Saint Vincent and the Grenadines is targeting increased foreign investment in the country’s fledgling medical cannabis industry in an effort to diversify its economy away from its weak exports of traditional crops and goods.

The announcement, which was made as a part of the unveiling of the country’s National Budget last week, comes after investments in the cannabis industry generated US $5.2 million in tax revenue and licensing fees in 2019, far outpacing the US $1.8 million projected after the legalization of cannabis cultivation and sales for medicinal purposes in December 2018.

However, the move to attract investment to the island’s “well-regulated, export-oriented medicinal cannabis industry” faces a major hurdle according to Camillo Gonsalves, the country’s Minister of Finance: existing federal banking regulations in the United States that bar financial institutions from providing services to cannabis companies. This extends to banks, such as those in the Caribbean, that, as a result of their correspondent banking relationships with the US, are restricted when it comes to cannabis.

Only US $2.2 million has made it into public coffers, as the Medicinal Cannabis Authority has only been able to access funds from companies from Canada, the Caribbean and Europe, according to data provided to Cannabis Wire by Saint Vincent’s Medicinal Cannabis Authority.

“The reluctance to immediately accept all fees is due to caution on the part of the [Medicinal Cannabis Authority] and the local banking sector about potentially jeopardizing our fragile correspondent banking relations, particularly when dealing with cannabis companies that have American directors or board members,” Gonsalves said to members of parliament during the budget address.

Gonsalves added that the restrictions are untenable and the country’s banks are “currently consulting with their correspondent banks and attorneys about the most efficacious ways to process and accept these fees, as well as the day-to-day transactions that will increase as the industry matures.”

Saint Vincent and the Grenadines isn’t the only Caribbean country facing major challenges due to United States restrictions on cannabis industry banking. Jamaica, which is currently drafting legislation to allow for the import and export of cannabis and products produced from the plant, is also facing major challenges, according to Audley Shaw, the country’s Minister of Industry, Commerce, Agriculture and Fisheries.

“Industry players face serious issues in respect of establishing bank accounts,affecting the movement of much-needed investments for the start of their businesses. The global banking industry has not been receptive to banking funds being channeled into, or generated within, Jamaica’s cannabis industry, which is negatively impacting the industry’s operational capabilities and limiting its growth potential,” Shaw told Cannabis Wire.

Changes to United States banking regulations proposed under the Secure and Fair Enforcement (SAFE) Banking Act, Shaw said, would lift these hurdles for the industry in Jamaica and across the Caribbean. (Read Cannabis Wire’s latest coverage of the SAFE Act.)

Saint Vincent and the Grenadines, which is second only to Jamaica in the illegal cultivation of cannabis in the Caribbean, has received more than 250 license applications to-date from: 25 foreign investors, seven local investors, 26 local cultivators, 210 traditional cultivators, and 12 traditional cultivators’ cooperatives. (A local cultivator is a recently established company, while a traditional cultivator is someone who grew cannabis illegally and has received a license to become a legal cultivator.) A total of 70 applications have been approved.

According to the agenda for the Intersessional Conference of Heads of Government of the Caribbean Community (CARICOM), scheduled to be held on February 18 and 19 in Barbados— another Caribbean country that recently approved the cultivation and use of cannabis for medicinal purposes—the region’s leaders will discuss advocacy and lobbying efforts to address the banking issue.