Ganja exports, IPOs touted as SAFE winners - Jamaican ganjapreneurs cheer prospects for marijuana trade from new US banking bill
Published:Sunday | September 29, 2019 | 12:15 AMSteven Jackson - Business Writer
A new legislative bill in the United States is paving the way for banks to do business with marijuana companies, a development that has sparked hope among Jamaican ganjapreneurs that correspondent banking issues and other roadblocks to business may soon be cleared for them.
It would open up new opportunities for investments and exports from Jamaica, according to operators in the medical marijuana trade.
The Secure and Fair Enforcement Banking Act, otherwise called the SAFE Banking Act, passed in the US House of Representatives on Wednesday but still has to hurdle the US Senate before it is signed into law.
“It is timely and happening faster than expected,” said Dr Henry Lowe, who holds medicinal cannabis assets in Jamaica, the US, and Canada.
The SAFE bill seeks to amend US federal law so that banks and other financial institutions can work directly with legal cannabis businesses.
Marijuana remains illegal at the federal level but legal in 33 states in the union.
Because the drug is still illegal at the federal level, American banks have largely refused to do business with medical marijuana businesses. That has had a knock-on effect in Jamaica, where medical marijuana is now legal, but local banks have taken the position that doing business with operators would put their own relationships with their foreign banking partners at risk.
Lowe told the Financial Gleaner that if approved by the Senate, SAFE Banking would allow the transfer of funds between buyers and sellers in the cannabis industry in the US, and then globally. It would, therefore, pave the way for large exports out of Jamaica, he said.
It would also pave the way for cannabis companies to float their companies on the stock market, through initial public offerings, he added, as investment banks would now have a clearer path to arrange such offers, he added.
Lowe’s company, Medicanja Limited, has gained approvals from the Ministry of Health for 12 pharmaceutical products, but cannot promote or export them due to legal and banking blockades, he said.
The scientists and businessman says he has avoided entering the recreational side of the market, nor does he engage in the cultivation of marijuana, in order to allay the concerns of the banks, but to no avail. His products fall within the pharmaceutical, nutraceutical or cosmeceutical categories.
“I have been hurt by the banking sector,” he charged. “Our clients had to abandon supporting me because of the banks. No one would get involved because of the banking issue, even though we took the decision not to get into any growing,” he said.
Balram Vaswani CEO of Kaya Inc, which operates three herbhouses in Jamaica, with a fourth slated for opening next year, told the Financial Gleaner that the move if the SAFE bill is ratified by the Senate, it would lead to outside conglomerates entering the cannabis market.
“The stage is set to open up the sector to a lot of new people who didn’t want to get involved before, because of banking fears,” Vaswani said. “It allows for bigger things to happen.”
He urged local authorities to follow the US developments to ensure that Jamaica complies with its new framework.
Director of the Cannabis Licensing Authority, Delano Seiveright, noted that while it is still early days, as SAFE still has to hurdle the US Senate, passage in the US House was in itself a “huge development”. He called the lack of banking a major challenge stifling the industry, inhibiting investment, farm growth and new jobs, according to a release issued ahead of the CanEx Jamaica Business Conference & Expo in Montego Bay.
Lowe has said the movement on legislation in the US due to sustained lobby efforts, which in the case of Jamaica, he noted is to the credit of Minister Audley Shaw and Ambassador Audrey Marks.