Evolution of cannabis regulations and their overlooked link with money laundering: Australia as a critical case study
Journal of Money Laundering Control
ISSN: 1368-5201
Article publication date: 3 February 2023
Issue publication date: 22 November 2023
Abstract
Purpose
The purpose of this paper is to interrogate if the legal status of a cannabis affects money laundering activity. The legal status of cannabis continues to evolve globally; at the same time, its market remains enormous. Much of this market represents dirty money from criminal acts, which often requires laundering. In the context of changing cannabis regulations, legislation, and policies, the authors propose the possible implications such changes may have on the extent of money laundering.
Design/methodology/approach
This paper proposes the implications of the evolution of cannabis regulations on money laundering activities, using the theoretical underpinning of rational choice. Using Australia as a replicable critical case study, the paper, using the Walker gravity model and using United Nations Office on Drugs and Crime-reported prices of cannabis from 2003 to 2017 and Australian Criminal Intelligence Commission reports empirically validates the effects of cannabis regulations on the proceeds available for laundering.
Findings
This study finds support for the argument that prohibitive measures toward cannabis use contribute to increases in the need to launder generated proceeds.
Research limitations/implications
The findings can be replicated in other countries and may contribute to novel propositions within the debate on the legalization of cannabis use, which has, thus, far primarily focused on the areas of health, crime, taxation and education.
Originality/value
To the best of the authors’ knowledge, no study has yet attempted to provide an economic analysis of the effects of cannabis policy changes on money laundering.
Keywords
Acknowledgements
The authors are grateful to Dr Joras Ferwarda, Assistant Professor at Utrecht University School of Economics, The Netherlands, and Wahaj Ahmed Khan, Bank Al Habib Limited, Pakistan, for their time and help. Their guidance on the Walker Gravity Model enabled the authors to proceed further and accomplish this research. Finally, the authors are thankful to Professor Kuldeep Kumar and Professor Adrian Gepp for their constant support and motivation.
Funding: This research was funded by the Charles Sturt University Sturt Scheme grant.
Citation
Tiwari, M. and Ferrill, J. (2023), "Evolution of cannabis regulations and their overlooked link with money laundering: Australia as a critical case study", Journal of Money Laundering Control, Vol. 26 No. 5, pp. 970-988. https://doi.org/10.1108/JMLC-11-2022-0158
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited