With cannabis legal in most US states at least for medical purposes and for recreational purposes in a growing number, there has been much talk of taxing the profits to the extent that some people fear it will be taxed to death. Casinos in Native American territories are big business, raking in $28.9bn in 2014, and cannabis could be the same. Anthony Rivera, a founder of CannaNative, which works alongside hundreds of tribes that are leading the way on cannabis matters, believes that the Injun cannabis industry will “far exceed” the gambling industry as time goes on.
This follows the case of California v Cabazon Band of Mission Indians in 1987, when the Supreme Court ruled that if a state permits gambling, gambling was permissible on Native American lands and unaffected by state regulation. Something similar could happen with cannabis: outside of Injun country, companies which produce or retail cannabis are unable to subtract business expenses from their federal taxes, but Native American tribes are free of federal income tax on activities conducted on their land. Leslie Bocskor, who founded Electrum Partners, a consultancy leading the way for states and tribes seeking to enter the cannabis industry, spoke of a profit margin of as much as 85 percent compared to non-tribal enterprises.
Vincent Sliwoski, an attorney in Portland who represents companies which deal in cannabis, explained that states have permitted cannabis since 1996, with California leading the way and legalising cannabis for medical reasons, since which enforcement has been “sporadic.” A guidance memo from the Department of Justice in 2013 allowed states to cultivate and sell cannabis with no prospect of prosecution by the feds, with the limits that the drug can’t be grown in public land, sold to children or sent to states that regard it as illegal. Tribal governments received similar guidance months later. Per Sliwoski, the risk is that the federal government might change its mind.
But the government disapproves
Some tribes have been leading the way and attempting to penetrate the cannabis market, but these attempts have mostly been curtailed. One example was in July of 2015, when federal agents struck at two northern Californian reservations, accusing them of producing too much marijuana to be legal, which was denied. It was three months after when agents seized hemp plants – cannabis for industrial uses such as clothing, oil, food and construction materials – from the Menominee Nation of Wisconsin, charging that the plants featured impermissibly high levels of tetrahydrocannabinol, the element of cannabis that gets you high, in the face of which “confused and alarmed” Injun leaders asked that the government subject the plants to testing and offered to eradicate any that got you too stoned. In view of this, the Flandreau Santee Sioux tribe set its crop afire to avoid receiving the same treatment. There are tribes, one of which is the Oglala Sioux of South Dakota, which continue to prohibit cannabis. Sliwoski imagines that certain local attorneys have been “more zealous” than others, so “enforcement has fallen disproportionately upon tribes for that reason.” But some tribes have been leading the way and established successful retail businesses.
Why change could happen
Almost 30 percent of Injuns lived in poverty in 2014, as measured by the Census, the highest rate of any race. But after centuries of being ripped off by the government, the unique status of tribal homelands could give them a critical advantage. These are sovereign nations and can make and enforce civil and criminal laws and regulate activities. So anyone leading the way and setting up a cannabis operation will find it much easier, being free of the city, county and state governments that control non-Injun territory.
One is the Confederated Tribes of Warm Springs, Oregon, which was in 1855 obliged to relocate 80 miles from the Columbia River on which it depended, and access to that was cut when the government commenced construction of the Bonneville dam in the 1930s. Now, it is one of the most economically depressed places in the state.
The tribe now wishes to find itself leading the way and grow cannabis and sell it elsewhere in Oregon, which legalised recreational cannabis in 2014. A 36,000-square foot greenhouse is being built, and the product could be sold by 2018.
Residents are all for it. In a recent referendum, 1,252 people voted in favour with but 198 against, and turnout was high in spite of a snowstorm. Let’s hope the government allows it.