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Bank Kerfuffle Threatens Uruguay Legalization

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Economics

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.

TELL US, have you been negatively affected by the lack of banking solutions for cannabis sales?

1 Comment

1 Comment

  1. suedaustralien

    August 30, 2017 at 12:19 am

    The roots for this are in the international organisations/straight jackets.

    Check out http://www.unodc.org or search for “Vienna anti-drug organisations”. They have created a structure that seeks to choke off anything and everything to do with hemp. In Australia we had just started industrial hemp growing, suddenly the government comes in and says they cannot allow that because of the international treaty. I knew an MP here once who looked into industrial hemp – the papers (before computer age) disappeared from her office. Nothing else vanished, the disappearance should obviously have been read as stay away from hemp.

    The Australian government had allowed doctors to prescribe cannabis oil for very sick children, but it does not allow the import. Import companies have been threatened to have their licence taken away – must slavishly obey the international treaty. They say that there are currently trials to grow it domestically but they are slowing that process down so much that it becomes unviable and then it gets cancelled.

    Every country has to write an annual report to that organisation in Vienna how they combat drugs and what they do against the criminal enterprises. Uruguayan pharmacies fall under criminal enterprises in their definition.

    We must get rid of this international treaty – we do not elect parliamentarians to just be executers of outdated treaties. The enemy is the UN who has a stranglehood that many people have tried to free us from. Time for a broader coalition.

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