Pot Was Flying Off the Shelves in Uruguay. Then U.S. Banks Weighed In.


Pot Was Flying Off the Shelves in Uruguay. Then U.S. Banks Weighed In.

By ERNESTO LONDOÑOAUG. 25, 2017

A line outside a pharmacy selling legal marijuana last month in Montevideo, Uruguay. Credit Matilde Campodonico/Associated Press

The pharmacies selling pot were doing a brisk business.

After Uruguay became the first country in the world to fully legalize marijuana sales for recreational use last month, some of the pharmacies struggled to keep up with the demand.

Then came the stern letters from American banks.

The letters immediately sent officials in Uruguay scrambling to make sense of the Patriot Act and other American laws that could doom an essential part of their country’s new marijuana market.

American banks, including Bank of America, said that they would stop doing business with banks in Uruguay that provide services for those state-controlled sales.

Afraid of losing access to the American banking system, Uruguayan banks warned some of the pharmacies over the last couple of weeks that their accounts would be shut down, potentially signaling a broader international impasse as other countries, including Canada, set out to legalize marijuana.

“We can’t hold out false hope,” President Tabaré Vázquez of Uruguay told reporters this week, adding that his administration was trying to come up with a solution.

Uruguay’s Marijuana Law Turns Pharmacists Into Dealers JULY 19, 2017

The snag mirrors challenges that such businesses have faced in American states that have legalized medical and recreational cannabis. Under the Patriot Act, which was passed weeks after the attacks of Sept. 11, 2001, it is unlawful for American financial institutions to do business with dealers of certain controlled substances, including marijuana. The provisions were designed to curb money laundering and drug trafficking.

American banks, including Bank of America, said they would stop doing business with banks in Uruguay that provide services for the country’s state-controlled marijuana sales. Credit Spencer Platt/Getty Images

The Obama administration indicated in 2014 that banks were unlikely to face penalties for offering services to marijuana businesses in states where the trade is legal, as long they screened accounts for signs of money laundering and ensured that customers followed state guidelines. This enabled some of the businesses to get accounts at credit unions, but major banks have largely stayed away from the expanding industry, concluding that the burdens and risks of doing business with marijuana sellers were not worth the hassle.

“Banks are businesses, and they can pick and choose who they do business with,” said Frank Robison, a lawyer in Colorado who specializes in marijuana regulation. “From a banking industry perspective, the marijuana industry might be perceived as a flea on a dog’s back.”

Several pot businesses in states like Colorado and Washington — the first to legalize recreational marijuana — have opted to remain cash-only businesses. Others have found small banks willing to take a calculated risk.

But finding a workaround in Uruguay may be hard. Sales of marijuana represent a small share of business for pharmacies, which are currently the only merchants licensed to sell it, and the pharmacies say they need banking services to operate.

Similarly, bankers in Uruguay will probably find it much more important to remain in good standing with American financial institutions than to preserve the accounts of a small number of pharmacies.

The threat of losing their bank accounts has led some of the roughly 15 pharmacies that initially signed up to participate in the new market to give up on marijuana sales, said Pablo Durán, a legal expert at the Center of Pharmacies in Uruguay, a trade group. Twenty other pharmacies that were expected to join the market are holding off while the government explores solutions, he said.

The American regulations are counterproductive, supporters of the legal market in Uruguay contend, because they may inadvertently encourage, not prevent, illicit drug sales.

Fighting drug trafficking was one of the main reasons the Uruguayan government gave for legalizing recreational marijuana. Officials spent years developing a complex regulatory framework that permits people to grow a limited supply of cannabis themselves or buy it at pharmacies for less than the black market rate. Lawmakers hoped that legal structure would undercut illicit marijuana cultivation and sales.

“There probably isn’t a trade in Uruguay today that is more controlled than cannabis sale,” Mr. Durán said.

As a candidate, President Trump said that American states should be free to chart their own courses on marijuana, and he promised to pare back regulation in the financial sector. Attorney General Jeff Sessions, however, has been a sharp critic of legalization and has compared marijuana to heroin.

Now, some members of the cannabis industry wonder whether the United States government will resolve the conflict between its banking laws and the expanding patchwork of measures to legalize recreational and medical marijuana use around the world. The guidance from the Obama administration, issued by the Justice and Treasury Departments in a pair of memos in 2014, addressed the matter domestically but not for international banking.

