Can The UK Solve Its 'Money Laundering" Problem With The Proceeds Of Medicinal Cannabis?

• Published date: 16 April 2021
• Subject Matter: Government, Public Sector, Cannabis & Hemp, Money Laundering
• Law Firm: BCL Solicitors LLP
• Author: Mr John Binns and David Hardstaff

BCL partner John Binns and Associate David Hardstaff's article 'Can the UK Solve its 'Money Laundering" Problem with the Proceeds of Medicinal Cannabis?' has been published by International Pharmaceutical Industry Magazine.

Here's an extract from the article:

The manufacture, marketing and supply of medicinal cannabis products raise complex regulatory issues in the jurisdiction where those activities take place. These go beyond the issues applicable to medicines in general, even some whose potential harms are far greater, due to the cultural and moral judgements that have been applied to cannabis for many years. Inevitably, there is a large and growing variation in the level and nature of regulation that applies in various jurisdictions, with some countries having gone as far as to legalise cannabis in general (including for recreational use), and others being slow even to allow medicinal products in which cannabis is an ingredient.

A Restrictive Environment

The UK is, broadly speaking, at the more conservative end of that spectrum for the moment, allowing some bespoke and restrictive exceptions for medicinal cannabis products, while keeping its general prohibition in place. Just as important, however, given its importance as a global financial centre, is its regulatory approach to those who invest and trade in the shares of overseas businesses that sell cannabis products. There, thanks to a quirk in its notoriously restrictive money laundering laws, the UK has cast a dark and discouraging shadow over the prospects for major investment in the medicinal cannabis industry. Now, however, an announcement from its Financial Conduct Authority (FCA) has hinted at a potential way forward, and at the time of writing, the first listing of a cannabis company on the London Stock Exchange has taken place, with several other following closely behind.

The starting point for the UK, as for many countries, is that cannabis, and certain derivatives of cannabis such as THC, are controlled drugs, so that various actions in relation to them (including possession, supply, import, export, and cultivation of the cannabis plant) are criminal offences, punishable with imprisonment, unless done in accordance with licences. The primary legislation, which creates the offences, is the Misuse of Drugs Act 1971 (MDA), while the detail of licensing arrangements is contained in secondary legislation, including...