From today (7 July 2021), Jersey funds are free to invest in the global cannabis industry without fear of investment returns being treated as proceeds of crime when they hit the fund's bank account.
Legislative changes mean that so long as the returns are from cannabis activity that is legal in the country where it's taking place, and that country applies suitably equivalent money laundering controls to Jersey (check the official list), then those returns are explicitly excluded from being proceeds of crime for AML purposes.
This opens the door for Jersey funds to be used for making cannabis investments in key market jurisdictions such as Canada, USA, Germany, Italy and Australia.
Under the 'dual criminality rule', if an activity is legal overseas (where it took place) but illegal in Jersey (and punishable by more than a year in prison), then any proceeds from that activity are regarded as proceeds of crime. The same rule applies in the UK. But in Jersey, cannabis activity in approved jurisdictions is now unequivocally exempt from this rule.
Pre-pandemic, the global cannabis market was booming, and the post-pandemic outlook looks even brighter. In December 2020, the United Nations reclassified cannabis by removing it from the list of 'the world's most dangerous drugs' and though it is still listed as a controlled drug, it seems that many more countries are moving towards decriminalisation.
This development in the Jersey AML regime means that Jersey funds (and other investment vehicles) are 'open for business' when it comes to cannabis investment.
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