“Uruguay may be the tip of the iceberg,” said Mr. Robison, the Colorado lawyer who specializes in marijuana regulation.

Pharmacists in Uruguay were incredulous to learn that their bank accounts could be shut down, considering the years of study and planning that preceded the start of retail marijuana sales last month. The country’s marijuana law was passed in 2013.

“We can’t understand how the government didn’t have the foresight to anticipate this,” said Gabriel Bachini, a pharmacy owner in the coastal city of Colonia.

Buying marijuana in a pharmacy in Montevideo. Credit Andres Stapff/Reuters

Since sales began, the number of registered buyers in Uruguay has more than doubled. As of Aug. 15, more than 12,500 people had enrolled in a system that verifies customers’ identities with fingerprint scanners and allows them to buy up to 40 grams per month (at a price of about $13 for 10 grams, enough for about 15 joints, advocates say). Under the law, only Uruguayan citizens and legal permanent residents are allowed to buy or grow marijuana.

“Demand has been very strong,” Mr. Bachini said. “People are thrilled that they no longer have to go to private homes or venture out into neighborhoods” to get marijuana.

In emailed statements, the Treasury and Justice Departments said that their earlier guidance was still being applied. But banking and legal experts say the Trump administration has yet to lay down clear markers on this area of policy.

Officials in Uruguay are hopeful that American lawmakers will pass legislation allowing banks to do business with marijuana sellers in states and countries where it is regulated. Representative Ed Perlmutter, Democrat of Colorado, introduced a bill in April that would do that, but marijuana advocates say they do not expect a prompt legislative change.

“It is ironic that laws aimed at fighting drug trafficking and money laundering have created a roadblock for a system that intends to do just that,” said Hannah Hetzer, an analyst at the Drug Policy Alliance, which supports decriminalization of marijuana. “Uruguay is creating a legal market that displaces the illicit marijuana market.”

Mr. Bachini, the pharmacist, said he had not yet heard from his bank. But if it threatens to shut down his account, he said, he will not think twice about giving up marijuana sales.

“This pharmacy has been around for 30 years,” he said. “I’d just stop until this issue with the United States is resolved.”

Correction: August 26, 2017

An earlier version of this article misidentified the state that Ed Perlmutter represents in the House. It is Colorado, not Oregon.

Mauricio Rabuffetti contributed reporting.

A version of this article appears in print on August 26, 2017, on Page A1 of the New York edition with the headline: Uruguay’s Legal Pot Is Imperiled by U.S. Banks. Order Reprints| Today’s Paper|Subscribe

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FBI must explain prioritizing environmental activists on its terrorist lists – journalist (VIDEO)

Reuters / Danny Moloshok

The public deserves to know why the FBI singles out environmental or left-wing activists – some from decades ago – as top terrorist suspects on its most wanted lists, as opposed to violent right-wing fugitives, journalist Will Potter told RT.

Potter, an investigative journalist and author of "Green is the New Red: An Insider’s Account of a Social Movement Under Siege," recently wrote a post on his website that questions the Federal Bureau of Investigation’s terrorism priorities, especially in light of the agency’s well-known past abuses. He noted that all of those on the agency’s Most Wanted Domestic Terrorism list are either leftists who committed crimes at least 30 years ago, or environmental/animal right’s activists accused of property crimes, not physical violence.

 

"Over and over again, we’re seeing this overreaching of FBI responsibilities, and going after protest groups and politicizing their duties," he told RT in an interview. "It’s time for all of us to examine how those powers are being used, and I think it’s time for a congressional inquiry as well."

Potter pointed to recent revelations exposing the FBI’s unlawful surveillance and intelligence gathering aimed at "extremist" environmental activists opposed to the Keystone XL oil pipeline, which was called "vital to the security and economy of the United States" in FBI documents.

"I think the most important takeaway (of the FBI’s domestic terror list) is not the individual crimes or what these people are accused of, but the bigger priorities that the FBI is putting forward," he said.

"The purpose of this list is to put a giant spotlight on what the FBI wants to focus its resources on. And when the FBI is focusing resources on environmentalists, or people who are accused of destroying property, or political activists from the ’70s, that means they’re not focusing resources on today’s criminals and actual right-wing groups that have murdered people and sent anthrax, (and) murdered abortion doctors. That should really give everybody pause of how our taxpayer money is being spent."

