Issuu

business@tribunemedia.net

WEDNESDAY, MARCH 13, 2019

$4.40

DPM: We won’t allow any crypto asset ‘disasters’ By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net THE DEPUTY Prime Minister yesterday said the government aims to prevent “disastrous situations” by imposing proper regulation for cryptocurrency assets and related instruments. “The whole issue around crypto currencies and assets is a very dynamic and moving initiative,” said K Peter Turnquest. “There is legislation being drafted through the Securities Commission, and we hope to have the first draft for public consultation very shortly, once it’s been presented to Cabinet and approved. Hopefully we will have the framework around that in short order.” He added that cryptocurrency exchanges and companies operating within this space have expressed interest in setting up operations in The Bahamas, and said: “We want to make sure we have the right regulatory environment set so we don’t end up with disastrous situations where we have shysters or con men taking advantage of a lax regulatory environment. “We’re putting in place the legislation and regulatory rules as much as it applies to ensure that we protect the reputation of The Bahamas.” The Central Bank of The Bahamas, responding to a rash of companies promoting initial coin offerings (ICOs) and crypto/blockchain solutions, last year moved to warn Bahamians of the risk involved in investing in a still-evolving industry. “The Central Bank of The Bahamas wishes to advise the public that no licence has been granted to cryptocurrency operators by the bank or any other financial regulator to offer digital currency, or to provide such services such as cryptocurrency exchanges, crypto loans or crypto and fiat processing in or from within The Bahamas,” the Central Bank warned. “Persons investing in such products and services do so at their own risk.” The Central Bank added that crypto/digital currencies were not legal tender in The Bahamas, are not issued or backed by it, and are not legal foreign currency either. “The Central Bank does not regulate or supervise virtual currencies, nor has the bank authorised any entity to operate a virtual currency platform,” the Central Bank reiterated. “The public is further advised to seek professional advice with respect to matters regarding savings and investments from legitimate and licensed financial institutions.”

$4.42

Court tosses $727m Renward LOI claim By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

HE Supreme Court has dismissed the $727.364m damages claim brought against Renward Wells and two government “agents” by the firm at the centre of the letter of intent (LOI) controversy. Carol Misiewicz, the deputy registrar, in a March 8, 2019, ruling found that Stellar Energy and its affiliates were “from any angle unable to sustain an action” against the now-Cabinet minister and his co-defendants, Algernon Allen and Frank Forbes, “on the basis of the LOI”. She determined that the LOI, the signing of which forced Mr Wells’ departure as Ministry of

• Stellar lawsuit can’t sustain ‘from any angle’ • Algernon Allen claim also dismissed • Waste-to-energy firm ‘unlikely to appeal’

RENWARD WELLS

ALGERNON ALLEN

GREGORY MOSS

DAMIEN GOMEZ

Works parliamentary secretary under the former Christie administration, “was not binding in law” and represented “a discussion document” rather than a completed contract. The deputy registrar also branded Stellar’s claims against Mr Allen, himself a former Cabinet minister, and Mr Forbes, a businessman and accountant who ran Sigma Holdings, as “bad” given that they were not parties to the now-notorious LOI. Ruling that Stellar, which had proposed developing a

THE Bahamas must use its escape from the European Union’s (EU) tax “blacklist” to take the financial services industry to the “next level of growth”, the deputy prime minister urged yesterday. KP Turnquest, speaking after it was confirmed that The Bahamas had avoided the EU’s 15-strong list, told Tribune Business that the country needed to exploit this outcome by repositioning the sector to focus on high-margin, value-added business. Following the “arduous” effort to enact multiple laws bringing The Bahamas into compliance with the EU’s demands, Mr Turnquest said this nation

KP TURNQUEST now needed to use this legislative platform to its advantage by attracting companies to domicile and conduct real business from these shores. He argued that this would both deepen the financial

‘Breathing space for action’ by EU, says former AG By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

drive real, tangible benefits to the Bahamian people. “It is the evolution of the business. I don’t think we can deny that the volume business, as you put it, is a thing of the past, but it gives us an opportunity in respect of the high value side of the business that we can do very well in.” Mr Turnquest explained that the latest reforms will shift The Bahamas away from its traditional reliance on “volume” - represented by International Business Company (IBC) incorporations and number of bank

SEE PAGE 5

SEE PAGE 9

SEE PAGE 4

• DPM: Turn ‘arduous’ process to our benefit • ‘Major work’ still as EU monitors Bahamas • ‘Scanning horizon’ for further threats services industry’s ties to the domestic economy, and provide “real, tangible benefits to the Bahamian people”, since an expanded corporate presence would speak greater commercial activity and job creation. “This is the message that needs to be put forth,” Mr Turnquest told Tribune Business yesterday. “What has been a very difficult and arduous process gives us the opportunity to retool the financial services sector for the next level of growth, which is the deepening of the industry’s involvement domestically and expansion of its value-added side to

JOHN DELANEY QC

THE Bahamas’ escape from the European Union’s (EU) tax “blacklist” has created “breathing space for action” to reposition the financial industry, an ex-attorney general argued yesterday. John Delaney QC, principal at the Delaney Partners law firm, told Tribune Business that this nation needed to seize the opportunity provided by its non-inclusion to attract investors and companies to establish a physical presence in The Bahamas. Calling for the Commercial Enterprises Act to be expanded to cover more industries, so The Bahamas’ attraction as a location is enhanced, Mr Delaney said he saw financial services evolving into support infrastructure for an international business and services hub. While business volumes might decline under the new regulatory environment imposed by the likes of the EU and Organisation for Economic Co-Operation and Development (OECD), he added that “returns” to The Bahamas would increase because companies with physical presence would generate more jobs and activity in the domestic economy. “It’s more breathing space for action; it’s not breathing space to do nothing,” Mr Delaney told Tribune Business of The Bahamas’ non-inclusion on the EU’s 15-strong list of nations deemed “uncooperative” in the fight against global tax

