The production of recreational cannabis was legalised in Canada in October 2018. As a consequence, UK corporates and financial institutions wishing to invest or be involved in activity relating to Canadian cannabis businesses face a real obstacle: doing so could technically constitute a criminal offence under UK money laundering legislation (see our previous blog here).
Even before this change took effect, Lloyd’s of London announced that, having taken advice from leading counsel, it is satisfied that providing insurance for Canadian cannabis risks would not in appropriate circumstances amount to a breach of UK money laundering legislation. In short, their view is that the UK money laundering legislation was not designed to prohibit the provision of insurance to business activity (i.e. the production of cannabis) that has been “carefully legalised in another country”. Lloyd’s recommends that managing agents obtain appropriate legal advice under Canadian and UK laws.