The targeting of environmental activists is no accident, Potter explained. It’s part of the FBI’s current mission and not an aberration, especially in an era of federal legislation, such as the Animal Enterprise Terrorism Act, a sweeping law that labels and punishes as "eco-terrorism" numerous political activities or civil disobedience conducted in the name of animal rights. The law covers action that "damages or causes the loss of any real or personal property" or "places a person in reasonable fear" of injury.

"It may seem like isolated incidents where you have these environmentalists on a most-wanted list, or the FBI is talking about animal-rights activists, but these are really systemic problems."

Potter said he wants to know how the infamous J. Edgar Hoover-era FBI spying programs, which once targeted Black Panther members and anti-war activists, have evolved to include today’s targets despite public admonishments of invasive, repressive surveillance operations.

"It’s important to remember that the FBI has a history of abuses like this," he said. "That’s why accountability and oversight are so important. During the 1970s and ’80s, there was surveillance and harassment, a program called COINTELPRO spied upon and disrupted social movements. And after that, there were congressional hearings. (Surveillance of activists) was supposed to stop, it was all over with. That was the message we were told. I think now we have to revisit that and find out actually what’s the scope of what’s taking place today, whether those tactics evolved into something new."

Potter said the imbalance in the FBI’s most wanted list is exemplified by left-wing environmental or animal-rights activists, who have been included based on property crimes that have not harmed a human being, while right-wing militia members who have perpetrated violence on people are not on the list.

"The crimes that the people on this most wanted list are accused of, some of them are serious property crimes," he said, "but it’s important to point out that in the history of these groups, no one has ever been hurt, and that’s never been their intention, whereas with right-wing groups in particular, militias, sovereign citizens, anti-abortion groups, that’s been the explicit purpose.

"You can’t ignore these things when you’re prioritizing crime. And why is that? Someone at the FBI needs to explain their justification for not including those groups while focusing so much resources on environmentalists."

Economic damage, not physical injury or loss of life, has guided the FBI’s so-called "anti-terrorism" operations against environmental activists, Potter said.

“What started as a corporate-driven agenda to label protesters as eco-terrorists has become institutionalized,” he told Vice last month. “This has really become standard operating procedure, and I think that’s what’s most disturbing about this.”

In January, a man sentenced to 19 years in prison for conspiring to commit "environmental terrorism" was granted early release after nine years of incarceration once it came to light that prosecutors withheld evidence from the defense. Eric McDavid’s defense had claimed FBI entrapment in the case, saying an agency informant housed, fed, and encouraged McDavid and co-defendants to plot illegal activities, while using FBI surveillance equipment to relay their interactions back to the authorities.

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As heroin trade grows, a sting in Kenya

Heroin addicts prepare heroin before using it in Lamu, Kenya, on November 21, 2014.

One evening last November, a handful of policemen in Kenya’s sweltering port city of Mombasa were handpicked to help in the final stages of a U.S.-led drugs sting that spanned three continents.

The target was a mansion in the wealthy beach suburb of Nyali. The policemen were banned from using their mobile phones and the names of the men they wanted were kept from them until two hours before the raid. Secrecy was deemed vital in a region known for its corruption.

The quarry that night were the alleged leaders of the "Akasha organisation." The U.S. Drug Enforcement Agency (DEA) had spent years infiltrating Akasha and alleges that the gang is part of a heroin supply chain that stretches from the poppy fields of Afghanistan through east Africa to the cities of Europe and the United States.

Inside a mansion girded by palm trees and a two-metre cobblestone wall, police captured the alleged leader of the crime syndicate, Baktash Akasha, his brother Ibrahim, and two other men. Kenyan police charged them with trafficking narcotics to the United States. Prosecutors in the United States subsequently indicted all four on charges including conspiracy to import heroin.

In documents filed in a court in the Southern District of New York on Nov. 10, the U.S. prosecutors alleged that the Akasha organisation was responsible for the "production and distribution" of large quantities of narcotics in Kenya, Africa and beyond.

All the men deny the Kenyan charges and are fighting a U.S. request to have them extradited. Instead, they want their case heard in Kenya.

The raid was part of a wider effort by the DEA and Kenya to counter the growing power of drug cartels operating in east Africa. But while the raid was a success, the story of the operation highlights the many hurdles to slowing drug flows: corruption, porous land borders, poor maritime surveillance and a weak judiciary.

