Banking giant JPMorgan Chase & Co. informed its brokerage clients they’ll no longer be allowed to purchase cannabis-related stocks and securities starting Nov. 8.
Reuters on Tuesday cited an internal JPMorgan letter to brokers that said, in part, “J.P. Morgan (JPMS) has introduced a framework that is designed to comply with U.S. money laundering laws and regulations by restricting certain activities in the securities of U.S. Marijuana Related Businesses.”
The New York-based bank’s restriction applies to any company that has a “direct nexus to marijuana-related activities,” even those that aren’t traded on major exchanges such as the Nasdaq, New York Stock Exchange or Toronto Stock Exchange.
After Nov. 8, JPMorgan clients with positions in marijuana companies will be allowed to liquidate their shares, according to the bank’s letter.
The pivot by JPMorgan follows a similar move earlier this year by global investment firm Credit Suisse Group, which told clients it was calling off all transactions involving marijuana-related companies in the United States.
That decision by Credit Suisse Group reportedly led to a huge selloff of cannabis stocks.
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U.S. Cannabis Council CEO Steve Hawkins called JPMorgan’s decision “beyond disappointing.”
“JPMorgan’s new policy is regressive and at odds with the majority of Americans, who want legal, regulated cannabis. What’s more, it’s self-defeating,” Hawkins said in a statement. “The end of federal cannabis prohibition is within site, and the industry is already growing rapidly.
“I imagine more than a few JPMorgan customers will take issue with being blocked from one of the hottest industries on the market today. JPMorgan is on the wrong side of history on this and will come to regret its decision.”