The Telegraph reported over the weekend that IG, Europe’s largest online platform, is to sell its clients’ marijuana shares by the end of May after lawyers warned that investing in them might be a crime.
The UK has recently relaxed the rules on medicinal cannabis, but the dealing, possession and use of the drug for recreational purposes remains a criminal offence.
But in Canada and certain US states, the drug can be used recreationally, which has led to a raft of businesses competing to make everything from the leaf itself thorugh to cannabis-infused drinks and sweets.
#potstocks #cannabis #ACB #CGC #Tilray I just got word that my trading platform IG markets (one of the biggest multi) is banning cannabis trading. Most major platforms and banks may soon follow. Means nothing it is a registered security in a lawful jurisdiction. Grubs. pic.twitter.com/OMrNjzwxgu— Bitcoin Baller (@BallerBitcoin) April 23, 2019
Many of those companies already have UK-based shareholders, but law firm Macfarlanes claimed earlier this year that investors on this side of the pond could be committing an offence under the Proceeds of Crime Act by trading recreational cannabis stocks.
“UK investors in cannabis-related companies, even indirectly, risk technically committing money laundering offences under POCA,” Macfarlanes concluded in their report.
So, should UK investors be worried if they have investments in overseas cannabis companies?
“No, absolutely not,” said Robert Jappie, an expert on cannabis law at Mackrell Turner Garrett in London.
Jappie said although the law was ambiguous, in practice there is little chance of a UK-based cannabis investor being prosecuted.
“[IG’s move] seems overly cautious to me. Any pull-out based on proceeds of crime concerns or potential criminal activity I think is entirely unnecessary.”
Business as usual for other platforms
AJ Bell said its customers would still be able to invest in cannabis stocks as long as the investment settles in CREST – London’s online trade settlement platform – and the company is traded on a HMRC-recognised stock exchange.
Interactive Investor will continue to promote cannabis firms as well, although a spokesperson added it would continue to monitor any developments.
In an email, Hargreaves Lansdown said: “We are an execution only service and investors have the ability to invest in listed companies of interest to them. It is not for us to decide which are suitable for them.”
IG couldn’t immediately be reached for comment.