‘Next level’ for financial sector after EU escape By NEIL HARTNELL and KRISHNA RUSSELL Tribune Reporters

$4.45

Ex-minister backs corporate tax call By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A FORMER finance minister yesterday joined calls for The Bahamas to consider implementing a low-rate corporate tax as a way to shed its long-standing “tax haven” label. James Smith, pictured, also an ex-Central Bank governor, told Tribune Business he had floated the suggestion of a corporate income tax of “no more than 15 percent” to members of the Bahamian financial services industry at their recent Bimini summit. Speaking after the European Union (EU) yesterday confirmed The Bahamas

• Smith suggests rate of ‘15% or less’ • Would help shed ‘tax haven’ label • Urges study of this and ‘double tax’ had avoided its “blacklist” of jurisdictions deemed “uncooperative” in the fight against global tax evasion, Mr Smith said such a tax would pave the way for this nation to enter double taxation agreements with other nations. Such treaties have been used by the likes of Barbados to attract foreign investors and companies to establish a physical presence, and even corporate headquarters, as these firms are taxed only once - at the

Caribbean nation’s lower rates - on profits and dividends repatriated to home territories such as Canada. While implementation of a corporate tax was not required to meet the EU’s demands, Mr Smith argued that The Bahamas needed to at least study it as an option for both attracting foreign direct investment (FDI) and taking itself out of the crosshairs of the 28-nation bloc and Organisation for Economic Co-Operation and Devel-

opment (OECD). Warning that these groups were unlikely to halt their attacks, Mr Smith said: “From our point of view, and that of the other international financial centres (IFCs), it’s a question of waiting and seeing a moving of the goal posts and redefining of terms. “They seem to have an overall objective in mind; making it difficult for IFCs to compete, and in that kind of environment the best

thing we can do is monitor. If we take a victory lap today we find there’s something else coming down the chute.” Recalling his recent appearance at the Bahamas Financial Services Board’s (BFSB) recent International Business and Finance Summit (IBFS) in Bimini, Mr Smith said he had advocated for this nation to implement a low-rate corporate tax as a means to end external perceptions that it facilitates tax avoidance and evasion by clients. “I said: To stop being looked at as a tax haven, why not go ahead and form

SEE PAGE 4

PAGE 2, Wednesday, March 13, 2019

THE TRIBUNE

Govt under ‘no illusions’ on financial sector threat By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net THE DEPUTY Prime Minister yesterday said the government harbours “no illusions” over the continuing threat international regulatory initiatives pose to the financial services industry. KP Turnquest, pictured, speaking after it was confirmed that The Bahamas had escaped the European Union’s (EU) tax “blacklist”, said: “We have no illusions that this is an industry that is very dynamic, and continues to

move as regulations and standards move. “We know there are upcoming initiatives by the EU and OECD (Organisation for Economic Co-Operation and Development) with respect to the taxation of digital transactions, for instance, harmonisation of valueadded tax (VAT) rates and rules, as well as initiatives which speak to some kind of minimal taxation internationally. “All of these are issues are going to confront us in the upcoming year. It’s reasonable to expect that there will be further requirements as we go along. We

recognise that as the standards change we also have to make changes.” The government yesterday hailed the success of its efforts, in partnership with the financial services industry, to keep The Bahamas off the EU “blacklist” of countries deemed uncooperative in the fight against global tax evasion and avoidance. Arguing that it had safeguarded the industry’s competitiveness by affirming this nation’s commitment to tax transparency, the Ministry of Finance said the past year’s efforts had shown The Bahamas is “a partner on international standards on information exchange, tackling harmful tax practices and dismantling artificial tax structures”. Dr Hubert Minnis, the prime minister, said in a statement: “The government is very encouraged and pleased by the EU’s decision to not include The Bahamas on its list of noncooperative jurisdictions. The decision is the result of a strategic and comprehensive approach by the government’s team in consultation with stakeholders. “I would like to thank the private sector for its valuable contribution, and reiterate our government’s commitment to continue to do what is

necessary to maintain the standing of The Bahamas as a respected international financial centre.” Mr Turnquest added: “Our ongoing co-operation with the EU, and the positive evaluation of the country, sends a strong signal to the international community that The Bahamas’ financial services industry is stable and governed by a sound regulatory regime. “The government will continue to promote engagement with all stakeholders on these issues to ensure The Bahamas remains the preferred jurisdiction of choice for financial services in the region. “I commend the Technical Working Committee for their tireless efforts, as they have been working assiduously for over a year to push the reform process forward. This required the strengthening of our legislative and regulatory framework, among other things.” The Ministry of Finance said the EU has reviewed the tax systems of more than 92 jurisdictions since 2017 due to concerns that corporations and individuals were using their corporate vehicles and tax structures to deprive member states of tax revenue. The “blacklist”, circulated yesterday by the 28-nation bloc, named 15 countries deemed to promote harmful tax practices and facilitate offshore structures without real economic activity. Those listed jurisdictions, the Ministry of Finance said, face a range of challenges including reputational damage and strict restraints on transactions

