The Minister of New Growth Industries, Hon. Kareem Musa, says the hefty price tag of the referendum is the reason for the delay, not concerns raised by the banking community
BELIZE CITY, Wed. Aug. 3, 2022
The process of legalizing cannabis in Belize and launching a cannabis industry has been put on pause after a recent meeting between the churches and government officials. There had been speculation that concerns raised by the banking community may have been the impetus behind the shelving of the marijuana legalization bills, which have gone through three readings—in both the lower and upper houses of the Belizean parliament—with only final assent from the Governor-General being necessary for them to be put into effect. The recently amended Misuse of Drugs Act and the Cannabis and Industrial Hemp Control and Licensing Bill 2022 had laid the legal framework for a legal cannabis industry in Belize, but an offensive from the churches, which garnered the requisite number of signatures to trigger a referendum on the matter, has brought efforts to get that industry off the ground to a sudden halt.
The referendum, which was set to take place by early September, has been put on hold after the government and churches agreed to hit the pause button. When recently interviewed by local reporters, Prime Minister Hon. John Briceño said that his Minister of State in the Ministry of Finance, Hon. Chris Coye, had a meeting with key players in the banking community who expressed concern over the legalization, and how the industry could affect correspondent banking relations.
Minister of New Growth Industries, Hon. Kareem Musa, for his part, has acknowledged those concerns and how critical it is to preserve correspondent banking relations in Belize, but pointed out that the cannabis industry in Belize would be entirely cash-based — meaning revenue from the cannabis and industrial hemp industry would not be deposited in, or handled by, local banks with international correspondent banking relationships.
He noted that it had always been the intention within his ministry to have the cannabis industry operate on a cash-only basis, and he went on to point to the fact that the industrial hemp industry, among others in Belize, is considered cash-based.
“Correspondent banking is a live issue at all times for Belize and for the Caribbean, but what I can tell you is that countries like Jamaica, and Antigua, are moving towards it; Trinidad is about to pass their legislation, and St. Vincent. Those countries are moving toward the legalization of cannabis. As I always say, it is a cash industry, so when you ask me about banking– banking does not necessarily come into the picture unless you are banking your cannabis dollars,” he said.
He further noted that even the United States’ cannabis industry is a cash-based enterprise.
“In the Caribbean and the great United States, where it is a 92-billion dollar industry, it is a cash industry, so individuals who are engaged in the cannabis sector do not go and deposit their funds within the banks. That does not happen even in America,” Hon. Musa said.
Minister Musa went on to suggest that maybe a local institution with no international correspondent banking facility may be an option for the handling of earnings within the industry.
He pointed out, however, that the greater concern at this juncture of the process is the cost of the referendum, which the government has already set aside $5 million to cover in a recent supplementary appropriation. The process of having Belizeans vote on whether they support or oppose marijuana legalization, however, could cost much more than what was budgeted, and has caused the government to decide to stall the process.
“The real point is that it is a costly referendum, and so it’s $5 million it would have cost for us to do this referendum, and to me that is the real reason, but at the same time as we put a pause on the legislation, we have time to tighten up whatever loose ends there may be in terms of correspondent banking, but in my respectful opinion that will never be tied up,” Minister Musa outlined.
He also indicated that the government and other stakeholders will have to figure out a way to work around the global banking reality facing the cannabis industry.
“We will have to figure a way—whether it [be] opening community banks or credit unions that do not have correspondent banking in order to bank the dollars here in Belize. That is the solution, and there are several international companies who have expressed interest to come and open these community banks here, so there are solutions to that, but like I said, the primary concern at this time is the cost of the referendum,” Hon. Musa said.
Minister Musa emphasized, however, that commercial banks in the country would need to do additional due diligence to ensure the funds being deposited at their institutions are not proceeds from the cannabis industry—a concern that had reportedly been raised by one of the country’s major banks.
“What it does is that it imposes obligations on the local banks to do their due diligence to make sure that the funds that they are receiving are not related to, whether it is a cultivation license or a dispensary license, the banks just have to ensure that they are not receiving funds from the cannabis-related businesses. There are several other cash industries already in existence in Belize; for example, the cattle that we transship to Guatemala, tobacco, and the cigarette industry at the Free Zone—that is a cash industry. The hemp business right now in Belize … the funds received in relation to that industry is not accepted by the banks, and so cash industries are normal in Belize. We have to understand that, but there is a greater concern, because there is so much revenue to be earned from cannabis that in fact, the local banks are saying, ‘we want to make sure there are no issues for us’,” Hon. Musa outlined.
For now, however, the legalization of cannabis in Belize is on pause.
Late this evening, the churches and the Government of Belize released a joint statement which made that pause in the holding of a referendum (and the legalization of marijuana) official. The release states, “The Church Leaders on behalf of the petitioners and the Government of Belize request of the Governor General to defer the issuing of the Writ of Referendum until a date to be determined.”