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A long-standing impediment to the growth of the cannabis industry in Jamaica has been the ability to bank proceeds and to avoid running afoul of correspondent relationships.

According to one company, Jamaica’s Audley Shaw-led Ministry of Industry, Investment and Commerce has let an opportunity to solve correspondent banking issues surrounding monetising marijuana slip.

That opportunity is now likely to be taken up by The Bahamas.

Thunder Impact Limited, a Jamaican  business solutions company (that works together with fin-tech operators) collaborated with U.S. entities and offered the Jamaican government an answer to its correspondent banking problem.

THUNDER IMPACT’S SOLUTION

Thunder Impact, working with Berkeley Research Group, Global Risk & Data Authority and Dorsey & Whitney LLP, came up with a plan that includes:

• Establishing Global Banking Relationships with the Jamaican cannabis sector under the present legal environment within the U.S. and securing same relationships in the event of any changes in the federal laws in the U.S. around cannabis.
• Creating relationships to facilitate the trade of cannabis with Jamaica and to position Jamaica to be a transhipment point in the global trade of the commodity.

The aim was to provide correspondent facilities for cannabis banking and to make Jamaica the Caribbean hub for this trade. According to one of the partners of Thunder Impact, the project was approved by the State Department and endorsed by the U.S. Embassy in Kingston.

NO SIGN OFF ON PROJECT YET

Negotiations began in November 2019 with the ministry. It was expected that it would sign off on the six-month project but, more than a year later, that has not taken place.

A principal who is part of the project told Our Today: “A number of banks from the U.S. were brought in on this proposal to demonstrate how Jamaica could bank cannabis revenue under the same regulatory environment that pertains to ganja in the U.S. There would be no need for the law to change at the federal level and Jamaica would be positioned as the country through which the U.S. does international trade of cannabis through Jamaican ports.”

The principal added: “Minister Shaw has had this for a year now and nothing has been done. The proposal has now been withdrawn and presented to other Caribbean countries who are keen to make it happen. Jamaica is not serious about the cannabis industry despite all the talk.”

Shaw has estimated that the  local medicinal marijuana industry will be worth some J$16 billion by 2022.

The local industry has many critics with some of the view that it is overly regulated and too slow to react to potential business, and that the small farmer does not have adequate opportunities to monetise ganja crops.

Nevertheless, the fact remains that without the ability to bank the proceeds and to do transactions in the U.S., the local industry will continue to remain in stasis with no real money to be made.

The National Commercial Bank has made it clear that, under the present regime, it will not be banking ganja proceeds and other local financial houses are reluctant to jeopardise their correspondent banking relationships in doing so.

Dr Ellen Campbell-Grizzle, associate professor of the College of Health Sciences at the  University of Technology, said: “A big problem is how to get our indigenous people to make headway into the industry. Many of them are just outside watching the game and they are not playing; they don’t have the resources.

“We need to make the business of cannabis more accessible to the people who paid the price. Many of them went to prison and all of that. Yet the thing is decriminalised and they can’t seem to get a foothold into it.”

“The Bank of Jamaica made it very clear to us that it would not act on this matter until it got clear directives from the Ministry of Industry and Commerce.”

An executive team member of Thunder Impact

An executive team member of Thunder Impact, speaking with Our Today said one of the aims of the proposal was to ensure that Jamaica didn’t simply play catch-up with the world but became one of the leaders as far as correspondent banking and cannabis is concerned. The idea was that the banks that were involved with the project would respond to regulatory and compliance issues and keep an eye on how local banks were performing on banking cannabis proceeds.

“All that was needed was a constant flow of communication but that was not forthcoming. We spoke with State Minister Floyd Green and the regulatory body, the CLA. The Bank of Jamaica made it very clear to us that it would not act on this matter until it got clear directives from the Ministry of Industry and Commerce. It was important that a financial network be established.

“The proposal had a component built around trade policy and the transhipment of the product. It would focus more on the logistics side of things and location was a vital element. It was not simply a private sector initiative – the public sector is a major stakeholder and the group was prepared to cross every ‘t’ and dot every ‘i’ with the Government. In the end, Minister Shaw took too long to come to a decision and in September the group were speaking with three other Caribbean countries, having given up on Jamaica.

“You must understand here that there are around 510 banks and 185 credit unions banking cannabis in America so there is a model to learn from and apply. The team batted hard for Jamaica. If Audley Shaw cannot see it, maybe it needs to be escalated to the Minister of Finance.”

Walt Mix, the general manager at Berkeley Research Group and former head of the California Banking Commission, was part of this project and acted as the U.S. Government liaison officer. He believes Jamaica should leverage its natural assets and that countries including Canada are already engaged in cannabis banking.

“It is not too late for Jamaica to set up this programme. There are many U.S. banks prepared to work with Jamaica and abide by the requisite anti-money laundering and combating financial terrorism rules. Governments and banks must work together and it is not that difficult to do. This industry can help to create more jobs, increase tax revenue and lead to economic development and improving trade between countries. Here in California, which is the fifth largest economy in the world, many banks are engaged in financial transactions around marijuana. The precedent has been set, so why can’t Jamaica follow a proper risk management programme?”

As many as 35 American states have legalised the use of marijuana with 15 allowing recreational activity.

Mix’s firm has developed banking programmes for cannabis in the U.S. He advises U.S. and international bank clients on corporate governance, risk management, strategic planning and financial advisory assignments.

Kavion Grant, founder and CEO of Thunder Impact, said: “The Jamaican government has not said it is not interested in the programme, but it hasn’t said that it is interested.”

Thunder Impact remains committed to working with the Government of Jamaica to provide solutions to this cannabis banking issue. The industry can provide more jobs and help to develop the welfare of Jamaican people.”