October 8, 2015 9:43 am

Opening the Door: DOJ Memorandum On Marijuana in Indian Country

By Ariel Clark and Nicole Howell Neubert, Clark Neubert LLP

On October 28, 2014, the United States Department of Justice issued a Memorandum titled “Policy Statement Regarding Marijuana Issues in Indian Country,” which effectively opened the door to Indian nations growing and selling marijuana on their lands. In so doing, the government signaled how tribes may chart a path to cultivating cannabis without federal law enforcement interference. Specifically, the memorandum reminded United States Attorney’s of the need for flexibility and effectively advised tribes seeking to legalize cultivation and use in Indian Country to (1) prevent all activities implicated by the eight federal priorities set forth in the August 23, 2013 “Cole Memorandum” and (2) to consult with the local United States Attorney’s Offices on a government-to-government basis, with each U.S. Attorney directed to assess the particular threats present in his or her district.

Response in Indian Country
Response in Indian Country is mixed. Some view the signal as a welcome avenue for overall economic development similar to that presented by gaming initiatives, with an eye toward the employment opportunities created by tribally owned cannabis businesses. Additionally, unlike gaming, individual tribe members face the prospect of growing on their own land, creating and managing small businesses of their own. Tribal land that is remote and thus may be ill suited to gaming may be particularly well matched to cultivation. In these ways, marijuana cultivation is seen as offering a unique opportunity for participation by a broader base of Indian nations as well as members within each tribe.

Still others express strong concerns citing historical alcohol and drug abuse among tribes and viewing marijuana as simply adding to the already difficult mix of substance abuse challenges present. To this opponents add the risks of federal law enforcement, citing the Indian Country Memorandum’s caveat that nothing in either memorandum (including the “Cole Memo“) legalizes marijuana or changes federal authority or jurisdiction to enforce federal law on Indian lands. Both views, and the shades of nuance between, exemplify the myriad discussions ongoing within and among Indian nations about whether to get involved in the business of marijuana cultivation.

Tribal Law and Cannabis
The answers lie in Indian law, a comprehensive examination of which is not possible in this forum, but can be outlined with a few concepts. On a high level, tribes are sovereign nations and enacting tribal laws regarding the use and cultivation of cannabis is an exercise in national sovereignty. Practically speaking, however, Indian nations do not take these steps independently, due in large part to the enactment of Public Law 280 in 1953, which transferred legal authority over Indian Country from the federal government to state governments. This legislation drastically changed the division of legal authority among tribal, federal, and state governments, with six states (including California) being given extensive criminal and civil jurisdiction over tribal lands and other states being allowed to assume such jurisdiction at their option. (See http://www.tribal-institute.org/lists/pl280.htm) This not only expanded the role for state criminal justice systems in Indian Country, but it effectively eliminated the role of the federal criminal justice system and significantly diminished the nation-to-nation relationship between Indian Nations and the federal government. (Id.) Many view PL 280 as having “gone far beyond that which was legally required, intended, and contemplated.” (Id.) In the context of marijuana, therefore, the overlay of individual state medical marijuana regulatory schemes and adult-use legalization only adds to the already complicated set of issues presented by Indian national sovereignty.

To be sure, marijuana is different than gaming or cigarettes and those models cannot be superimposed to address cannabis cultivation. Individual nations are carefully considering how and if they want to engage their land and people into this industry. Among the considerations are: What type of marijuana business? Cultivation only? If so, how to interface with patients and/or customers in non-Indian Country without running afoul of state law? Dispensaries? If so, what are the associated liability issues and how to manage? Legalization of medical and/or adult use, and how to manage each system? And whether to invite non-tribal business to lease tribal land or whether to start tribally-owned marijuana businesses.

Flowing from the responses to these questions, each Nation must next determine the type of legislation needed to achieve their goals, remaining mindful of the “Cole Memorandum” priorities, state law and law enforcement priorities, and the need to create sensible, effective tribal regulations. In each instance, however, tribes are likely to use a combination of solutions: enacting tribal ordinances to allow for medical and/or adult use of marijuana; enacting regulatory and licensing schemes to uniformly oversee and advise businesses regarding cultivation, processing, transportation, and dispensing standards; and still others may establish tribally-owned cannabis businesses, which may have significant tax benefits, including avoidance of the economic challenges presented by IRC section 280E and its prohibition against the deduction of ordinary business expenses for cannabis businesses-tax payers under its jurisdiction.

California Tribes & Cannabis
Anecdotally, California tribes are moving forward. Two examples of the many projects in the planning, negotiation, and tribal legislation phase ongoing across California lands and beyond are the Pinoleville Pomo Nation in Ukiah and, the Torres Martinez Desert Cahuilla. In early 2015, the Ukiah Pomo Nation reportedly struck a deal with groups in Kansas and Colorado to construct a 2.5-acre marijuana cultivation facility, but ran into obstacles when local law enforcement and the United States Attorney claimed to be surprised by the plans. Reports indicate the project has been placed on hold pending such discussions.

Even more recently, on March 5, the Torres Martinez Desert Cahuilla with lands located in the Coachella Valley announced a partnership between the tribe and a 51- percent Indian-owned cannabis company to construct and develop a medical marijuana production and processing facility. To date there are no indications that the project has been blocked by local and federal authorities.
In determining which of the many trails to blaze, tribal leaders are not sitting back. Indeed, Nations proactively are conferring with each other as well as experts in Indian law, cannabis, and other relevant fields to decide how to proceed. In particular, in February approximately 75 tribal leaders participated in the first Tribal Marijuana Conference held in Tulelip, Washington, followed by meetings in Washington and at the Reservation Economic Summit in Las Vegas on March 12, to discuss forming the first Tribal Cannabis Association.

While in many respects tribes face issues similar to those of the cannabis industry as a whole, the prospect of Indian nation cultivation presents unique multi-jurisdictional issues of law enforcement, regulation, taxation, and sovereignty, and correspondingly unique solutions. Proceeding with caution and counsel, there is a palpable feeling among many tribes that the time is now. Sound familiar?

Ariel Clark and Nicole Howell Neubert are business and corporate attorneys who specialize in the cannabis industry, and have a background in Indian law. The firm represents individuals, cooperatives, businesses and tribes throughout California regarding business formation, operation, compliance, permitting, and litigation matters.