The protection of cannabis companies financial rights within Colombia’s legal system
By Jose Alejandro Abusaid, Of Counsel to Hoban Law Group
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.