Indian Tribes Advance Into Cannabis Cultivation, Though Gaming Model May Not Apply
First Native American tribe to start growing and manufacturing medical marijuana on their tribal land … The Pinoleville Pomo Nation is the first Native American tribe to announce that they will start growing and manufacturing medical marijuana on their tribal land. The tribe signed a deal to develop an indoor grow facility in Northern California. "We anticipate construction to begin in early February, and operations to commence by the end of the month," Barry Brautman, president of FoxBarry Development Company, LLC, told Indian Country Today Media Network. FoxBarry Farms will help develop "state-of-the-art greenhouses, as well as processing and office space," Brautman said. – Technical420
Dominant Social Theme: Cannabis makes its way onto the reservation.
Free-Market Analysis: Indian tribes are taking swift steps to involve themselves in cannabis cultivation and marketing, as we can see from the above excerpt. This takes place following regulatory and business advances that have made the Native American entrée increasingly feasible.
The Daily Bell previously reported on a Justice Department approval regarding Native American efforts to cultivate and sell cannabis. Almost immediately this attracted various entrepreneurial strategies, leading MJ Business Daily to write, "A handful of cannabis entrepreneurs are leaping at the chance to seize a new business opportunity following news that the Department of Justice won't interfere with Native American tribes that want to grow and sell marijuana."
The Daily Bell later reported, "New York-based Cannabis and Hemp Association announced that it was in talks with 'dozens' of tribes that may be interested in getting into the cannabis industry. … And … Colorado-based United Cannabis Corp. announced that it signed a deal to help tribes in California grow and dispense medical marijuana."
Here's more on Pinoleville Pomo Nation involvement:
FoxBarry will also manage the distribution of medical marijuana and related products in California. "Our first phase will include 90,000 feet of greenhouse space, and another 20,000 feet of indoor space," Brautman said.
The tribe will only sell marijuana to authorized medical users and dispensaries in accordance with California state law. FoxBarry pledged $30 million to develop at least three medical marijuana facilities on tribal lands in California. FoxBarry agreed to terms with another Indian Nation, however, they did not disclose which tribe they are working with.
United Cannabis (CNAB:OTCQB), which is a publicly traded company based out of Colorado, will offer consulting services to the FoxBarry-managed medical marijuana farms, particularly related to cultivation, harvesting, processing and sales of medical marijuana and medical marijuana-infused products. The agreement states that CNAB will receive $200,000 in prepaid royalties and 15 percent of net sales. In return, FoxBarry will have exclusive distribution rights to United Cannabis products in California.
"The project will be producing the full range of medical marijuana and medical marijuana-infused products under the licensing agreement with United Cannabis," which will include leaves, flowers, hash, hash oil, medicinal pills, medicinal liquids/oils, and much more, Brautman said.
United Cannabis is a supplier of Prana Bio Nutrient Medicinals which is derived from marijuana. This product is available in an oil and pill form and it targets aliments related to the central nervous system or the immune system, respectively.
As we can see from the above, it is likely that the tribe will be selling extracts, presumably natural ones. However, as tempting as this advance is from an investment standpoint, the astounding success that some tribes have experienced in the gaming (casino) industry may not be replicated with cannabis.
This is because when it comes to Native American businesses, highly regulated industries are more profitable than less regulated ones. Tribes have had tremendous success supporting gaming in regions where it is not otherwise available. The nascent cannabis industry seems highly regulated at present, but this may not be the case in five or ten years, or even sooner.
No doubt, cannabis cultivation – especially for medical purposes – could prove to be extraordinarily successful for some Indian tribes, but as it stands now, tribes may not have overwhelming competitive advantages in the long-term, as they have to follow various federal guidelines, just as others do. We reported on this previously as follows:
In [its] memorandum … the US Justice Department instructed US Attorneys to "not prevent tribes from growing or selling marijuana on the sovereign lands, even in states that ban the practice." Tribes will nonetheless be required to follow federal guidelines. Generally, the Justice Department will not try to enforce federal marijuana laws as long as federally recognized tribes meet eight federal guidelines, including prohibiting sales to minors and transportation into prohibited areas, but will continue to prosecute marijuana felonies on tribal lands.
See here: Cannabis Trends Report: Taxing Consumers Into the Black Market, Waiting for Medicine
Right now, Indian tribes may have advantages in states that have not yet legalized or decriminalized cannabis but in the long term the industry profile as regards Indian participation may conform to the beverage (alcohol) industry rather than gaming.
Additionally, the most productive and hospitable regions for growing cannabis lie in southerly latitudes – including countries like Colombia – whereas US Indian lands are in the north, causing Indian tribes to contemplate greenhouse production – as we can see from the above article.
From an industry standpoint, Indian cannabis initiatives are very good news, as they expand the business universe and bring more resources and funding. From an investment standpoint, there will surely be alternatives as tempting or more tempting than certain Indian initiatives.
The gaming model that has been so successful for certain Indian tribes may not apply here, at least not entirely, though no doubt certain Indian initiatives will be highly successful.
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