Banking troubles for Uruguay’s recreational cannabis businesses

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It didn’t take long for recreational marijuana businesses in Uruguay to encounter a key challenge that hinders U.S. cannabis companies: banking.

Uruguayan pharmacies began selling adult-use cannabis July 19, but the South American nation’s banks are refusing to do business with companies tied to marijuana.

A government official – speaking on the condition of anonymity – said Uruguayan banks that deal with companies that sell rec marijuana risk running afoul of international finance laws. U.S. financial institutions, meanwhile, are hesitant to bank marijuana businesses because cannabis remains illegal at the federal level.

Uruguay’s largest bank, state-owned Banco Republica, told MJ-selling pharmacies that it must close their accounts.

A pharmacy in Uruguay’s capital, Montevideo, decided not to bank the pharmacies after receiving a warning from a local branch of Santander. The Spanish bank said it has decided not to work in the cannabis sector.

Running a business in Uruguay without being able to bank is difficult because, among other things, the law prohibits cash or check payments for employees and requires that salaries be paid by direct deposit.

Diego Olivera, secretary-general of Uruguay’s National Drugs Council, said authorities are meeting with MJ-dispensing pharmacies to determine how many have been warned by banks. He added that officials are looking at possible solutions but didn’t give details.

Sen. Jose Mujica has threatened “gridlock” in parliament if authorities fail to resolve the problem. He was president when legalization passed in 2013 that made Uruguay the first country to cover the entire cannabis chain from seed to sale.

– Associated Press