Fears that "regulatory red tape" could "strangle" Guernsey’s cannabis industry

Thursday 04 November 2021

Some local cannabis cultivators and distributors face major challenges because most High Street banks will not handle the proceeds of cannabis business.

In July, a memorandum of understanding was signed with the UK Home Office which allows businesses in Guernsey to apply for a licence to grow cannabis for sale to the medicinal cannabis market.

By September, seven site applications for cultivation had been received by the newly-established Bailiwick of Guernsey Cannabis Agency, the body responsible for granting licences in the island. 

However, local cultivators say it is difficult to find High Street banks willing to take their business.

“It is an issue,” said the Chief Executive Officer of The House of Green, Paul Smith. "As the industry grows and gets more regulated and more understood we’d hope more banks will start to do it, but at the moment it’s still proving to be quite difficult.”

The House of Green is a local business cultivating cannabis across several sites in the island.

“We were fortunate in the way we set up our company two or three years ago, using a Guernsey-licensed corporate services advisor, [which] allowed us to open a bank account fairly quickly,” said Mr Smith.

“We bank with Barclays and Barclays got themselves comfortable with the industry fairly quickly and I think they’ve opened up a number of accounts for cultivators and licensees over here.

“However, I think they’re getting to point where they’re saying they don’t want to be the only ones banking the whole cannabis industry, so I think they’re possibly not looking for more accounts.”

Pictured: Cannabis remains an illegal drug for recreation, with heavy penalties for importation and possession.

Express contacted the local branches of Barclays, HSBC, NatWest and Skipton to ask for comment but at present they have not provided replies. Lloyds replied but did not wish to comment.

“The main reason is that obviously, up until recently, it was seen as an illegal trade,” said Mr Smith.

“It [needs] real openness and acceptance of the way the market is changing...some banks are adjusting quicker than others.”

When licences were issued, they were welcomed by the President of the Committee for Economic Development, Deputy Neil Inder.

“It is highly encouraging to see such a positive response from businesses in just a few months since the MoU was signed,” said Deputy Inder.

“These are the early steps of a promising new sector for the Bailiwick, one which is already attracting interest and investment locally and from overseas.”

The industry's banking challenges were mentioned briefly in a documentary called 'The Cannabis Conundrum', in which Deputy Gavin St Pier gave his views on the legalisation of cannabis.

Deputy St Pier now says the States need to work with finance houses to provide them with more flexibility to support the cannabis industry. 

Pictured: “This is something that has plagued the industry for some time,” said Paul Smith, CEO of The House of Green.

“The whole world’s attitude to cannabis is in flux," said Deputy St Pier. "Some jurisdictions have legalised its use recreationally and medicinally; some only medicinally; some have decriminalised its recreational use; and others continue to ban it outright.

“So given banks are headquartered outside the island, trying to work to global corporate policies, it is no surprise that some may be reticent to bank a sector experiencing this change.

“Government has a clear responsibility to work hard and quickly with both the Guernsey Financial Services Commission as regulator and locally-regulated banks to ensure that a sector which Government recognises as legitimate and wants to encourage is not strangled by regulatory red tape before it can even properly begin.

“Otherwise, investors will just invest elsewhere and other jurisdictions will just steal a march on a new industry that has the obvious potential to be an important employer and diversifier in our economy.”