with EU member states and financial institutions. The 15 listed nations are Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu, Dominica, Barbados, United Arab Emirates (UAE), Marshall Islands, American Samoa, Guam, Samoa, Trinidad and Tobago and the US Virgin Islands. The Bahamas last year passed multiple laws that fundamentally changed the regulatory landscape and operating model for the financial services industry. The Multinational Entities Financial Reporting Act led the way to deal with the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, which is also designed to combat tax evasion. This imposes reporting requirements for Bahamas-domiciled entities that are part of multinational groups or corporate structures that, collectively, earn annual revenues in excess of $850m. Meanwhile, to satisfy the EU, The Bahamas passed the Removal of Preferential Exemptions Act to eliminate the tax breaks enjoyed by foreign investors and non-resident entities that were not available to the domestic economy. Prominent among these incentives was the 20-year stamp duty exemption for International Business Companies (IBCs), the premature end to which could spark investor lawsuits, and the flat $300 business licence fee. The Bahamas also passed the Commercial Entities (Substance Requirements) Act to address the EU’s demand for all nations to impose “economic substance” regimes that effectively require

companies to prove they have a physical presence - and are doing “real business” - in a jurisdiction. It wants corporate profits, revenues and assets to be taxed in the jurisdictions where they are generated. They are thus aiming to prevent companies, especially multinational corporations, from exploiting gaps in tax types, rates and rules to artificially shift profits from jurisdictions where they are generated to low or ‘no tax’ jurisdictions, thus lowering their tax bill. The Bahamian law requires entities operating in this nation to show they have a physical presence by conducting income-generating activities here. Management and control must also reside in this country. Headquarters operations, together with banking, insurance, fund management, financing and leasing, shipping, distribution or service center operations, and holding companies, are the business activities under the Act that must have a “substantial presence” in The Bahamas through offices and employees and be conducting “real business” activities. Branville McCartney, the former Democratic National Alliance (DNA) leader earlier this week warned that The Bahamas was “is not in the clear” despite escaping the European Union (EU) tax “blacklist”. He added that even if The Bahamas was not listed “you can bet your bottom dollar” the EU and other multinational agencies will find different means to attack this nation again given that their ultimate goal is to drive it out of the financial services business.

THE TRIBUNE By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net THE opposition’s finance spokesman yesterday called for clarity over the Grand Lucayan’s impending sale, arguing: “This is not what transparency looks like.” Chester Cooper, the Exuma and Ragged Island MP, said in a statement: “The government’s handling of the Grand Lucayan sale, and the myriad issues involved, would be laughable were the stakes not so high. “We are now learning that a settlement for managers who wish to depart the resort is being arbitrated by the Industrial Tribunal in Grand Bahama, and the voluntary separation involved in this tranche of layoffs will cost taxpayers $3m-$5m.” He added: “This is in addition to the more than $3m already paid to separated line staff, plus a reported $3.5m for renovations. We can add to that the $30m in cash paid for the hotel upfront before a sale was completed, as well as the $35m mortgage the government has executed with Hutchison [Whampoa], and the associated closing costs of the sale. “On top of that is the running total of government subsidised operating costs for the hotel, at last estimation by the government to be just shy of $2m per month. Since we do not know, and the minister of finance has yet to say, we should probably put that at around $14m. The minister must say whether this is accurately reflected in government expenditure in a mid-year budget on which the government has suppressed debate.” KP Turnquest, deputy prime minister, last night blasted back by describing Mr Cooper’s comment as “idle posturing” on the basis that the questions he was posing were answered in both the mid-year budget and previously released sixmonth “fiscal snapshot”. Suggesting that the Progressive Liberal Party (PLP) was “unfamiliar” with heightened fiscal transparency, Mr Turnquest said: “This is a new era of transparency which empowers Bahamians to be able to independently review and verify information about the government’s spending

To advertise in The Tribune, contact 502-2394

Wednesday, March 13, 2019, PAGE 3

DPM and opposition battle over Lucayan ‘transparency

THE GRAND Lucayan Resort in Freeport, Grand Bahama.

CHESTER COOPER due to brand new quarterly performance reporting on the people’s budgetary affairs. “The opposition has not seemed to catch on as yet, but had they availed themselves of the abundance of fiscal information available online and on the public record, many of their questions could have been answered. On page 11 of the mid-term budget booklet tabled in the House

of Assembly last week, the government’s fiscal summary included equity investments that were made during the period related to support of the acquisition of the Grand Lucayan resort. “Further, page 14 of the First six months report on budgetary performance shows the precise amounts that were reported as spent on the matter at the time. The opposition might not

be familiar with this level of transparency, but I advise them to learn quickly; if they choose to avail themselves of the information that is now readily available, it would limit their need for idle posturing and allow them to better use this time to be about the business of the people who elected them to serve.” Tribune Business reported on January 31 that the government had injected $45.4m into the Grand Lucayan resort,

including $13m to cover its operational costs, during the first six months of the fiscal year to end-December 31, 2018. Analysing the government’s financing transactions and investment, the six-month “fiscal snapshot” said: “On the equity side, developments continued to be dominated by the government’s investment in the special purpose vehicle, Lucayan Renewal Holdings, formed to acquire the Our Lucaya properties in Grand Bahama during the first quarter of the fiscal year. “For the first half of fiscal year 2018-2019 these investments totaled $45.4m—reflective of the original $32.4m in equity contribution alongside an additional $13m, for operational expenses.” Still, Mr Cooper asked yesterday: “What exactly is the cost so far? How many tax dollars, exactly, are we projected to spend before a sale closes? While the minister of finance is at it, we also ask he state how many bidders for the purchase of the hotel have signed non-disclosure agreements versus how many have actually submitted proposals. “What it the revised timeline for the sale? It seems clear that even the last date guessed at will not be met. This lack of transparency and accounting are a breach of trust by Hubert Minnis and the FNM. This is not what transparency looks like. There is lack of accountability in the spend of taxpayer dollars, apparently to save face politically, and it is wrong. We demand answers on the Grand Lucayan.” Mr Cooper had hit out after it was revealed that the Bahamas Hotel

