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by Deniece Alleyne, St. Kitts & Nevis,

The Cannabis Dilemma

The push to decriminalize the cultivation and use of cannabis in St. Kitts and Nevis and throughout the Caribbean region has been spearheaded by the Rastafarian communities by whom it is used as a sacrament of worship. This insistence on cannabis as a matter of conscience culminated in the case Ras Sankofa Maccabbee v the Commissioner of Police & Attorney General of St. Christopher & Nevis 2019. Parallel advocacy of a lenient approach has also occurred by various social groups focused on youth as it has been a major source of incarceration for particularly poor and undereducated young men who then suffer further marginalization as criminal records inhibit job prospects in a small society as well as making migration in search of more opportunity much more difficult.

The government resisted this pressure mainly on the ground that the international community continues to view cannabis as a substance to be strictly controlled. Over the past decade as anti-money laundering (AML) issues have come to the fore, several large US banks have engaged in de-risking by eliminating relationships with banks in the Caribbean where the commercial volume is too small in their view to justify the increased costs associated with increased scrutiny. This scrutiny has come from the Organisation for Economic Co-operation and Development (OECD) particularly because of offshore financial services, citizenship by investment and the unfortunate spectre of Islamic terrorism which has, for example, seen Trinidad and Tobago being among the highest per capita source countries for ISIS fighters. These factors cause the region to be deemed high risk.

Caribbean governments have thus been on a never-ending regulatory push to satisfy the demands of the correspondent banks that their banking system is free from tainted funds. As the world has moved towards a more lenient policy concerning cannabis, Caribbean governments have found themselves walking a tightrope where they have responded to local reformist pressure with limited changes while simultaneously trying to avoid risking correspondent banking relationships. Until the proceeds from cannabis business can be safely entered into the banking system, Caribbean governments are precluded from fully liberalizing their approach as a loss of correspondent banking would be catastrophic for the tourism based economies.

Legislative Shift

In the past few months, the government of St. Kitts and Nevis has implemented a suite of legislation relating to the decriminalization of the possession and use of cannabis within certain limitations.

These include the full operationalization of:

1. the Cannabis Act 2020 on 20^th April 2023 which establishes a medicinal cannabis authority with the ultimate aim of establishing a medicinal cannabis industry;
2. the Rastafari Rights Recognition Act on 21^st June 2023 which gives effect to the ruling in the case Ras Sankofa Maccabbee v the Commissioner of Police & Attorney General of St. Christopher & Nevis 2019. It was pronounced in this case that the laws then in place violated the constitutional rights to freedom of conscience of Rastafarians; and
3. the Freedom of Conscience (Cannabis) Act also on 21^st June 2023 which allows adults to cultivate a maximum of five (5) plants in their homes.

This is a paradigm shift with significant potential to dramatically change the lives of persons who have been traditionally marginalized, suffered incarceration and its attendant social exclusions and have been overwhelmingly impoverished. The hope is that these persons would be able to enter mainstream society with a viable means of earning a living and be rehabilitated as criminal records relating to the possession and personal use of cannabis are eventually expunged.

There is a significant expectation, especially on the part of the aforementioned marginalized groups, that this nascent industry will normalize what has been a counter-cultural way of life. The government has also announced that the development of a local cannabis industry is part of its thrust to create an economy that is more resilient to threats like those posed by the covid19 pandemic and related lockdown which caused catastrophic losses in the tourism industry.

In contrast with these expectations the United Nations Office on Drugs and Crime (UNODC) World Drug Report 2023 identifies cannabis as the most used drug of abuse with a majority of countries (46%) indicating that it is the leading cause of drug abuse disorders. In the 2022 report the authors noted that the trend towards decriminalization of cannabis use in North America has resulted in associated increases in psychiatric disorder patients, hospitalizations and suicides and this trend has continued.

Banking in the Cannabis Industry

Further complicating matters and especially for a small island developing state like St. Kitts & Nevis is the banking issue. Cannabis remains illegal at the federal level in the United States which means that the largest banks with international business and which act as correspondent banks for foreign countries like Wells Fargo, JP Morgan Chase and Bank of America do not accept funds related to the industry. This means that foreign banks like those in St. Kitts & Nevis with correspondent relationships are also unable to accept these funds at the risk of losing these vital relationships.

The United States senate is currently considering a bill to grant access to the banking system called the Secure and Fair Enforcement Regulation (SAFER) Banking Act, but this faces significant hurdles. Despite bipartisan support generally, there is still significant opposition. On 26^th September 2023 a group of senators issued a statement that said in part “allowing banking access to a Schedule I drug sets a dangerous legal precedent and will help facilitate money laundering for drug cartels”. The current turmoil in the United States congress also puts an indefinite hold on legislative progress. As such, the future for vital banking access remains uncertain.

The lack of banking access means that the development of a cannabis industry in St. Kitts & Nevis, and the wider region, will be stymied but there is very little public discussion of this, or any difficulties associated with the industry.

The Ongoing Approach

In 2021 the United Nations removed cannabis from schedule IV of the 1961 Single Convention on Narcotic Drugs which contains the most tightly restricted drugs like heroin. Cannabis was, instead,  placed in schedule I as a substance that is “highly addictive and highly liable to substance use disorders”. This change is intended to promote scientific and medical research but still ensures that cannabis remains a controlled substance in international law.

The international situation including extra scrutiny and ever-increasing regulation related to AML/CFT/PF (anti money-laundering, terrorism and proliferation financing) means that small island states will find it difficult to chart an independent course and the potential and expectations of citizens hoping for the full mainstreaming of cannabis will remain as nebulous as cannabis smoke for the foreseeable future.

On the other hand, wealthy investors will present Caribbean governments with tempting prospects with workarounds for the hurdles but history shows that oftentimes, the lion’s share of the financial benefits of such projects do not remain in country. This will further disillusion local communities who simply do not have the resources to invest or the financial strength to absorb initial losses associated with any new industry. Ensuring the retention of wealth within the countries is what regional governments are trying to achieve but managing expectations will prove extremely difficult.

Author: Deniece Alleyne
Designation: Partner
Law Firm: HazelAlleyne Law Office
Country: St Kitts and Nevis

Contact: dalleyne@hazelalleynelaw.com