‘We never thought this would be considered drug trafficking’: International finance rules, policy space and Uruguay’s regulation of recreational cannabis

ABSTRACT

Following landmark legislation in 2013, Uruguay became the first country to regulate the legal production, distribution and sale of recreational cannabis. While broader debates anticipated the significance of the UN drug conventions, the extent to which Uruguay’s drug treaty obligations shaped regulation is unclear and the relevance of finance norms has been neglected. Drawing on institutionalist and governance theories, this study explores how international drug and finance regulations limited Uruguay’s policy space to implement cannabis regulation, and how this was perceived by policy actors. Policy documents and 43 semi-structured interviews were thematically analysed. The analysis demonstrates how Uruguay’s drug treaty obligations were less directly constraining to policy space compared to international finance norms, including the US Patriot Act, anti-money laundering standards and financial inclusion practices. Such norms exerted powerful influence over Uruguay’s ability to implement aspects of cannabis supply that interact with broader financial systems, allowing banks to terminate business relationships with clients deemed as high risks for money laundering. The Uruguayan case suggests that financial regulations at diverse levels are likely to constrain policy space in other contexts where the market-based policies of cannabis regulation raise tensions with a narrowly constructed risk management principle in approaches to financial supply.

KEYWORDS:

• Cannabis regulation
• policy space
• multilevel governance
• international drug treaties
• finance norms
• Uruguay

Acknowledgements

The author thanks representatives of the Uruguayan Research Centre for the Tobacco Epidemic (CIET) and the Ministry of Health for their support during engagement of key interviewees. Professors Jeff Collin and Sarah Hill are thanked for their critical review of an early draft of this manuscript. Finally, I would like to thank the Reviewers for taking the time and effort required to review this manuscript. I sincerely appreciate their valuable comments and suggestions, which helped improve the overall quality of the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This research was funded by the School of Social and Political Science at the University of Edinburgh. The author is also supported via SPECTRUM with funding from the UK Prevention Research Partnership (MR/S037519/1): https://mrc.ukri.org/research/initiatives/prevention-research/ukprp/.