JP Morgan Chase will no longer let clients buy certain cannabis-related securities

Effective today, November 8, JP Morgan Chase & Co will no longer allow its clients to purchase certain U.S. cannabis-related securities, according to a letter seen by Reuters. The decision follows similar measures taken by Credit Suisse last May.

«J.P. Morgan (JPMS) has introduced a framework that aims to comply with U.S. money laundering laws and regulations by restricting certain activities in the securities of U.S. marijuana-related businesses,» Reuters reported in the letter issued by JP Morgan Chase & Co.

From today, the bank will not allow new purchases or short positions in companies in the cannabusiness sector, but customers with existing positions will be allowed to liquidate them. The new rules apply to companies with U.S. operations that are not listed on Nasdaq, the New York Stock Exchange or the Toronto Stock Exchange and have a «direct connection to marijuana-related activities,» the letter states.

The NYSE and Nasdaq allow the listing of some cannabis companies - including Canadian companies that don't sell cannabis in the U.S. - but both exchanges prohibit the listing of companies that directly grow or sell cannabis, activities that remain illegal under U.S. federal law.

Abner Kurtin, CEO of cannabis company Ascend Wellness Holdings Inc. said that when Credit Suisse withdrew its custodial services on cannabis stocks, «a number of large investors in the space lost their ability to hold stocks,» which «led to a significant collapse.».

While a bill is currently being drafted in the United States to allow cannabis companies to have a banking activity, In September, Cowen and Co, another US bank active in the cannabis trade, increased its cash margin requirements for all cannabis-related transactions on its platform, according to a letter sent to customers and described by Reuters.