Investment in cannabis is booming in the US and Canada ever since the legalization of recreational cannabis in Canada and some US states last year. More and more businesses are opening up in the cannabis industry, hoping to emulate the successes of others in the sector.
GreenStar Biosciences Corp. (CSE: GSTR) is one such company that identifies and invests in some of the most promising North American cannabis companies. One such success story is their partner company Cowlitz. Cowlitz produces and delivers high quality cannabis products at affordable prices. Thanks to their efficient supply system, and indoor and outdoor production facilities, they are able to generate $3 million of revenue quarterly and growing. At the end of 2018, the company registered revenue of $14.6 million which is an impressive achievement after just five years of operations.
While North America is booming cannabis investors in the UK face more difficulties as the British legislation regarding the sector is tricky and unclear.
The Proceeds of Crime Act (POCA) is the main anti-money laundering legislation in the UK. It states that anyone receiving proceeds of crime can be prosecuted.
For investors, these laws limit their scope when it comes to negotiating cannabis investment with producing countries such as Canada; a nation where, unlike the UK, recreational marijuana is legal. In the UK, cannabis is legal only for medical use if prescribed as cannabidiol.
Under the POCA, the sanctions that an investor might face are seizure of investment proceeds or dividends; even fines that, according to experts, would affect investment in cannabidiol and medicinal cannabis brands.
A report released by a research firm Prohibition Partner warned that crimes under the POCA were generally drafted and unclear.
In addition, it should be noted that some seek to invest in countries where certain illegal conduct in the UK is permitted.
For its part, the Home Office said it supports the application of the legislation when possible criminal activities that violate UK law are identified.
Nick Davies, executive director of the law firm Memery Crystal, said that concerns about the POCA delay flotations in the UK; that is, more diligence is being done than would be done for an oil or mining company in the same jurisdiction.
Memery Crystal is working with two companies that hope to be the first cannabis companies to operate on one of the UK’s main stock exchanges.
The UK’s National Agency Against Crime said it considered requests for exceptions to the law through its Suspicious Activity Reporting process.
Cannabis, a business that wants to be legal
According to an article published in El País Semanal, the 1961 UN Single Convention on Narcotic Drugs placed marijuana at the same level of danger as heroin.
With the passing of the decades, diverse studies have been made to demonstrate their benefits in certain doses. Likewise, in around 25 countries, cannabis is legal for medicinal use, and in some others its recreational use is allowed.
The World Health Organization (WHO) recommended that the UN remove cannabis from Schedule IV, the most restrictive category since 1961. However, it is the UN Economic and Social Council (ECOSOC) that is in charge of making these decisions, and has postponed them so that States have more time to consider the recommendations.
The European Union, for its part, voted to develop a common standard for medicinal cannabis throughout that bloc. According to the Prohibition Reporter, it is expected to be the largest market for cannabis in the next five years.
The reason points out that the cannabis business is growing and increasingly attracts the attention of investors, as marijuana has become a very common consumer product.
Although the market is concentrated in the United States and Canada, it is beginning to move into Europe; it is estimated that, by 2028, more than 145 million dollars will be reached in the legal cannabis market.
Finally, other specialists, such as Emmanuelle Auriol of the Toulouse School of Economics, say the taboos about marijuana are fading; public opinion is changing, and investors no longer see it as a stain on their reputation but rather a route to profit.
