Ganja money fears - banks staying clear of revenues from marijuana industry, dread dissociation from US firms
There is fear among ganja stakeholders that the thrust to establish a blazing marijuana industry in Jamaica could be stalled, as there is uncertainty surrounding where revenues from the business would be banked.
This, as financial institutions locally may run the risk of being dissociated from their counterparts in the United States for collecting money from ganja players. The federal laws still frown upon the herb, in keeping with the United Nations Conventions on Dangerous Drugs.
The concerns were raised by the chairman of the Cannabis Licensing Authority (CLA), Hyacinth 'Cindy' Lightbourne, yesterday during a session on the marijuana industry at the Jamaica 55 Diaspora Conference, at the Jamaica Conference Centre in downtown Kingston. She noted that US banks have to comply with federal laws and regulations, and Jamaican banks are dependent on US banks for international transactions.
"Jamaican banks, their correspondent banks in New York, those banks are their lifeblood," Lightbourne declared, suggesting that it was disastrous for local banks to be dissociated from their US counterparts, some of which are already engaged in the process of de-risking of their relationships with institutions in Jamaica.
The issue stems from Jamaica having a 'high-risk' profile, compounded by the fact that the emerging ganja industry is still regarded as highly unregulated, hobbling along without the support of robust and internationally recognised regulations.
And, it is unlikely that there will be that support any time soon, according to the CLA chairman.
"With the current government of the United States, the relaxation of those laws, with regard to ganja, seem very unlikely based on rhetoric that has been said in the open space," Lightbourne noted.
... Headache for pharmaceutical and insurance companies, too
Concerns were also raised by Dr Ellen Campbell Grizzle, associate professor at the University of Technology, about pharmaceutical companies not investing their money in the ganja industry because of similar reasons of being repudiated by the US banks.
Overall, ganja enterprises not being able to bank would mean that the industry would have to transact business in cash, increasing its exposure to serious security and financial risks at a time when there is a push among businesses to go cashless, argued the chairman of the Cannabis Licensing Authority (CLA), Hyacinth 'Cindy' Lightbourne.
It would also mean that it would be expensive to insure enterprises in the ganja industry, an insurance executive asserted.
Lightbourne, responding to a suggestion that a trust fund could be set up, explained that it was difficult for banks or any credit union to, in any way, assist the industry at this time because they were all subjected to the rules and regulations of the Bank of Jamaica, which operates under strict international guidelines.
Lightbourne said that it was for the banks and the regulators to develop a way forward "because they have much to benefit from the industry as well".
"I believe the Jamaican banks need to get together and put their heads together in order to figure out what are the options. Once they figure out the options, their advocacy is going to be done with the Bank of Jamaica and then further on to the Ministry of Finance and to the United States," she stated.
The cannabis industry is a multibillion-dollar one projected to outsize both cigarette and alcohol combined.