to win regulatory approval.

Research also showed that many of IGC’s partnerships were questionable. For example, in its CBD-infused drinks announcement the company claimed that it will work with a manufacturer in Malaysia, even though the country hands out mandatory death sentences for cannabis possession and has no medical-marijuana program.