R&C: How would you describe the regulatory and compliance challenges currently facing businesses in the regulated cannabis industry?

Parfitt: Regulatory and compliance challenges in this industry are very much dependent on the jurisdiction. There is a lot of variation around the world, and just because cannabis is legalised in one country does not necessarily mean that it is legal to do business from another country with entities that are involved in the industry. As it stands today, three countries have legalised the recreational use of marijuana: Canada, Uruguay and Portugal. The US poses a specific challenge: while most states have either legalised or decriminalised marijuana use, at a federal level it remains illegal. Consider the international dimension too, and the legality of doing business with legal marijuana-related businesses (MRBs). In Canada, for example, Deloitte estimates the value of the legal cannabis industry at approximately $4.34bn in 2019. Could UK businesses participate? The UK’s Proceeds of Crime Act (POCA) only considers whether the predicate activity – ‘criminal conduct’ – is legal in the UK, and not the legal status where it was undertaken. So, any revenue derived by a UK company from a Canadian MRB would constitute the proceeds of crime.

Apr-Jun 2019 Issue

Acuris Risk Intelligence