It’s been a bit of a rough patch for the cannabis investing sector as two of Canada’s major banking institutions have closed their doors on the industry.
Earlier this week, Scotiabank and the Royal Bank of Canada announced they will no longer provide bank accounts to companies in the marijuana industry, leaving many businesses stranded while they look for alternative routes.
According to the Financial Post, Nathan MacLellan–owner of Hemp County in Woodstock, Ontario–received a letter from Scotiabank late in August advising him the account was being cancelled.
MacLellan had allegedly been with the organization for over a decade, selling marijuana-items including pipes and bongs, but not cannabis.
With that in mind, Wealth Professional reported that the two banks will no longer be providing services to any companies involved in the production or sale of marijuana, which includes stores like MacLellan’s.
“It’s kind of insulting really, especially when legalization is right on the horizon,” he said in the Financial Post article. “Nothing in the store that we sell is illegal. Every single variety store sells pipes and bongs nowadays, so why are they singling us out all of a sudden?”
While legalization of marijuana will reportedly be introduced spring 2017 by the Liberal government, CBC reported that banks will likely accept recreational marijuana companies as clients–but not yet.
Khurram Malik, analyst at Jacob Capital Management told CBC that in the meantime, there will be a lot of arrests and businesses being shut down.
“The banks do not want to have their names anywhere near that,” he said.
Investors in the cannabis industry will no doubt be keeping a close eye on any future developments as they unfold.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.