The operation, revealed in court documents and interviews, came at a crucial time. Law enforcement agencies are worried that a record opium harvest in Afghanistan will flood global heroin markets this year. The United Nations reported Afghan opium cultivation rose 7 percent in 2014. Western drug agencies are worried this will grow further following the withdrawal of all British and many American troops from Afghanistan.

Western officials are concerned that increased drug trafficking in east Africa could destabilise the region. They fear a repeat of what happened on the other side of Africa in Guinea-Bissau, which has been flooded with South American drugs. The United States has called that west African country Africa’s first "narco state."

Most Europe-bound Afghan heroin still goes through the established "Balkan route" via Iran and southeast Europe. But a spate of seizures along the Kenyan and Tanzanian coastline over the past few years points to a switch to a "southern route" via Africa.

Short of funds and anti-trafficking expertise, east African countries rely on the Combined Maritime Force (CMF) to go after drug traffickers. While the 30-nation naval force was set up to protect busy shipping lanes from Somali pirates, it is intercepting more and more drug deliveries. Last year it seized 3.4 tonnes of heroin, a 66 percent increase on 2013.

To help, Western law enforcement agencies are stepping up operations in east Africa and countries closer to Afghanistan. The DEA says it plans to re-open its office in Karachi, Pakistan, to work with DEA agents in Nairobi and with Pakistani authorities.

Britain, which estimates it is the destination for about 20 percent of the heroin shipped through east Africa, has also stepped up its presence in the region.

"Now it is not just about us here in Kenya," Hamisi Masa, the head of Kenya’s elite Anti-Narcotics Unit, told Reuters. "The whole world is concerned."

THE FAMILY BUSINESS

The Akasha family has been involved in the drug trade for years, Western diplomats allege.

In the 1990s, the clan was led by Baktash’s father Ibrahim. U.S. Embassy cables published by WikiLeaks describe Ibrahim Akasha as a drug baron. "The Akasha family long controlled drugs (then mostly hashish, heroin, cannabis) along Mombasa to Europe," said a cable dated Jan. 9, 2006.

In 2000, Ibrahim Akasha was killed in a drive-by shooting in Amsterdam’s Red Light district, according to the cables. That dented the business and split the family. Baktash and his half-brother Nurdin, better known as Tinta, Ibrahim’s son with another of his wives, accused each other of murder plots against the family.

Tinta could not be reached for comment.

The DEA had been monitoring the Akashas for years, according to Cliff Ombeta, a lawyer representing the Akashas in Kenya.

By 2014, when the agency began the operation to catch the Akashas, Baktash had taken over the family business. A burly man with a receding hairline, he had built close links with major Pakistani heroin traffickers, the DEA alleges.

One such contact, the U.S. indictment states, was Gulam Hussein, also known as the "Old Man." Hussein had lived on and off in Kenya since 2012. The indictment describes him as "the head of a transportation network that distributes massive quantities of narcotics throughout the Middle East and Africa."

Another alleged contact was Vijaygiri Goswami, an Indian businessman who had spent more than a decade in a Dubai jail for drug trafficking offences. Goswami is married to 1990s Bollywood star Mamta Kulkarni and had built business empires in Zambia and South Africa.

Goswami and Hussein were captured with the Akasha brothers in the Mombasa raid. As well as the heroin charges, U.S. prosecutors have charged the Akashas and Goswami with conspiracy to import methamphetamines, according to the indictment in the New York court.

None of the men have pleaded to the U.S. charges, according to Daniel Arshack, a New York-based lawyer for Goswami. He said he was confident all four men will not be extradited. "We have no reason to believe that the allegations in the U.S. indictment are supported by facts," he said.

PRIVATE JET

According to U.S. court documents and to Kenyan lawyer Ombeta, who represents not just the Akashas but also Goswami and Hussein, the DEA sting started in March last year.

Ombeta told Reuters the sting against his clients amounted to entrapment.

An undercover DEA source posing as a member of a Colombian drugs cartel was introduced to Baktash by a friend of the Akashas. The friend "was also a DEA agent," Ombeta said.

The DEA would not discuss details of its operatives or informants. Ombeta said the man pretending to work for the Colombians was a Moroccan national who had been jailed for a drug trafficking offence in the United States. Peppering his conversation with talk of a private jet and ambitious business plans, the man cultivated an image of opulence, Ombeta said.

Soon after their first meeting, the Moroccan man gave 3 million Kenyan shillings ($32,870) in cash to the Akashas as a goodwill gesture, Ombeta said. "He was flashing money so they could see this was someone who has money and is ready to buy."

