The protection of cannabis companies financial rights within Colombia’s legal system

The protection of cannabis companies financial rights within Colombia’s legal system
The protection of cannabis companies financial rights within Colombia’s legal system

The protection of cannabis companies financial rights within Colombia’s legal system

By Jose Alejandro Abusaid, Of Counsel to Hoban Law Group

26/11/2018

Even when the government has fully regulated and legitimated the cannabis industry, from administrative licenses for the  cultivation and processing of psychoactive and non-psychoactive cannabis, to sanitary matters for the commercialization of cannabis derived products, unfortunately, financial institutions, and particularly banks, are still coming up with obstacles for cannabis companies to acquire financial services.

As they go through all sorts of inconveniences because of this situation, cannabis companies should be well aware that these arbitrary exclusions are averse to the rights contained within Colombia’s legal system and, therefore, they can be taken down in a prevalence of national and international economic interests.

Firstly, it is decisive to consider that Colombia’s State Council, Constitutional court and Financial Superintendency, have all stated that financial services are indeed public services, being a status derived of its immense relevance for an economically organized community in the market system, as wells as the crucial interests involved and the need for permanence, continuity, regularity and generality of their activity.

Thereon, Colombian Constitutional Court has declared that the exclusion of clients within banking and other financial services, can be only done as a consequence of objective and reasonable criteria that implies a direct economic risk for the financial institution, for instance, when the company is included in a restrictive list that is recognized by Colombia’s government. The Court recognized that this also pursues the protection of economic freedom and private enterprise.

In consequence, financial institutions can not arbitrarily refuse to provide their services to cannabis companies for the activities they perform, as it is their fundamental right to obtain access to them. Additionally, the breach of this right by financial institutions can be repaired through  “tutelage”, which is the most expedit legal mechanism in Colombia, as it has to be resolved within 10 working days.

This is also great news for foreign companies looking forward, or currently operating in Colombia as, in accordance with the various Free Trade Agreements that have been celebrated,  favorable conditions and rights provided for national companies must be also extended to foreign investors, under the principle of “Equal Treatment”.

Furthermore, Colombian Foreign Investment regulation guarantees that foreign investors must have “free transferability” which ensures that the investor can freely transfer abroad his capital and profits. In terms of free transfer, the regulation guarantees that any change in the same can not diminish nor impair the rights of the moment in which the investment was registered.

All that has been stated before denotes that cannabis companies can, by all means, demand the financial institutions to provide them financial services without being denied because of the activities these companies perform. Now, even cannabis companies are indeed facing some challenges as the industry continually grows, it is certain that Colombia’s overall legal system protects them and provides the legal mechanisms for them to operate seamlessly.

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Cannabis Law Journal – Editorial Board Members

Editor – Sean Hocking

Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild