The United States’ restrictions on banking for cannabis businesses have major global implications. Foreign-based financial institutions with US banking relationships cannot freely work with legal cannabis businesses. With the House passage on September 25 of the SAFE Banking Act, which, if it clears the Senate, would lift these restrictions in the US, securities exchanges around the world are considering the implications for their own economic institutions.
(Read Cannabis Wire’s coverage of the vote here.)
Just last week, during an International Cannabis Bar Association event in New York, panelists discussed the complications that cannabis businesses across the globe face as a result of these restrictions. A key point? The fact that “all the money always passes through New York,” said Marco Algorta, CEO of CANNAPUR, a Uruguay-based cannabis company.
In Colombia, for example, if it’s legal for a medical cannabis company to open an account in Colombia,“why won’t they open an account?” asked Santiago Concha, a panelist and Colombia-based lawyer. “They don’t open the account because all the Colombian banks have referrals with [institutions like] Bank of America.”
(Read Cannabis Wire’s coverage of the panels here.)
Medical cannabis was legalized for medical use in Jamaica in 2015, and is also allowed for personal and religious use. As an early global mover, Jamaica’s cannabis industry has been particularly affected, due to the island nation’s correspondent banking relationship with the US.
“We are watching closely the legislative process [of the SAFE Banking Act] as its passing could have a positive impact on our market and the ease of doing business for cannabis companies,” Marlene Street Forrest, managing director of the Jamaican Stock Exchange, told Cannabis Wire.
“Despite no clear laws to the contrary regarding the listing on the JSE of these companies, the fact that there is this concern, our brokers shy away from taking these companies to market, thereby literally restricting access to equity capital and growth of these companies,” Forrest continued. “To date we have not listed any of these securities, whether they are for companies incorporated in Jamaica, or listed elsewhere and could possibly be crossed listed in Jamaica.”
Forrest added that she believes SAFE Banking Act would “result in the growth globally of the cannabis industry,” and could be of “significant help in formalizing the industry and creating legitimate job opportunities for families in Jamaica.”
In Canada, where cannabis is federally legal for both medical and adult use, the Canadian Securities Exchange has been tracking the SAFE Banking Act’s progress in Congress. Last week, CSE’s director of listed company services Barrington Miller told Cannabis Wire co-founder Alyson Martin that when the Act does pass, “it’s going to open up this industry, and help show people what cannabis really is, and that’s a legitimate business.” (Read our recap of that interview here).
Richard Carleton, CEO of the Canadian Securities Exchange told Cannabis Wire that they are maintaining a “close eye” on cannabis-related legislative developments in the United States, such as the SAFE Banking and STATES Acts, adding that the CSE has worked very closely with cannabis companies, some since their infancy.
“When you think about how restrictive access to banking and other financial services have been,” Carleton said, it’s “remarkable” how cannabis businesses have been able to “succeed and grow as they have to-date.”
The Canadian Securities Exchange has more listed cannabis companies than any other exchange in the world, Carleton noted. As of Sept. 27, the CSE has 173 entries on their Cannabis Stock List. After a potential passage of the SAFE Banking Act, Carleton says he’d like to see those companies retained by the CSE even as they may seek to be listed in the United States.
But Carleton says that even with the potential passage of the SAFE Banking Act through Congress, it’s not a given that financial institutions would immediately hop on board to work with the cannabis industry. “They may, in fact, be waiting for a de-scheduling of cannabis from the Controlled Substances Act before they jump,” Carleton said.
In Australia, where medical cannabis has been legal since 2016, the federal legality of cannabis itself, and not only the subsequent banking issue, is the sticking point.
According to a spokesperson from the Australian Securities Exchange, the organization has yet to list any US cannabis businesses “because of their potential illegality under US federal law.” If that law changes, the spokesperson said, ASX “will revisit the issue.”