It’s hard to do business without banks.
The first country to fully legalize the recreational use of marijuana, Uruguay, has suddenly found itself facing an unexpected obstacle: the international banking industry.
It all began a few weeks ago when one of the 15 pharmacies that had agreed to sell the two varieties of cannabis distributed by the Uruguayan State announced that it was withdrawing from the scheme after its bank, Santander, had threatened to close its account unless it stopped providing services for the state-controlled sales. Shortly afterwards it was revealed that other banks, including Brazil’s Itaú, had canceled the accounts of the private companies that had been granted a license to produce marijuana as well as some cannabis clubs.
To fill the funding void, the state-owned lender Banco República (BROU) stepped up to provide financing to the 15 pharmacies involved in the scheme as well as producers and clubs. But within days it, too, was given a stark ultimatum, this time from two of Wall Street’s biggest hitters, Bank of America and Citi: Either it stops providing financing for Uruguay’s licensed marijuana producers and vendors or it’s dollar operations could be at risk — a very serious threat in a country where US dollars are used so widely that they can even be withdrawn from ATMs…