The minister of industry, commerce, agriculture, and fisheries was addressing delegates in attendance at the 2018 CanEx Jamaica — Business Conference & Expo at the Montego Bay Convention Centre in St James yesterday.
In an impassioned plea to the conference, Shaw told the delegates: “This is something that I am asking you, at your level in this (CanEx) room, whatever you can do to help us in joining in a great lobby to the United States to say, 'The time has come to change your approach, otherwise you are going to cause problems in terms of the credible and transparent movement of money in the industry globally.' The United States has an obligation, in my view, to take a very serious and urgent look at this issue.”
He argued that it is the small nations that are most affected by de-risking, as the more powerful economies can navigate their way around these major stumbling blocks. De-risking refers to the practice of financial institutions exiting relationships with and closing the accounts of clients perceived to be high risk.
“In this issue of the movement of money it is small countries like Jamaica which will suffer the most. The big boys have a way of finding a way around that issue. All of our commercial banks in Jamaica are obliged, right now, to go through the New York system in terms of the movement of money internationally,” Shaw argued.
“I am encouraged by recent comments by President Trump, in conversations with Senator Mitch McConnell and other US senators, in which the president has specifically suggested that they are going to be obliged to take a more careful look at medicinal cannabis in the first instance,” Shaw said.
He also told the gathering, which included former Mexican President Vicente Fox, that he has “engaged all stakeholders in our society and sent a strong message that ganja is not the problem, it is a part of Jamaica's solution”.
CanEx, founded by Douglas Gordon three years ago, provides an annual platform for individuals in the cannabis industry to exchange ideas, and is being held against the background that authorised ganja growers in Jamaica are facing numerous operational hurdles, including a refusal by banks to do business with them.
Growers complain not only about the safety risk of operating their business as a cash only enterprise, but also experess concern about the logistical hurdles of paying their employees and suppliers as well as the tax department without the benefit of a company bank account.
One medical cannabis producer from western Jamaica asked not to use his name, despite the fact that he is a legal producer, having recently received a grower’s licence from the Cannabis Licensing Board.
“I can’t afford to have my name out there,” he lamented, “as the bank will close my account!”
“Despite the fact that I have a legal company which has been licenced by government to do business, the banks refuse to open an account in the name of my company,” the Jamaican grower says.
He is currently producing on two acres of land under the watchful eyes of the Cannabis Licensing Authority (CLA).
Two other small growers from central Jamaica said they were afraid of having their name linked to the ganja business, fearing that the banks will close their accounts if it is found that their source of funding is related to cannabis production.
Scotiabank, one of the largest banks in Jamaica, headquartered in Canada, says they aren't providing accounts to companies associated with the marijuana industry.”
A Scotiabank spokesman says the bank aims to "manage risks soundly while making prudent business decisions."
"This is why the bank has taken the decision to close existing small business accounts and to prohibit the opening of new accounts for customers classified as 'marijuana-related business," the spokesman said.
Scotiabank says it will continue to monitor the industry and may change its position in the future.
The banks argue that the problem surrounds the anti-money laundering regulations on the banks, which they agree is harming almost everyone including growers, workers, government and even other businesses that just happen to interact with marijuana firms.
The complex web of regulations that deter banks from working with cannabis companies require banks and financial firms to file “suspicious activity reports” that help federal investigators detect and uncover criminal enterprises. The purpose of these reports is to help law enforcement identify criminal activity and be able to follow the money to catch leaders of criminal enterprises.
In order for Jamaica to do business internationally, it uses what is called ‘correspondent banks’ in the United States through which a majority of Jamaica’s business flow, and have signed international agreements to assist in stamping out money laundering.
The US Federal Government still classifies marijuana as a “Schedule 1” drug, on a par with heroin. Banks that handle marijuana money can be charged with money laundering. The cannabis businesses, therefore, is stuck working with cash, which causes problems for more than just tax collection.
As the United States move to make marijuana a legal entity, not only for recreational but also medical uses, traditional ganja growing countries like Jamaica are determined to plant their feet firmly on the bandwagon and become a major player in the legalized industry.
Minister Shaw said the Government was mindful of its responsibility to abide by local and international laws in treating with cannabis.
However he noted that Jamaica couldn’t ignore the tremendous growth that has taken place globally in the medical cannabis industry, adding that he is currently formulating a strategy to help fast-track its development locally.
Citing other countries that have benefited from using the plant, the Minister contended that Jamaica is uniquely positioned to play a leading role in the medical marijuana industry, which can create wealth for the country.
Mr. Shaw noted that in the United States alone, the legal marijuana market is predicted to rise from US$6.7 billion this year to US$21.8 billion by 2020. He pointed out as well that Canada has built a major industry, which may become fully legalised next year.
The Minister further informed that the Dutch Ministry of Health is exporting medical marijuana to Canada, Italy, Germany and the Czech Republic. In addition, Israel has over 12,000 medical marijuana patients and is leading the world in research on medical marijuana.
Mr. Shaw said developing a medical marijuana industry for the country will involve pursuing research at the universities to create medicines which can help people dealing with major illnesses, such as diabetes, epilepsy and others.
“One simple breakthrough in any of these areas will contribute billions of dollars to our economy. This is about turning wasted land into growing hemp products which contain no psychoactive properties and can be used for food, textiles, building materials and many others,” he said.
With Canada becoming the second country to legalize marijuana, a report from one of the largest Canadian banks estimates that marijuana sales will outpace liquor sales by 2020.
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