The Moroccan man told Baktash Akasha that the Colombians wanted to buy high-quality heroin to sell in the United States, according to prosecutors. In one of many conversations recorded by the DEA, Baktash allegedly said that he could get them unlimited amounts of "white crystal," a reference to pure heroin.

Weeks later, Baktash allegedly told one of his Pakistani suppliers that the Colombians wanted 500 kg (1,100 lb) of "carat diamond," a reference to high quality heroin.

The supplier replied the heroin would cost them about $12,000 per kg and said that he had 420 kg of pure heroin.

"THE SULTAN"

As the DEA source was negotiating with the Akashas, the CMF naval force made a series of seizures in Indian Ocean waters off Kenya, Tanzania and the island of Zanzibar. The U.S. extradition document links at least one of these shipments to Hussein.

In April 2014, CMF forces boarded a traditional wooden dhow and found a tonne of heroin stashed among cement bags. That was roughly equal to all the heroin that 11 east African governments had seized between 1990 and 2009, according to the U.N. Office on Drugs and Crime.

Then in July, for the first time ever, Kenya’s navy made a major heroin seizure. Tipped off by a Western agency, it intercepted a rusting vessel that had set off from Pakistan. A week after they towed the ship into port in Mombasa, officials discovered nearly 800 kg of heroin in its diesel tank.

According to a U.S. extradition document, the man responsible for that second shipment was Gulam Hussein. U.S. court documents allege Hussein told undercover DEA sources he had transported "tons of kilograms of heroin by sea."

Undeterred by the seizure, Hussein, the Akashas and Goswami allegedly set about agreeing a deal on their upcoming shipment.

In mid-September, Baktash told the Moroccan man that a heroin supplier known as "The Sultan" had sent a representative with a one kilogram sample of heroin for the Colombians to test, court documents allege.

The shipment arrived in Kenya in October. Goswami allegedly told the Moroccan that he was working with Baktash to get another 500 kg.

POLYGRAPH TESTS

As the sting neared its end, the DEA and Kenyan authorities grew worried that word would leak.

Junior officers in the Kenyan police earn less than $200 a month. Such low pay helps fuel corruption, according to Kenyan officials. "Drugs barons have bought some of our officers and this is very sad," Mombasa County Commissioner Nelson Marwa told journalists in December. "We have information that police vehicles and ambulances are being used to transport drugs within (Mombasa) county and the coast region."

The Mombasa police rejected this claim. It said Marwa’s statement was "shocking" but promised to conduct an internal investigation.

In the days leading up to the raid, Kenya’s Anti-Narcotics Unit (ANU) suddenly transferred nearly 30 police officers, including some of its own men, away from the Mombasa region.

Local media linked the redeployments to the Akasha bust, saying most of the policemen were moved because of corruption fears. Hamisi Masa, the ANU chief, told Kenyan press he was behind the transfers, but called it a "regular" move.

Fearful of possible corruption, the DEA has in the last three years helped set up a special "vetted" unit within the ANU. Officers who want to join the inner circle have to pass extra checks including polygraph tests. Britain’s National Crime Agency (NCA) carries out similar vetting and due diligence checks with local security officials. It is also beefing up its Kenya team.

THE RAID

In early November, Baktash’s brother Ibrahim allegedly delivered 98 kg of heroin to the man from the Colombian cartel in Nairobi, unaware that the DEA was clandestinely recording their meetings. A couple of days later, he allegedly delivered 1 kg of methamphetamines.

Soon after, Ibrahim left Nairobi on a commercial flight to Mombasa, and the DEA and ANU made their move.

ANU officers handpicked several regular policemen to provide back-up and then hid in a mansion opposite the Akasha home. At about 1.30 am on Nov. 10, they launched their raid, arresting the men and confiscating laptops, tablets, mobile phones and cars.

"There was no resistance … just shock that they had been caught completely unaware," said one member of the Anti-Narcotics Unit.

Ombeta, the Kenyan lawyer representing the four men, said Baktash has told him that he suspects his estranged brother Tinta collaborated with the DEA.

The four men have also told their lawyer that their initial mistrust of the Moroccan man had receded as he splashed more and more cash around.

The men deny any involvement in drug trafficking, Ombeta said, but were tempted by the sight of all that money.

"They were taken over by greed," Ombeta said. (Additional reporting by Edith Honan; Edited by Simon Robinson and Sara Ledwith)

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