'Cowardly bankers'

'Cowardly bankers'

Advisor takes aim, calls on BOJ to lead charge for banking ganja money

Senior staff reporter

Monday, April 22, 2019

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IT is time for the central bank to take the lead and provide guidance to local financial institutions on how to proceed with transactions related to Jamaica's burgeoning medicinal marijuana industry.

This is the argument being made by special advisor to the Ganja Growers and Producers Association of Jamaica, Orville Silvera.

“Not only should they take the lead, this is the only way we can go,” Silvera said in an interview with the Jamaica Observer.

He argued that the Bank of Jamaica (BOJ) has not issued any policy position on such transactions, and that it is the banks which have taken the decision not to touch marijuana money.

“The governor of the BOJ has told no bank in this country not to bank cannabis [money]… they're the ones taking it upon themselves not to bank cannabis money,” he said.

“I am certain every single central bank governor whose country has gone medicinal, and who have relationships in trade with the US (United States), have had their central bank governors communicate with the treasury department of the US as it relates to correspondent banking. So this (governor) wouldn't be anybody less — it is his time now. Put out some points to the local banking community to say, 'If you do it this way, I am certain you are good to go.'

“Take the lead; show them what to do. What is being done by those banks in the US that is banking cannabis and are not running afoul of the US federal system? Jamaican banks can do the same thing, directed by their central bank,” Silvera stated.

The special advisor suggested that the BoJ should be able to create regulations similar to directives issued by the US federal bank to banks in that country.

“If banks bank they must report all accounts that they know to be [linked to] cannabis, and if they stick to that they will have no problem,” he said.

According to Silvera, out of the more than 400 banks and financial institutions in the US that facilitate legal cannabis transactions, none have been cited by the US federal government for any breaches. He pointed out that these financial institutions are mainly small banks and credit unions.

He noted the promulgation of the Secure and Fair Enforcement Banking (SAFE) Act in the US, which will allow big banks to provide services to cannabis companies in states where the industry is legal, without fear of criminal prosecution by the federal government. The Bill was advanced by a House Committee last month, and is to go before a full Congress for further consideration.“We have a group of cowardly bankers. They're not thinking. Our bankers keep speaking as if by rote when they speak about correspondent banking… If we go to Cananda (for example), the Bank of Montreal just loaned $80 million to a cannabis company… You want to tell me that the Bank of Montreal don't have any correspondent banking with the US?” he reasoned.

Silvera further asserted that with oversight of banks from the BOJ, and a regulatory agency — the Cannabis Licencing Authority (CLA) — there is more than adequate oversight for the handling of money generated in the cannabis industry.

“The governor of BOJ, [who] understands what is happening in the United States, [can] pattern it for Jamaica here [and] give the same instructions. Now, you also have a regulatory agency that is also doing vetting for you, and you're telling me that you cannot bank these people?” Silvera continued.

He pointed out that the level of due diligence carried out by the CLA before it issues a provisional licence provides ample checks and balances for financial risk.

“The CLA does a type of due diligence that incorporates the finance and the security of the individuals, so when a person is deemed to be conditionally approved, that means the due diligence done on that person and the director of that company was thorough,” Silvera stated.

He said this puts banks in a position to know much more about individuals and companies than they normally would.

“They (the bank) now know more about this individual or the company when the company comes through the CLA than they would have known when the individual just walks in by themselves recommended by other customers and carrying a letter showing that I live here,” he said.

Silvera suggested that a regime could be established which would see financial institutions setting up adequately staffed compliance units so that all cannabis companies which they bank operate within the ambit of local and international legal frameworks.

Outlining an example of how this regime could operate, he explained: “If the regulators say this company, as a grower or retailer, grew 5,000 pounds for the year, then you know that if they're selling that between $500 and $700 per pound you would know how much they sell… If they come to you with more money than what should have been sold at $500 per pound they're in problems because you're going to refuse that account.”

He pointed out that the operation of these compliance units could be underwritten by the cannabis industry itself, noting that there are special charges for cannabis accounts in countries where there are legal markets.

He said, too, that local financial institutions would therefore be able to recoup the costs of making special arrangements to facilitate the ganja trade.

The Dangerous Drugs Act was amended in 2015, with new provisions regarding the possession and smoking of marijuana, use of ganja for medical, therapeutic and scientific purposes, and use of ganja by individuals of the Rastafarian faith.

The CLA has been set up as the regulator to, among other things, ensure that activities within the industry are in keeping with the country's international obligations, and to issue licences, permits and authorisation for the handling of hemp and ganja.

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