Bank Kerfuffle Threatens Uruguay Legalization
Legal cannabis in Uruguay encounters a banking snag
The biggest problem with marijuana legalization doesn’t have anything to do with marijuana. It has everything to do with banks — as in banks don’t want to handle any money having to do with legal cannabis sales.
Dispensaries in the United States know this all too well, and are compensating by hiring armored cars, paying all their taxes in cash, and hiding the rest.
In Uruguay, the first nation to legalize cannabis at the national level, cannabis is available over-the-counter in pharmacies — many of whom say that they’ve been offered a choice by their financial institutions: Sell weed and lose your bank account, or quit with the reefer and be able to make deposits and process credit card payments.
You can tell where this is going. Pharmacies are saying that they’ll have to stop selling marijuana, which puts a serious kink in the country’s plans to have a legal marijuana market. By extension, this snafu also has the potential to cause a serious problem for any other country planning to legalize the drug.
You’d think someone would have worked this out with the banks beforehand. But, no.
“The truth is we did not know… that this could happen,” Economy Minister Danilo Astori was quoted as saying by La Republica newspaper, according to Agence France-Press.
But according to the banks, this isn’t their choice. Nor is it their idea. They’re merely reacting to international pressure.
Other banks in other countries are telling Uruguayan banks that handle accounts from weed-selling pharmacies are threatening to halt any further business unless the weed money is eliminated. Since the thing about global finance is that it is global, the threat is existential. Banks also have to make a choice: drop their pharmacy accounts, or make sure those accounts are clean.
And so banks are choosing to stay in business.
This situation is exacerbating an already limited market in the South American nation. According to AFP, there are only 16 pharmacies selling marijuana in the country of 3.5 million.
Officials say they’re looking for a solution… in all the wrong places.
As per AFP:
Another of the architects of the law, Julio Calzada, said Uruguay will now have to talk with U.S. banks to seek a way around the restrictions.
“There are alternatives,” he said, “but not in Uruguay.”
This won’t go well. The United States of America — the same USA that, officially, believes marijuana is dangerous, addictive, and of no use medically — is not going to be Uruguay’s savior. And nation-building isn’t illegal under federal U.S. law. Marijuana is.
Marijuana sales began in Uruguay last month, the culmination of a legalization process that began in 2013. For legalization to encounter such an insurmountable road block early on could spell trouble — if not disaster — for plans in Canada to create a legal marijuana marketplace.
Banks, it’s always the banks.
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