Wall Street bank to prohibit cannabis stock investments

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The move comes with a strange explanation on the part of the financial institution

The Bank of New York Mellon (BNY Mellon) no longer wants to support cannabis trading. It sent a letter to investors at the end of last month, indicating that it will no longer accept certain incoming positions or trading of non-permitted securities tied to cannabis-related businesses (CRB), adding that the policy will take effect as of November 30. Its reason for making the change seems a little strange.

BNY Mellon states in its letter, “In the U.S., the federal Controlled Substances Act (CSA) governs the cannabis industry, under which marijuana remains listed as a Schedule I drug. In general, any company that manufactures, processes or distributes cannabis within the U.S., regardless of whether the business resides in a U.S. state or another country where cannabis is legal, would be in violation of U.S. federal law (i.e., see, generally, the CSA, 21 U.S.C. §812) unless approved by the DEA for medical use. Any cannabis related company without a direct U.S. nexus, such as a Canadian company without any U.S. operations or distribution, would generally not violate the CSA.”

It goes on to say that it will allow certain securities, such as those issued by CRBs listed on several major stock exchanges in the US or Canada, as well as “other securities as may be approved from time to time.” However, it appears that the new policy applies to any company that maintains marijuana assets in the US. The fact that it has already been providing securities trading services without any issues or federal intervention makes the policy update a little odd, especially in light of the fact that the House has already approved the Secure and Fair Enforcement (SAFE) Banking Act, which is now with the Senate.

BNY Mellon recommends that investors not make any trades or transfers starting now, and adds that it reserves the right to reject any that are submitted. After November 30, no trades or deposits outside the scope of its new policy will be allowed.