In a stark reminder that marijuana is still illegal at the federal level in the U.S., one notable specialist bank is effectively refusing to trade or hold domestic cannabis stocks.
The financier in question is Bank of New York Mellon (NYSE:BK), which according to a report from BNN Bloomberg has updated its cannabis securities policy to incorporate the stricter new guidelines.
BNN Bloomberg said it obtained a note on the changes intended for clients. In this, the bank apparently conveyed that it would "no longer accept incoming positions, or trading of non-permitted cannabis-related securities." The revised policy takes effect on Nov. 30.
The report quoted the note as explaining: "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 violate U.S. federal law ... unless approved by the [U.S. Drug Enforcement Administration] for medical use."
Bank of New York Mellon has not yet commented nor issued an official communication on the matter to the public.
Although the company is not particularly well known to the public, it has a big presence in its niche of custodian banking. It also has significant operations in wealth and asset management.
It seems that there is a large caveat to Bank of New York Mellon's restrictions, however. A great many cannabis companies are headquartered in Canada, and it's not unusual for the smaller ones to limit their operations to that country. The new policy appears to permit trading in such assets, BNN Bloomberg said.
There are a host of cannabis companies based in, or focused on ,the U.S. that would fall afoul of the bank's new rules. Among the more prominent ones are Curaleaf (OTC:CURLF) and KushCo Holdings (OTC:KSHB).
Interestingly, in spite of its Massachusetts mailing address and its network of U.S. dispensaries, Curaleaf's shares are listed on the Canadian Securities Exchange.
Like Bank of New York Mellon itself, neither Curaleaf nor KushCo has yet offered public comment about the latest policy.
The shift in the bank's policy comes at a somewhat incongruous time. Recently, the U.S. House of Representatives passed, by a wide margin, the SAFE Banking Act. This is a set of measures that would provide access to basic banking services for cannabis companies operating in states where at least some form of marijuana is legal.
The passage of that act into law is a little doubtful in the Republican-controlled Senate. Yet the mere fact that it's being passed at all indicates a rapidly growing acceptance of marijuana legalization. It also shows that attention and respect is being paid to the rapidly developing marijuana business sector, Bank of New York Mellon's move notwithstanding.