Managerial Association (BHMA), having last week “overwhelmingly” rejected the government’s latest $3.1m payout offer, took its grievances back before the Industrial Tribunal on Monday. Some 90 of the 114 Grand Lucayan managers have expressed a desire to leave if the voluntary separation package (VSEP) terms are right. However, Michael Scott, chairman of Lucayan Renewal Holdings, the government-owned vehicle that controls the hotel, bluntly warned them and the BHMA that “there’s no more money” available to meet their demands. He added that the Lucayan Renewal Holdings Board and the government had no option but “to draw a line in the sand” to protect the financial interests of Bahamian taxpayer, disclosing that the two sides were still $2.4m apart on their VSEP valuations. Mr Scott suggested the Board would now seek to cut Mr Ferguson and the union out of the discussions. He indicated that it would deal directly with the 90 managers wanting to leave if the terms were right, with the board and government adopting a “take it or leave it” position where those who opted not to take the VSEP will be expected to continue reporting to work. Mr Scott described the worker payouts as a “sideshow” and distraction from the board’s main work, which is to focus on selling the Grand Lucayan to the buyer best able to transform the resort and surrounding area into a true destination, thereby reviving Freeport’s and the wider Grand Bahama tourism product.

PAGE 4, Wednesday, March 13, 2019

Court tosses $727m Renward LOI claim

FROM PAGE ONE

$600-$650m waste-to-energy plant at the New Providence landfill, had “not been able to overcome the hurdles presented by the LOI, Ms Misiewicz said Mr Wells despite signing it - was not a party to its terms. “In any event the LOI, for whatever it was worth, automatically expired one year from the date of its execution, which was on July 3, 2015,” the deputy registrar found. “It was a discussion document, subject to contract and was not binding in law. Approached from any angle, the plaintiffs [Stellar] are unable to sustain an action on the basis of the LOI.” Turning to Stellar’s claim against Messrs Allen and Forbes, Ms Misiewicz agreed with their attorney, Damien Gomez QC, that the allegations against the duo were “contradictory” and they were also not parties to the LOI. “The claims against them are bad and should therefore be dismissed,” she ruled, striking out Stellar’s action against Mr Wells, Mr Allen and Mr Forbes and awarding the trio costs. “I am satisfied that [Stellar] does not gave a good arguable case against any of the defendants, but in particular does not have a case against” them. It is unclear what happens to Stellar’s claim against the two remaining defendants, the Ministry of Works and Attorney General’s Office, who have also urged the court to strike out the matter. While their application was not heard with those of the other defendants’, Ms Misiewicz’s comments indicate

their prospects of success are relatively good. The Supreme Court’s decision effectively leaves Messrs Wells, Allen and Forbes in the clear, bringing to an end a murky episode where the Bahamian people received no clear answers or explanation for the events that led to the former’s departure from his parliamentary secretary post. Jean Paul Michelsen, Stellar Energy’s Bahamas-based former chief operating officer, yesterday told Tribune Business there would likely be little appetite to continue the case by appealing the deputy registrar’s ruling. Indicating there had been a split with Stellar’s principal, Dr Fabrizio Zanaboni, Mr Michelsen voiced hope that the Supreme Court’s verdict would bring “closure” and all sides can “move on”. “I still own equity in the business but, frankly, that business is dormant,” he told Tribune Business of Stellar’s status. “As far as I’m concerned it is what it is. I’m not surprised she [the deputy registrar] made that decision, and I don’t think the major shareholder in Stellar Energy will take this any further. “I’m happy there’s some closure to this entire episode and we’re able to move on. I moved on about a year ago.” Stellar Energy launched its ill-fated lawsuit in September/October 2016, claiming $727.364m in damages for loss of opportunity/profits, and seeking declarations that the government both “honour” the LOI contract and not award a waste-toenergy contract to any other company until damages are paid.

LEGAL NOTICE

THE TRIBUNE

However, Mr Wells’ attorney, former MP Gregory Moss, successfully argued that the now-Cabinet minister was “a public authority for purposes of the claim against him”. As a result, Ms Misiewicz agreed that the claim against Mr Wells was “statute barred” under both the Crown Proceedings Act and Limitation Act. “This finding of fact also means that [Mr Wells] is entitled to have the case against him dismissed as he has immunity under Section 49 of the Interpretation and General Clauses Act, as there is no allegation against him in the statement of claim for having acted in bad faith or negligence,” the Supreme Court deputy registrar ruled. Mr Wells, who is currently minister of transport and local government, became embroiled in controversy in mid-July 2014 when the Stellar LOI was leaked to the media and he was accused of signing it on the government’s behalf without the proper authorisation. He eventually departed his parliamentary secretary post some 80-90 days later, but Tribune Business later obtained evidence suggesting that - as indicated by Mr Wells’ close colleague, former MP Dr Andre Rollins said - the whole affair was a “manufactured political controversy”. This newspaper obtained a May 26, 2014, letter written by Michael Halkitis, then-minister of state for finance, to the Inter-American Development Bank’s (IDB) Bahamas country representative stating that “the government has issued an initial LOI” to Stellar Energy. That letter was dated some five to six weeks BEFORE Mr Wells signed the LOI, suggesting key members of the Christie Cabinet knew of its existence in advance and of the government’s intentions - at least at that point

