Issues at Play
Tribal law and cannabis banking continues to be a hot topic within the cannabis industry. In 2014 the U.S. Department of Justice, with review by the Attorney General’s Native American Issues Subcommittee, issued its Policy Statement Regarding Marijuana Issues in Indian Country. The Memo highlights the enforcement of federal law on tribal territories, including the Cole Memorandum, to provide explanation on how the Federal government will interact with tribal nations to address marijuana enforcement in the form of government-to-government consults and agreements.
The current issues at play within the marijuana industry in tribal nations include:
- Lack of banking services continues to be an issue for tribal cannabis businesses. Here’s a map of Native American financial institutions compiled by the Federal Reserve Bank of Minneapolis. It is unclear however whether these Native American-owned banks have provided financial services for tribal cannabis businesses.
- Having legalized marijuana in their own communities, several tribal marijuana businesses have opened dispensaries within their respective territories. Issues arose when for instance in South Dakota, the Native Nations Cannabis Dispensary was opened by members of the Flandreau Santee Sioux Tribe prior to the state opening its first medical dispensary. Non-Flandreau Sioux members were issued tribal medical cards for purchasing marijuana from the dispensary. Attorney General Jason Ravnsborg later confirmed that tribal medical cards for non-members were not a substitute for a written physician’s prescription as outlined in South Dakota’s medical cannabis regulations.
- Insurance for tribal cannabis businesses continue to present hurdles. In 2019, the California Native American Cannabis Association provided a draft summary which called out the state of California for enacting regulations that treat tribal nations as business entities rather than sovereign governments. This has led to a lack of interest from insurance carriers in insuring tribal cannabis businesses.
What We’ve Seen Thus Far
On a federal level, this summer we’ve seen support grow for an amendment to H.R. 4505, the Commerce, Justice and Science Appropriation bill, introduced by Reps. Earl Blumenauer (D-OR), Tom McClintock (R-CA), Eleanor Holmes Norton (D-DC) and Barbara Lee (D-CA) that would protect all state- and tribal-led marijuana programs from federal interference. To date, the current bill in Sec. 531 allows protection for certain states’ medical marijuana programs, with amendments to the bill still being heard in the House of Representatives.
The Paiute Tribe of Utah is collaborating with Governor Spencer Cox to discuss ways in which the two governments can work together in developing a medical cannabis industry. Tribal chair, Corrina Bow, reiterated the health benefits associated with cannabis and the opportunity to boost economic growth for the largely rural tribal nation.
On August 5th, the Eastern Band of Cherokee Indians passed a medical marijuana ordinance for their tribal territory located in western North Carolina. North Carolina currently does not have a statewide medical marijuana program, yet medical marijuana within the tribe’s territory is legal for those with a valid patient card issued by the tribe as well as those with valid documentation showing that the person is a participant of a medical marijuana program in a different jurisdiction. In an interview with One Feather, Jeremy Wilson, EBCI governmental affairs liaison, reiterated that the tribe understood that patients transporting and consuming marijuana off of tribal territory is illegal – “Everybody understands that if you go off-Boundary with it, it’s still illegal. We’re adults – we understand that”. Prohibiting patients from doing so however will be an onerous task.
TILT Holdings Inc., a global, multi-million dollar technology company that offers cannabis business solutions has partnered with the Shinnecock Indian Nation of New York to develop vertical cannabis operations for Shinnecock’s Little Beach Harvest dispensary. For the joint venture, TILT will finance, build and provide management services for the tribe’s dispensary, including financing up to $18 million in capital expenditures to kickstart vertical operations.
What Does This Mean for Banking?
Non-native banks often face legal uncertainties due to discord between federal laws that govern federal or state chartered institutions and the sovereign status of tribal territories. Modern banking systems across the US remain inadequate to address the independent status of tribal governments and their businesses. As mentioned above, tribes are able to work around this by banking with Native American owned banks that service their communities but not all tribal territories have access to these institutions and this does not address the issue of start-up costs for operating a marijuana related business. Since lack of access to capital continues to be a recurring issue among tribal territories, it is likely that joint ventures such as the partnership between TILT Holdings and the Shinnecock Indian Nation will be on the rise for tribal cannabis businesses seeking funding. Ultimately, like cannabis banking throughout the US, tribal cannabis banking remains a secret but the potential is there.
Because sovereign tribal nations do not require state cannabis licensing, the cannabis industry among tribal nations will only continue to grow, paralleling the growth of the cannabis industry nationwide. Tribes tax marijuana sales at a rate similar to state taxes for marijuana purchases but the tax revenue goes directly to the tribe. Like the Paiute Tribe of Utah, this has been a huge economic advantage for tribes located in isolated areas where other streams of tax revenue such as casinos, are not an option.
The American Rescue Plan passed by Congress in March 2021, administered $1.75 billion to American Indian and Alaska Native government programs. Tribal nations are given some discretion in how the funds are used as long as they are allocated to designated pots of funding, some of which include Tribal Housing Improvement, Tribal Government Services, Public Safety and Justice, Social Services, Child Welfare Assistance, among others. Tribal governments may be able to distribute some of these funds to existing or future cannabis programs implemented within their territories.