Equipping him with a Psycannon REPLACES his storm bolter and any close combat weapons. He still gets his attacks in CC, albeit with just base strengh 4 (6 with hammerhand) AP -. Essentially, he bashes your enemies heads with a giant gun. You replace your CC power with dakka. This applies to all Power-Armoured Grey Knights (purifiers, interceptors, strikes and purgation). Thats why Terminators are usually
the better troops choice, having a 2+5++ save, 2 attacks each, and not sacrificing assault for shooting.
Hope this helps