- to sign it. There is nothing, though, to suggest Mr Halkitis did anything wrong. All involved with the Stellar LOI and subsequent court case, along with both major political parties, are likely to welcome the Supreme Court ruling given their eagerness to put the matter behind them. The FNM took “ownership” of the matter when Mr Wells swapped sides to join it, yet to this day neither he nor anyone else involved has explained to the Bahamian people exactly what happened. Mary Bain Charlton, the attorney for Stellar, had argued before the Supreme Court that “it is so early in the game” to consider striking the case out “and there is much more evidence that needs to be brought out”. That opportunity now seems to have gone. However, Stellar’s original statement of claim laid out multiple allegations. It described Messrs Allen and Forbes as government “agents” who promised thenprime minister Perry Christie would arrange a $40m guarantee for the project, and bragged: “We hold the key to the kingdom.” The waste-to-energy group’s allegations placed Mr Christie and now-PLP leader, Philip Davis, at the centre of events leading up to the LOI’s disclosure and subsequent political firestorm although there is nothing to suggest they were guilty of any wrongdoing. Arguing that the LOI’s leaking showed “clear intent at the government level to sabotage” the $600m project, Stellar claimed Mr Allen, the former Urban Renewal co-chair, and Mr Forbes were “two of the private individuals who claimed to be representatives of The Bahamas government and/ or agents acting for and on behalf of The Bahamas government”.

LEGAL NOTICE

NOTICE INTERNATIONAL BUSINESS COMPANIES ACT (No. 46 of 2000)

POLARIS SECURITIES LIMITED

POLARIS CAPITAL FUND LIMITED

IBC No. 98941 B (In Voluntary Liquidation)

IBC No. 91888 B (In Voluntary Liquidation)

NOTICE is hereby given that as follows:

(a) That POLARIS SECURITIES LIMITED is in Dissolution under the provisions of The International Business Companies Act 2000.

(a) That POLARIS CAPITAL FUND LIMITED is in Dissolution under the provisions of The International Business Companies Act 2000.

(b) The Dissolution of the said Company commenced on the 28th day of February 2019 when the Articles of Dissolution were submitted and registered by the Registrar General. (c) The Liquidator of the Company is Sterling (Bahamas) Ltd of 2nd Floor, Saffrey Square, Bank Lane and Bay Street, Nassau, Bahamas. (d) Any person having a Claim against the above name Company are required on or before the 28th day of March 2019 to send their name, address and particulars of the debt or claim to the Liquidator of the Company, or in default thereof they may be excluded from the benefit of any distribution made before such claim is approved. Sterling (Bahamas) Limited Liquidator

Ex-minister backs corporate tax call

PAUL MOSS FROM PAGE ONE a corporate tax like Mauritius and enter into double tax agreements,” he told Tribune Business. “Let’s do a cost benefit analysis and determine the way to go rather than take an emotional stance that corporate taxation is bad. Possibly. Maybe. But let’s study it first.” Mr Smith, in his Bimini remarks, agreed that “the pressure from the OECD and other countries is unlikely to let up, and therefore the survival and growth of the offshore financial services sector in The Bahamas may require a new approach”. Outlining such a strategy, he suggested that The Bahamas “pivot away from tax avoidance structures and continue to try and meet the international standards” without being the first to do so lest it surrender any competitive advantage. Besides focusing on the development of products and services that are nontax related, Mr Smith said The Bahamas needed to explore whether implementation of a low-rate corporate income tax would generate net positive economic benefits for this nation. With the OECD’s Common Reporting Standard (CRS) having “almost made tax evasion impossible”, he added: “The old mantra of no corporate tax in The Bahamas should be revisited with a view to examining if there are any net positive economic benefits to introducing a small corporate tax (no more than 15 percent like other IFCs) on both resident and non-resident entities, while at the same time entering into strategic double

taxation avoidance treaties with selected countries using the OECD model.” Paul Moss, president of Dominion Management Services, one of the relatively few Bahamianowned providers in the international financial services segment, yesterday reiterated his previous calls for this nation to introduce corporate income taxation. “To be quite honest with you, unless there’s a real change in the way we look after our business and do taxation in this country it’s going to be a problem for us,” he told Tribune Business. “We need to be more strategic in how we look at ourselves. “We’ve been described in the past as a tax haven. We’ve done nothing to stop that. We need to look at corporate taxation and reach agreements with other countries for double taxation treaties. We have to lead and form alliances with other IFCs so we have respect from the OECD and other groups coming to us. “We’re always fighting in the dark. They know we’re small, weak and vulnerable... We’re not being aggressive in defending our position and fighting, standing up for what we believe in. That’s a problem. We’re always capitulating and they see us as being weak. We keep on giving up more than we’re asked to do, and I don’t think that’s a recipe for success; that’s a recipe for disaster.” Mr Moss warned that unless The Bahamas became more strategic and proactive, the financial services industry faces “a slow grind, a death walk, a walk on the plank, and we are in complete unison with the EU”.

NOTICE

NOTICE is hereby given that JOANNE ASHLEY PETITHOMME of Take Me Corner, Eight Mile Rock, Grand Bahama, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 13th day of March, 2019 to the Minister responsible for Nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

