JPMorgan: No Trading Certain U.S. Cannabis Stocks
Cannabis stocks are a popular and easy way to invest in the emerging cannabis industry. As any seasoned investor will point out, cannabis stocks are young compared to stock offerings from more established industries, and the landscape in which those companies operate is always evolving. That creates risk.
To make matters more complicated in the United States, not all cannabis stocks are listed on major stock exchanges. Cannabis, of course, remains illegal at the federal level in the U.S. and that creates even greater risks for certain cannabis companies.
All of that risk, combined with the fallout from the collapse of a private fund, has led JPMorgan to cease all trading of certain U.S.-based cannabis stocks. Per excerpts from an article first published by Reuters:
JPMorgan Chase & Co (JPM.N) has told prime brokerage clients it will no longer let them buy certain U.S. cannabis-related securities beginning Nov. 8, according to a letter seen by Reuters.
“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 bank wrote to clients.
As of Nov. 8, the bank will not allow new purchases or short positions in the related businesses, but clients with existing positions will be allowed to liquidate them, it said.
Cannabis stocks have taken a pounding this year, especially stocks for United States companies. JPMorgan’s announcement could, unfortunately, add to the trend, at least in the immediate future.
Cannabis companies that ‘touch the plant’ and are not listed on the Nasdaq, the New York Stock Exchange, or the Toronto Stock Exchange are subject to JPMorgan’s new policy.