Business in Cannabis: Weed on Tribal & Trust Land Pt. 2
Enter the Wilkinson Memorandum. This memo gave reassurance that the federated tribes within the U.S. will be held at the same standard as the state and local government, referring to James Cole’s original eight points of contingency (see part one). However, there’s a catch (isn’t there always?). That catch is Public Law 280. Public Law 280 articulates that the state can have governance over a tribe that is within the said states’ boundaries and if that state has not legalized the plant, then the tribe that has, is subject to state officials stepping in. Sad news for any tribe outside of the seven states that are fully legal, but if the tribe falls within a state that has legalized medical, then the tribe is free to explore the medical industry.
The aftermath of both the Cole and Wilkinson Memos has now encouraged many tribes to join in on the Green Rush, but what have they learned and observed from other tribes that have tried to move forward with cannabis business? One key aspect would be that the tribe must legalize the plant and decriminalize the procession, cultivation, and sales of it. This all requires a deep and detailed business plan that they will have to present to the state in which they reside.
Being that tribes are sovereign nations, they are not held to the same standards as regular i502 stores owned and operated by non-Natives. The tribe can sell, cultivate, process, conduct medical research, prescribe medical marijuana, conduct lab testing, and collect the tax revenue. This is unheard of in the regular i502 market! To make this happen, the tribes must enter what is called a compact, a declaration between the two parties with a clear plan of action and, more importantly, how the tribe will regulate the substance and report revenue with the state legislature. Make note that a compact is not required, but should be done to stay in good standing with the state and federal government.
The first known tribe to enter a compact was the Suquamish Tribe in Washington state. The tribe first legalized cannabis in 2015 and in 2016 entered a compact with the state legislature to begin the ground-breaking of a retail store. This store is now open, and they have a fully functional grow operation. The compact does not limit the tribe to own and operate one store or grow even though the tribe only mentioned one location in the compact. They can legally open as many as they want (which non-Native owners cannot), including the opportunity for any tribal member to open a small business pertaining to the substance. Though they must inform the Liquor Control Board (LCB) in order to do so.
Suquamish is also free to sell their native-made products to non-native businesses and non-
native businesses can sell their products to native businesses. The tribe will be held to the same standard of having frequent LCB inspections, along with charging consumers the same excise tax of 37% to avoid price wars against the state. The compact is good for 10 years (unless the federal government reschedules the plant, then the compact between the state and Suquamish will be up for immediate renegotiation).
The biggest incentive as seen by the tribes collectively, has been that they get to keep the excise tax. The same goes for casinos and the sale of tobacco and gasoline. In the compact, the state made the point to say the tribe should “use the excise tax for the better of the tribe,” leaving the specific purpose of the revenue vague. Many tribes that have legalized have stated that their money generated will go to education, economic development, elder care, and tribal member disbursements. Excise tax exclusions are as follows if; the product was grown on tribal land, the buyer is otherwise exempt from federal tax, if it was prescribed medical marijuana, or the product was bought by: a tribal member, another tribe, or tribal enterprise.
Although Tribal Nations are not required to say where the tax revenue is going, as mentioned before, my personal hope is that the revenue will also go toward cannabis education for the youth and community as a whole. Have special workshops for parents on how to effectively talk to your family about drugs and the use of drugs (NOT JUST CANNABIS). Because many tribes have dealt with some sort of epidemic due to drug use within their communities, the ones who have legalized cannabis on trusted land now generate a great deal of money to help with the recovery process and rehab fees.
....to be continued!