THE TRIBUNE

Wednesday, March 13, 2019, PAGE 5

‘Next level’ for financial sector after EU escape FROM PAGE ONE accounts - to the higher margin end of the financial services market where real value has to be added by companies with a physical presence. With The Bahamas’ traditional “secrecy” and tax minimisation model long obsolete, it now has to restructure and reposition the financial services industry - and, by extension, the wider economy - for continued growth by developing new competitive advantages in a tax transparent and compliant world. The government appears to have been preparing for this eventuality since last year with the passage of the Commercial Enterprises Act, which is designed to remove Immigrationrelated bureaucracy and red tape and make it easier for approved businesses in targeted industries to establish a physical presence in The Bahamas. This has now been further underpinned by the Commercial Entities (Substance Requirements) Act, which is designed to address the EU’s demand for all nations to impose “economic substance” regimes that effectively require companies to prove they have a physical presence - and are doing “real business” - in a jurisdiction. The two Acts are thus directly linked, with the EU-related law requiring entities operating in this nation to show they have a physical presence by conducting income-generating activities here. Management and control must also reside in this country. Headquarters operations, together with banking, insurance, fund management, financing and leasing, shipping, distribution or service center operations, and holding companies, are the business activities under the Act that must have a “substantial presence” in The Bahamas through offices and employees and be conducting “real business” activities. Mr Turnquest yesterday indicated that “if we get it right” these Acts could form the platform to relaunch The Bahamas as an international business centre and trade hub, with financial services - as the “second pillar” of the economy continuing to play a key role in this evolution. He warned, however, that the government and financial services industry must still do “a tremendous amount of work” between now and July 2019 to “operationalise” The Bahamas’ new regulatory regime and show the EU it has been fully implemented.

Explaining that the 28-nation bloc will “constantly be monitoring” The Bahamas to ensure effective execution, and also conducting “peer reviews” of this nation and other jurisdictions, Mr Turnquest said some “additional tweaks” still need to be made to the new regime although he declined to provide details. The deputy prime minister pledged that The Bahamas will now be “scanning the horizon” constantly for new international regulatory initiatives that may pose a threat to its financial services industry in a bid to get ahead of potential attacks and develop an appropriate response. “Right now we are putting all our efforts into ensuring we operationalise all the legislation passed. There’s a tremendous amount of work to be done between now and July to ensure we operationalise and implement all of the laws, and ensure we pass the monitoring and peer review test,” Mr Turnquest confirmed. “They [the EU] will be constantly monitoring our implementation, and the first peer reviews of jurisdictions will start in the next few months. There are a couple of additional tweaks to some of the legislation that we wish to make to ensure they are co-ordinated with all aspects of the regime, but those are not significant to the overall EU objective.” Mr Turnquest added that The Bahamas was an “active participant” in all EU and Organisation for Economic Co-Operation and Development (OECD) working groups dealing with tax-related issues, and “making our contribution at the table”. Revealing that the government was still on alert for developing international regulatory initiatives, he told Tribune Business: “We are scanning the horizon for those issues being mentioned in sidebars by member states so that we are cognisant of them, put them on our radar and thinking through responses should they come forward.” Mr Turnquest identified such initiatives as the taxation of electronic and digital transactions, plus the harmonisation of VAT rates, and added that The Bahamas will do “as much as we can to ensure we can shape the environment” in a stillevolving sector. Notwithstanding such future concerns, Mr Turnquest argued that The Bahamas’ non-inclusion on the EU list had “validated” the work done by the government in partnership with industry to transform

NOTICE

NOTICE is hereby given that EMROY ALE BROOKS of Carmichael Road, P.O. Box CR-55750, Nassau, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 6th day of March, 2019 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Povidence, The Bahamas.

The Bahamas’ regulatory regime. “It’s very important to stay off that list and follow-up, and do the work necessary to get off their ‘grey list’,” he added. “Listing comes with requirements for extra due diligence and other punitive measures and, to the extent we were able to avoid this, it puts our financial services industry in a much better position. “Not only could it affect our offshore business but also the onshore centre and its ability to facilitate trade through correspondent relationships and ease of trade across borders.” Mr Turnquest said The Bahamas’ non-inclusion by the EU represented “a strength we can leverage in trying to grow and support the industry”, reinforcing this nation’s argument that it was a compliant, co-operative jurisdiction. “Now that we have passed the regulatory test and are engaged in the implementation test, given these realities we have to ensure our products and services are outstanding and go back into the world in a positive and proactive manner to let the investor public know we are compliant,” Mr Turnquest said. “That we are still a progressive and well-regulated jurisdiction, and will continue to provide a valuable service to the international financial services industry, and have an attractive value proposition to bring to the table.” The EU yesterday confirmed that The Bahamas is among 34 jurisdictions that have been given until

NOTICE Pursuant to the provisions of the Companies Act, 1992 (as amended), notice is hereby given that Coral Credit Bank and Trust Ltd has been dissolved and struck off the Register as of the Eighth (8th) day of February 2019. Dated this 13th day of March 2019.

be channelled through their financial institutions. Enhanced tax reporting is also likely to be imposed. “In addition to the EU provisions, member states agreed on sanctions to apply at national level against the listed jurisdictions,” the European Commission said in a statement. “These include measures such as increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions. “The commission is urging member states to step up their efforts to agree on strong, binding and co-ordinated defensive measures as soon as possible to give the EU list an even greater impact.”

Pierre Moscovici, the EU commissioner for economic and financial affairs, taxation and customs, said: “The EU tax havens list is a true European success. It has had a resounding effect on tax transparency and fairness worldwide. “Thanks to the listing process, dozens of countries have abolished harmful tax regimes and have come into line with international standards on transparency and fair taxation. The countries that did not comply have been blacklisted, and will have to face the consequences that this brings. We are raising the bar of tax good governance globally and cutting out the opportunities for tax abuse.”

