MAKING MARIJUANA LESS ILLEGAL: CHALLENGES FOR NATIVE AMERICAN TRIBES ENTERING THE MARIJUANA MARKET.

• Author: Mooney, Paul

1. INTRODUCTION

   For many Native American tribes, the primary decision-maker is usually the tribal council. (1) The tribal council usually consists of a half-dozen to a dozen individuals that the tribe's membership base elects. (2) Council members often drive new business or political initiatives for the tribe. For example, some of the earliest tribal casino gaming operations were initiated or started by certain tribal council members. (3) The tribal council as a body usually makes the most crucial business and financial decisions for the tribe, depending on how much they are willing to delegate to their staff. The council can decide upon items as mundane as issuing a business license to a local marina or as complex as entering into a multi-million dollar loan.

   Suppose a member of the tribal council invites an entrepreneur he or she met to a tribal council meeting. The council member has had an interest in the tribe entering the cannabis space as a new source of revenue and as an alternative to the opioid addiction that has plagued many people in the community. The entrepreneur has recently constructed and has been operating a 3,000 square-foot marijuana grow operation. The operation is about fifty miles outside the tribe's reservation boundaries, and the state licenses the operation. The entrepreneur is interested in selling the operation to the tribe for two million dollars, but the tribe must buy the operation within the next few months. So, the entrepreneur will need to know at this meeting whether the tribal council is interested in purchasing the facility.

   Here, the tribal council faces an enormously complicated decision. It is tricky for anyone to acquire a marijuana operation, but Native American tribes are in a uniquely difficult situation. This hypothetical poses several questions. What funds are available to the tribe to purchase the facility, as most of the tribe's funds are from federal and state grants? Can the tribe own marijuana plants outside its reservation? Can the tribe license the facility itself? What licenses docs the tribe need to operate the cannabis business? Will the tribe's bank accept the money generated from the operation? Can the tribe go through the process of adding the property to its reservation? Are there any competitive advantages to the tribe operating in the cannabis space?

   This article will discuss the legal hurdles to tribes entering the cannabis space. Part I will summarize the current legality of marijuana under federal and state law. Part II discusses tribal sovereignty, tribal government structure, and the importance of economic development to tribes. Part III discusses some of the legal impediments to tribes entering the cannabis space. The article will conclude with a discussion of at least two advantages to tribes operating in the cannabis space in Part IV.

2. FEDERAL AND STATE MARIJUANA LAWS

   1. FEDERAL LAW

      Congress enacted the Controlled Substances Act of 1970 ("CSA") as Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970. (4) Congress passed the CSA in response to several factors. First, the Supreme Court had ruled that the federal government's primary means of criminalizing marijuana, the Marijuana Tax Act of 1937, was unconstitutional. (5) Second, the United States made commitments to prohibit marijuana under the Single Convention on Narcotic Drugs, an international treaty. (6) In addition, President Nixon and Congress desired to respond to counterculture and recreational drug use. (7) These forces existed despite federal recommendations from the National Commission on Marijuana and Drug Abuse that Congress decriminalize marijuana. (8) In short, the federal government needed a new national criminal scheme to comply with treaty obligations and to satisfy the politics of the time.

      The CSA classifies drugs into five schedules based on a given drug's potential for abuse. (9) Marijuana is a Schedule I substance, (10) which means it has a "high potential for abuse[,]" has "no currently accepted medical use in treatment in the United States[,]" and lacks "accepted safety for use... under medical supervision." (11) So, the CSA criminalizes the use or possession of marijuana under any circumstances. (12) Marijuana is broadly defined to include almost the entire plant. (13) The CSA also treats THC, the psychoactive agent in marijuana, as a Schedule I drug that individuals may not use under any circumstances. (14) Federal penalties for the possession or trafficking of marijuana range from fifteen days to life in prison, depending on various factors. (15)

   2. STATE LEGALIZATION

      The CSA contemplated that the federal government would focus its efforts on preventing large-scale drug trafficking, allowing states to focus on simple possession. (16) To this, the federal government encouraged many states to enact legislation that treated marijuana and other drugs the same as the CSA. (17) In the 1970s, many states passed legislation modeled after the CSA. (18) So, a super-majority of states treated marijuana and other drugs the same way as the federal government. (19)

      However, states have diverged from the criminalization of marijuana over the past three decades. (20) States now treat marijuana on a spectrum, from legalization for adults to traditional criminalization. (21) However, it is important to note that a state can still treat marijuana as a criminal offense for failing to follow state law in legalization states. (22) As of the writing of this article, a majority of states have legalized the medical use of marijuana in some form, (23) and a growing number of states have legalized adult recreational use of marijuana. (24) So, state and federal policies are in an ever-increasing conflict.

