As Jamaica continues to promote the potential of medicinal cannabis on the island to attract investors and spur the industry’s development, entrepreneurs within the industry face significant hurdles due to the fact that, while their businesses are legal, they are still not able to access the country’s banking services.

This creates substantial challenges at all levels of a cannabis business from sourcing investors to securing credit, conducting commercial operations, operating efficiently and taking advantage of growth opportunities.

The Jamaica Observer spoke with an industry insider who operates a vertically integrated cannabis business to determine the extent of the roadblocks faced by entrepreneurs and the strategies they use to navigate them.

The current status quo stems from the fact that in the United States cannabis is still illegal at the federal level, even though there are states in which it is legal. As a result, the banking system is hesitant to engage with cannabis companies because banks would likely find themselves at odds with federal law if they do so.

This has a spin-off effect on Jamaican banks because of their correspondent relationships with US banks requiring them to fall in line with the policies of their American counterparts.

The result is that Jamaican cannabis entrepreneurs are also forced to operate without access to banking services.

“I know that some people have had their accounts closed because of affiliation with cannabis businesses,” disclosed the local industry stakeholder to the Business Observer, adding that he has known of people who wanted to invest in cannabis companies but did not do so because the banks warned that their accounts would be shut down for their other businesses.

He pointed out that this may not be a deterrent for entrepreneurs who have a strong network of associates, friends and family wanting to invest, but for those needing to go further afield in search of investors the situation is a significant obstacle.

Ironically, when it comes to financing, cannabis operations in the United States have managed to identify several options that can help them, whereas the situation in Jamaica leaves very little space to manoeuvre.

Some local and regional banks as well as credit unions in states where cannabis has been legalised are willing to risk working with businesses. Certain states have also created state-authorised banking programmes while financial institutions with a specific focus on cannabis have also emerged.

In the particular experience of the Jamaican industry insider who spoke with the Business Observer, the greatest impact of an inaccessible banking system has been on the financial management of day-to-day operations, such as vendor transactions, managing payroll and having to handle large amounts of cash within the business.

“We are able to overcome many of these obstacles by being creative through various cash app payment systems,” he revealed. “It would be easier if we could manage these obligations through the banking system, but this is not the case as of now.”

“You have PayPal, you have Venmo if we need to make a payment for goods, mostly for suppliers,” the entrepreneur continued. “Most customers pay cash. When we have tourists who want to pay with credit cards we can do PayPal and stuff like that, but the majority is cash. [The cash app systems] are mostly for us paying suppliers.”

Dealing with large amounts of cash is a complex exercise and the additional security that is needed is an additional expense.

“Yes, we have cameras, armed guards, and cash is always transported via heavily armed personnel through PSRA (Private Security Regulation Authority)-certified companies,” he confirmed.

He disclosed that some security measures, however, are already required for other reasons.

“It is being required by CLA (Cannabis Lisencing Authority),” the businessman said. “It is part of the regulation and we don’t mind because it is a deterrent for theft. CLA requires that in the dispensary you have to have cameras covering everywhere. A lot of people may want to move the ganja out the back door, for example.”

“It is heavily regulated, but we don’t mind the regulation because it keeps the pool small and the value of the product high,” he added.

The cannabis entrepreneur explained that while his organisation has been able to cope with and adjust to the requirements of doing business in this environment, other cannabis companies may not fare as well.

“I think the lack of access to credit card and debit card payment is really the main detractor that most people would have,” he said. “For some exporters and farmers the inability to send large payments through the banking system to suppliers, that can be overwhelming.”

“I also don’t know if the challenges are as hard for us as it would be for a company that has all these foreign investors,” he speculated. “They would have a lot more challenges, especially when they become profitable because they would have to start disbursing the funds. That’s where their challenges would lie whereas with us it is fine locally. It is not as challenging for us as it is for others. We are able to get around it.”

From the insider’s point of view he still sees reason to be bullish on the future of cannabis in Jamaica.

“The cannabis market will continue to grow and thrive without the banks so it will be their loss if they don’t eventually accept business through the cannabis markets, especially with the impending growth of exports,” he insisted.

When asked if there are any planned initiatives on the part of cannabis investors and entrepreneurs to advocate for improved banking access his response was, “No, we leave that part up to the politicians and the licensing authority whose job it is to ensure that legally licensed companies are able to conduct business as any other entity operating under the parameters of the law would.

“If the banks choose not to do business with cannabis companies that are 100 per cent legal under current legislation, then we will continue to find ways to overcome these challenges and persevere,” he assured. “We are all legally licensed. We are not illegal. We are not criminals. We are working under the barriers of the law. Everything is done under the law.”