Global investment banking firm Credit Suisse Group reportedly has told customers in recent months that it has decided to stop executing stock transactions of cannabis companies with U.S. operations or hold those securities.
It was unclear Wednesday the extent of the impact of the decision.
But Reuters, which reported the move, cited sources who believe the move has contributed to a selloff of marijuana stocks in recent weeks.
The Switzerland-based financial institution was one of a handful of banks to buy and sell marijuana-related stocks for clients in the U.S. and act as a custodian of those stocks, according to Reuters.
A custodian holds the stocks for customers for safekeeping either in electronic or physical form.
Credit Suisse declined comment to Reuters, which pointed out that marijuana remains illegal federally in the U.S.
Abner Kurtin, CEO of Massachusetts-based Ascend Wellness Holdings, told Reuters that Credit Suisse’s decision has negatively affected cannabis stocks.
“(When) Credit Suisse pulled custodian (services) on cannabis stocks, a number of large investors in the space lost their ability to custodian the stocks,” Kurtin said. “That led to a significant selloff.”
Reuters specifically mentioned a U.S.-listed cannabis exchange-traded fund (ETF) with the symbol MSOS as having lost more than 20% of its value since early February.
The fund, AdvisorShares Pure US Cannabis ETF, launched in September to focus solely on U.S. cannabis companies including multistate operators. It is traded on the New York Stock Exchange Arca.
The ETF closed at $42.76 a share Wednesday, down more than 20% from $55 on Feb. 10. But it is up about 10% since trading at $38 on April 20.