Native Americans could hold the key to cashing in on the cannabis green rush. As sovereign nations, Native American tribes may be able to open and operate tax-free cannabis businesses. This could be a huge economic opportunity for tribes. It could also be an effective way to work around the hefty taxes already plaguing the legal weed industry.
Native Americans And Tax-Free Weed
In theory, Native Americans should be able to run cannabis businesses on their own land, even in states where weed is not legal. And they should be tax-free. Back in 2014, the Justice Department issued an important ruling. It stopped U.S. attorneys from going after tribes that grow and sell weed on reservation land.
This decision was similar to the 1987 California v. Cabazon ruling. In that one, the Supreme Court said that Native American tribes could run casinos on their land. It also said that states could not interfere with those gaming operations. But that’s not the only thing that ruling did. It also had a lot to do with taxes. Native American tribes are not subject to federal taxes. So are any corporations owned by tribes. With that said, individual Native Americans are still required to pay regular income tax. So although tribally-owned corporations are not taxed, the wages earned by individual Native Americans are taxed.
New Business Opportunities
So far, a few tribes have tried to cash in on this tax-free business opportunity. The first big attempt was by the Santee Sioux tribe of South Dakota. There, leaders planned to open a cannabis resort. The idea was to let guests purchase and consume cannabis at the venue. The resort would also include restaurants, slot machines, bar service, and live music. Similarly, the Pinoleville Pomo Nation in California quickly started growing medical marijuana.
And most recently, a Seminole-owned company has entered the fray. Just last month, Electrum Partners and the Seminole-owned corporation MCW announced a new partnership. The goal is to take advantage of Native American tribes’ tax-free status. Ultimately, they see it as a way to solve the problem of high taxes in the legal weed industry.
“It’s bigger than bingo and our gaming heritage, and, as the fastest growing industry in the United States with estimated value in the tens of billions, we are bringing the benefits of our tribal sovereignty to the cannabis inudstry,” James E. Billie said in a press release. Billie is a Seminole Chief and leader of MCW.
“Investors, cannabis industry entrepreneurs, and American Indian tribal governments have reason to rejoice over a 50%-60% competitive advantage in cash flow and federal taxes,” said Electrum Founder and President Leslie Bocskor.
“We believe in tribal sovereignty and its advantages for tribal economic development, thus by adding tribal sovereignty as an economic advantage, we simply decrease the cost and increase the profits for every business partner.”
Big Questions Loom
Yet despite all this, there is a lot of uncertainty. In fact, early efforts by Native Americans to create cannabis businesses have not gone well. In 2015, the Pinoleville Pomo Nation’s medical cannabis grow was raided. Authorities destroyed nearly 400 plants. They also busted up a high-tech cannabis oil extraction lab.
Similarly, the Santee Sioux tribe’s plans to open a cannabis resort never came to life. Instead, they stopped their plans in 2015 after federal officials threatened a raid. On top of that, consultants working with the tribe were arrested on drug charges.
Finally, Trump’s administration is making things even more uncertain. The original ruling that states could not interfere with Native Americans growing weed came under Obama. But things are different now. The Trump administration is becoming more and more unfriendly toward cannabis.
Earlier this year, White House press secretary Sean Spicer said that “greater enforcement” of federal weed laws was coming. Then, Attorney General Jeff Sessions spoke out against cannabis. He said weed is “only slightly less awful” than heroin. Additionally, he said that medical cannabis “had been hyped, maybe too much.”
Despite all this, ventures like the one being carried out by MCW and Electrum will test how far Native American tribes can go. We’ll have to wait and see whether or not the federal government follows through on its promise that Native Americans can run tax-free cannabis businesses.