To advertise in The Tribune, contact 502-2394

MARKET REPORT TUESDAY, 12 MARCH 2019

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 2,114.05 | CHG 0.54 | %CHG 0.03 | YTD 50.48 | YTD% 2.45 BISX LISTED & TRADED SECURITIES 52WK HI 4.50 20.91 7.50 5.50 1.95 0.96 3.68 10.20 6.60 4.64 12.50 2.74 1.81 8.50 6.40 15.60 6.99 4.47 13.85

52WK LOW 3.50 19.17 4.90 3.34 1.00 0.19 2.10 8.70 6.10 3.54 9.75 2.30 1.50 7.25 6.10 10.10 5.85 3.01 12.51

1000.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 103.00 100.00 100.00 105.00 103.00 100.00 10.00 1.01

1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00

52WK LOW 100.00

SYMBOL LAST CLOSE AML 4.37 APD 17.43 BPF 6.49 BWL 5.39 BOB 1.95 BBL 0.80 CAB 2.28 CIB 9.85 CHL 6.16 CBL 4.50 CBB 10.65 CWCB 2.65 DHS 1.79 EMAB 8.73 FAM 6.40 FBB 15.60 FIN 6.98 FCL 3.34 JSJ 13.85 CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 22 (Series B) +

SYMBOL FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS

Legal Notice

end-2019 to fulfill their commitments to complying with its tax transparency and anti-evasion/avoidance demands otherwise they could be “blacklisted” in 2020. Tribune Business’ article yesterday, which identified all the “blacklisted” nations and The Bahamas’ noninclusion, was spot on. The 15 jurisdictions singled out by the 28-nation bloc are Aruba, Barbados, Belize, Bermuda, Fiji, Oman, Vanuatu, Dominica, the United Arab Emirates, Marshall Islands, American Samoa, Guam, Samoa, Trinidad and Tobago, and the US Virgin Islands. Detailing the cost to these nations, the EU said development funding cannot

52WK HI 2.20 4.24 2.03 184.51 158.55 1.60 1.74 1.69 1.12 6.99 8.54 6.15 10.52 11.46 10.46 10.00 8.69 11.79

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.54 1.68 1.63 1.08 6.41 7.62 5.66 8.65 10.54 9.57 9.88 8.45 11.20

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.00 LAST SALE 100.00 107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

CLOSE 4.37 17.43 6.49 5.39 1.95 0.96 2.28 9.85 6.16 4.50 10.65 2.63 1.79 9.00 6.40 15.60 6.98 3.34 13.85

CHANGE 0.00 0.00 0.00 0.00 0.00 0.16 0.00 0.00 0.00 0.00 0.00 -0.02 0.00 0.27 0.00 0.00 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00

CHANGE 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund Colonial Bahamas Fund Class D Colonial Bahamas Fund Class E Colonial Bahamas Fund Class F

VOLUME

500 1,000

3,244

VOLUME

EPS$ 0.147 0.932 -0.306 0.323 0.104 0.000 -0.523 0.700 0.480 0.154 0.627 0.102 0.209 0.000 0.481 0.762 0.578 0.277 0.631

DIV$ 0.120 1.260 0.000 0.240 0.000 0.020 0.000 0.710 0.220 0.120 0.620 0.060 0.060 0.084 0.240 0.500 0.150 0.090 0.600

P/E 29.7 18.7 N/M 16.7 N/M N/M -4.4 14.1 12.8 29.2 17.0 25.8 8.6 N/M 13.3 20.5 12.1 12.1 21.9

YIELD 2.75% 7.23% 0.00% 4.45% 0.00% 2.08% 0.00% 7.21% 3.57% 2.67% 5.82% 2.28% 3.35% 0.93% 3.75% 3.21% 2.15% 2.69% 4.33%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST Prime + 1.75% 6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

NAV 2.20 4.24 2.03 184.51 147.81 1.60 1.74 1.69 1.12 7.47 8.64 6.60 10.37 11.69 10.38 9.92 8.69 11.79

YTD% 12 MTH% 3.97% 3.97% 2.49% 2.49% 2.43% 2.43% 3.26% 3.26% -3.65% -3.65% 0.47% 4.42% -0.04% 2.71% 0.27% 3.85% 0.75% 2.58% -1.08% 1.77% -5.96% -3.05% 1.90% 4.59% 7.24% 11.96% 2.77% 3.88% 3.94% 4.69% -0.71% 0.16% 3.96% 7.75% 8.34% 14.88

MATURITY 19-Oct-2022 20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022 NAV Date 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Jan-2019 31-Jan-2019 31-Jan-2019 31-Jan-2019 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 30-Sep-2018 30-Sep-2018 30-Sep-2018

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

Trevor D.A. Sunderland Liquidator of Coral Credit Bank and Trust Ltd TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

THE TRIBUNE

Wednesday, March 13, 2019, PAGE 9

‘Breathing space for action’s by EU, says former AG FROM PAGE ONE evasion and avoidance. “It’s a positive step for the evolving international business The Bahamas has been doing and is able to do. “What remains for The Bahamas to do for a more positive approach is how these changes can benefit The Bahamas. My basic thesis would be that it would surely be more beneficial to The Bahamas to have businesses with a more substantive presence than not, and we ought to be able to improve our engagement with the international marketplace and returns we get from it. “I may mean we have less in numbers, but the significance of that is you’re talking more than company incorporations and corporate bank accounts. We can do better with less companies so long as they have a substantial physical presence here,” he continued. “I think that we should seek to turn every development to our advantage, and I don’t mean that in some sort of underhand way. Change is not necessarily bad. It’s more a question of how one responds to these developments. What’s very important is to respond in a matter that serves The Bahamas best.” The government appears to have been preparing for this eventuality since last year with the passage of the Commercial Enterprises Act, which is designed to remove

Immigration-related bureaucracy and red tape and make it easier for approved businesses in targeted industries to establish a physical presence in The Bahamas. This has now been further underpinned by the Commercial Entities (Substance Requirements) Act, which is designed to address the EU’s demand for all nations to impose “economic substance” regimes that effectively require companies to prove they have a physical presence - and are doing “real business” - in a jurisdiction. The two Acts are thus directly linked, with the EUrelated law requiring entities operating in this nation to show they have a physical presence by conducting income-generating activities here. Management and control must also reside in this country. Headquarters operations, together with banking, insurance, fund management, financing and leasing, shipping, distribution or service center operations, and holding companies, are the business activities under the Act that must have a “substantial presence” in The Bahamas through offices and employees and be conducting “real business” activities. Mr Delaney yesterday told Tribune Business that he saw the financial services industry evolving to become a key component of a much wider sector, arguing that its development should not be seen as confined to “a bucket simply called financial services”.

