External Relations Minister Ian Gorst’s proposals would, if approved, update regulations so that a list of approved countries, subject to checks by international bodies, is put together where profits from the industry would no longer be categorised as criminal proceeds, providing they are viewed as lawful in the jurisdiction of origin.
The move comes as countries where Jersey’s finance sector has strong business interests, such as the USA and Canada, have increasingly decriminalised the production and sale of cannabis, in particular for medical use and in some areas for recreational consumption.
Jersey itself has made moves to enable the production of medical cannabis in the Island, with several firms, such as Northern Leaf and Green Island Growers, looking to enter the developing global market.
The report accompanying Senator Gorst’s proposals says that countries on the list will have been evaluated by anti-money-laundering and terrorist-financing agencies such as the Financial Action Task Force and MONEYVAL.
The report adds: ‘Due to the global nature of the financial services industry, local financial services businesses can now be exposed to proceeds generated outside of Jersey which have a nexus to lawful cannabis production in places like Canada and the US.
‘This nexus can either be directly by processing proceeds from the production, supply, or sale of cannabis or indirectly by processing monies related to investments in cannabis companies or investment funds investing in such companies.
‘The draft regulations are proposed in order to clarify which investments should not be treated as proceeds of crime by local financial services businesses. It is intended to remedy this situation, reflecting international developments with regard to the legislative treatment of cannabis and cannabis derivatives.’
It continues: ‘The draft regulations require that in order for it to be clear that proceeds are not proceeds of criminal conduct, they must be generated from conduct which was lawful where and when it occurred. So, for example, proceeds of lawful, licensed cannabis production taking place in Canada would fall within the provision, even if the production took place before the draft regulations come into force.’
During last week’s States sitting, Treasury Minister Susie Pinel said that tax receipts from Jersey’s fledging medical cannabis industry were not expected to be collected until 2024. The minister confirmed that the industry, which is expected to earn tens of millions of pounds, would probably be charged a 20% rate of corporation tax, but she added that it was likely that it would take some time for businesses in the sector to make profits which can then be taxed.