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ACKRELL CAPITAL
CHAPTER V Global Cannabis Regulation

International partnerships and business plans are being formed as countries increasingly allow importation and exportation of cannabis products and more companies recognize the global potential of the cannabis industry. Canadian companies are cultivating cannabis in South America and supplying markets in Europe, Australian companies are forming research partnerships with producers in Israel, and European companies are securing cannabis-related patents in the United States. And, as discussed in more detail in Chapter VII, Capital Markets for Cannabis Companies, more cross-border investment activity is taking place as industry participants position for the expected further opening of global cannabis markets.

Despite the growing recognition of the potential medical value of cannabis, the current legalization momentum and the increasingly international scope of cannabis business, the movement of products and flow of capital required for a truly global industry continue to be inhibited by incongruous laws, regulations and international treaties. For example, concerns about violating U.S. federal banking and anti–money laundering regulations have caused certain U.S. banks to refuse to be connected to the cannabis industry, avoiding even indirect association with cannabis activity that is legal where conducted. In one instance, a number of U.S. banks threatened to cease business with certain Uruguayan banks that serviced pharmacies legally distributing recreational cannabis within Uruguay. In turn, those Uruguayan banks effectively forced the pharmacies to stop participating in Uruguay’s cannabis market. (In a similar way, lack of access to the U.S. federal banking system continues to inhibit growth of the domestic cannabis industry.) Until the largest economies in the world more fully embrace cannabis, we must stop short of calling cannabis a truly global industry. However, we believe that the legalization momentum will continue worldwide.

United Nations Conventions

International regulation of cannabis, cannabis derivatives and many other narcotic, psychotropic and similar substances is addressed primarily by three international treaties (Conventions) adopted through the United Nations (UN) between 1961 and 1988.

The Single Convention on Narcotic Drugs of 1961 (1961 Convention) addresses regulation of the cannabis plant, the coca flower and the opium poppy; certain of their derivatives (such as hashish, cocaine and heroin, respectively); and any other substance found in accordance with the 1961 Convention to be “liable to similar abuse and productive of similar ill effects.” The 1961 Convention establishes four schedules of substances subject to increasingly strict controls in the following order: Schedule III, Schedule II, Schedule I and Schedule IV. Schedule IV substances (the most strictly controlled) are those Schedule I substances found to be particularly liable to abuse and to produce ill effects and for which such liability is not offset by substantial therapeutic advantages. Cannabis, cannabis resin, and extracts and tinctures of cannabis are included on Schedule I; cannabis and cannabis resin are also included on Schedule IV.

The Convention on Psychotropic Substances of 1971 (1971 Convention) addresses regulation of certain “psychotropic” substances, which the Convention recognizes generally as substances that may stimulate or depress the central nervous system causing “hallucinations or disturbances in motor func-

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