To advertise in The Tribune, contact 502-2394

“It should be more international trade in services, which includes financial services,” he explained. “Financial services should be there as part of the infrastructure we have to evolve into trade in services in The Bahamas. “When you talk about businesses having a substantial presence you’re not only talking about banks and financial services. They’re providing the infrastructure for international trade to be done from The Bahamas.” The Bahamas’ noninclusion on the EU list was welcomed by the financial services industry. Tanya McCartney, chief executive and executive director of the Bahamas Financial Services Board (BFSB), said: “We will continue to support the government as it moves to implement the measures that have been taken. This is an ongoing effort that requires us to adhere to international standards whilst acknowledging the importance of the financial services sector to our economy.” Bruno Roberts, co-chair of the Association of International Banks and Trust Companies (AIBT), added: “The EU has made it clear that we will be subject to continued monitoring. Industry stakeholders are committed to doing their part to meet the requirements set for the business of international financial services.”

PAGE 10, Wednesday, March 13, 2019

THE TRIBUNE

New Mexico bill would create first state-run pot shops in US SANTA FE Associated Press NEW Mexico would become the first US state to set up its own governmentoperated marijuana stores and subsidiwe medical cannabis for the poor under a bill brokered between Republicans and Democrats, as a new wave of states weighs legislation that would legalise recreational sales and consumption. The idea for state-run pot shops comes from a trio of GOP state senators who broke with local Republican Party orthodoxy to embrace legal marijuana with a decidedly big-government approach that would have

NEW Mexico state Rep Javier Martinez of Albuquerque, right, rallies support for a bill to authorise recreational marijuana consumption and sales through state-owned stores in Santa Fe, NM. New Mexico took a step toward legalising recreational marijuana when its House approved a bill that would allow state-run stores and require customers to carry a receipt with their cannabis or face penalties. the state directly oversee most sales — and require that marijuana consumers carry receipts of purchase or confront penalties. Those provisions were sown into Democrat-sponsored legislation that contains currents of social justice, including a provision to subsidise medical cannabis for poor people with “debilitating medical conditions” who might not otherwise be able to afford treatment. Tax dollars from recreational marijuana sales would fund employment and counseling programmes in communities “disproportionately affected by past federal and state drug policies”, including training to enter the marijuana sector. Carly Wolf, state policies coordinator at the National Organization for the Reform of Marijuana Laws, says the provisions for state-run stores and medical cannabis subsidisation both would be new to the United States, as New Mexico seeks to become the first state to set up a complete regulatory framework through legislation. Ten states and Washington,

DC, have legalised recreational marijuana — all by ballot initiative except Vermont, which allowed for personal use and growing but is still debating whether to authorise commercial production and sales. Other legislative efforts to legalise recreational marijuana are underway in New York and New Jersey, while a bill to legalize recreational cannabis in Democrat-dominated Hawaii fizzled last week. In New Mexico, a coterie of powerful conservative Democrats still stands in the way of a Senate floor vote on legalisation. “It’s not a priority,” said Democratic Sen John Arthur Smith of Deming, who will decide whether the marijuana bill is heard by the Senate Finance Committee, a final hurdle before a Senate vote. Smith does not favour legalisation and worries about harmful effects of marijuana on the brain. Sen Peter Wirth, the chamber’s Democratic majority leader, believes legalisation would prevail in a floor vote. He said support from a contingent of Senate Republicans has redrawn the political battle on marijuana along generational lines rather than partisan affiliation. Wirth also called the concept of state-run pot shops — that would sell marijuana on consignment without owning or producing it — a political game changer that allays anxiety about welcoming the nation’s rollicking, multibillion-dollar marijuana industry. In addition, marijuana production licenses would come with an in-state residency requirement of two years. “It puts some parameters around it,” Wirth said. “The state can monitor

what it looks like and how it expands.” Democratic Gov Michelle Lujan Grisham has expressed guarded support for recreational marijuana — provided the legislation addresses concerns about child access, impaired driving, workplace safety and safeguarding the state’s existing marijuana market for medical patients. “If the Legislature can check those boxes, bring it on,” Nora Sackett, a spokeswoman for Lujan Grisham, said in an email. New Mexico has watched neighboring Colorado’s pioneering decision to legalise and tax marijuana with a mixture of apprehension and envy, as lawmakers in Santa Fe struggle to find stable sources of tax revenue to improve public education and raise teacher salaries. The judiciary is threatening to intervene in school funding decisions, citing inadequate educational opportunities for children from poor and minority families. New Mexico would levy a 17 percent tax on recreational marijuana sales and allow possession of up to one ounce. Local governments can opt out, forgoing tax proceeds in the process. State tax proceeds would fund detection technologies and training for police to identify impaired drivers. Businesses could maintain “zero-tolerance” policies for drug testing as a condition of employment. Sponsors say the bill would safeguard New Mexico’s medical marijuana programme by removing taxes on medical pot to keep down prices and ensure its 70,000 participants don’t flock to the recreational market. At least four other states forgo taxes on medical marijuana.