3. TRIBAL ECONOMIC DEVELOPMENT

   1. TRIBAL LAW BACKGROUND

      There is no "all-purpose" definition of an Indian tribe, (25) but whether or not a tribe is federally recognized has become a bellwether due to the number of federal benefits this confers upon tribes. (26) Indian tribes have long been referred to under precedent as "domestic dependent nations," (27) as tribes are "distinct, independent, political communities" (28) that retain authority to "make their own laws and to be ruled by them." (29) Initially, the general rule was that "[State law could] have no force [in Indian Country]." (30) However, this rule has relaxed to something akin to a preemption analysis. (31) Today, courts generally conclude that tribes can make their own laws and enforce them in Indian Country regardless of state and, arguably, federal law absent permission from Congress. (32)

      As independent political communities, tribes must decide how to organize their government just like other states. Many tribes have been organized under constitutions, (33) with some important exceptions. (34) Tribal constitutions vary widely but generally grant broad power to the governing body of the tribe, usually a tribal council, to make decisions on behalf of the community. (3)"' Many, but not all, tribes decided to adopt a constitution under the Indian Reorganization Act ("IRA"), (36) which provided a formal process for tribes to adopt their Constitutions. (37) However, it is essential to note that a tribe's ability to govern docs not arise from the IRA; a tribe could make decisions prior to the IRA and also could decide whether or not to adopt the IRA. (38)

   2. TRIBAL ECONOMIC DEVELOPMENT

      Tribal economic development has emerged as one of the most important aspects of tribal communities. (39) Economic growth also has an essential link to tribal sovereignty, as financial resources are crucial for tribes to enforce their laws and provide services. (40) Further, tribes are unable to raise revenue through taxation for practical reasons. (41) A tribe may not have jurisdiction over many corporations and individuals on the reservation. (42) A tribal tax could result in double taxation, which would discourage economic growth. (43) A tribe's tax on its members is unlikely to generate much revenue given the financial condition of many Native Americans. (44) Without a tax base, a tribe can only depend on federal and state grant dollars to fund government services to its members. (45) As a substitute, tribal economic development through tribal businesses has emerged as an alternative means for tribes to raise revenue to provide government services. (46)

      The most well-known example of tribal economic development has been casino gaming. (47) The Indian Gaming Regulatory Act ("IGRA") requires tribes to enter into compact agreements with states to conduct casino-style gaming. (48) Congress enacted the IGRA in response to a Supreme Court case and a growing trend among tribes entering the casino gaming market. (49) Congress passed IGRA with two goals in mind: (1) to promote "tribal economic development, self-sufficiency, and strong tribal governments" and (2) to "shield [tribes] from organized crime and other corrupting influences." (50) IGRA enacted a scheme where tribes can regulate casino gaming themselves, but needed to consider state public policy decisions regarding what gaming is and isn't illegal. (51) Casino gaming has emerged as a multi-billion-dollar-a-ycar industry, bringing newfound wealth to numerous tribes across the country. (52) Tribes can use casino gaming revenue for important government services that grants do not fund. (53) Still, tribes can use the funds as direct cash payments to tribal members as a form of universal basic, or not-so-basic, income. (54) However, Indian gaming is primarily a story of extremes, with a small number of tribal casinos bringing in most of the funds. (55) So, many tribes have to look to alternative sources of revenue outside of casino gaming. (56)

      Marijuana is an attractive means for economic development for tribes for several different reasons. First, marijuana is a new and exciting industry as the market is projected to pull in forty-three billion dollars by 2025...