Had all gone according to plan — and had not the Obama administration Justice Department stepped in — New Year’s Eve on the Flandreau Santee Sioux Indian Reservation in South Dakota would have been a party of monumental proportions.
The Santee Sioux tribe had hoped to be the first in the nation to operate a legal marijuana lounge and resort on an Indian reservation. That was up until last month, when in what amounts to the ultimate buzzkill, the tribe torched its marijuana harvest over fear of a government raid.
Tribal officials say they still plan to move forward with the state-of-the-art grow operation, but Thursday night the renovated bowling alley where the nightclub-like marijuana resort was slated to open will be empty.
“It will be a quiet place,” said tribal attorney Seth Pearman.
The clash reflects the persistent legal paradox at the heart of the marijuana legalization debate, where the federal government still treats it as a criminal substance even as a growing number of states do not.
The Santee Sioux tribe voted to legalize marijuana in June, six months after the Justice Department issued a new policy that was read by many as giving tribes the green light to grow and sell marijuana. The guidelines indicated that reservations would be treated the same as states that had legalized marijuana use and sales, though in reality tribes eager to enter the industry have faced a series of hurdles.
Four states and the District have legalized marijuana. But outside of Oregon and Washington, where tribes have had at least some luck entering the trade due to statewide legalization, no more than a dozen of the 566 federally-recognized tribes have moved to legalize marijuana on their land, according to Robert Williams, an expert on tribal law at the University of Arizona James E. Rogers College of Law.
“Most tribes would rather not have to think about getting into this line of business,” Mr. Williams said. But poverty on Indian reservations and a lack of economic opportunities have historically pushed tribes into niche businesses, like casinos or payday lending, he said.
And tribes have found they hold some significant advantages when it comes to entering the marijuana industry at the outset, Mr. Williams said. They can skirt federal taxes and keep proceeds in tribal-run banks — an advantage over the rest of the marijuana industry, much of which has been forced to deal in cash because federal banking laws prevent pot businesses from depositing their money in banks. The Flandreau Santee Sioux tribe had previously estimated the marijuana lounge could generate up to $2 million a month in profit.
The tribe had been in close contact with federal law enforcement officials as members sought to open the marijuana lounge, about a stone’s throw from their already popular Royal River Casino and Hotel. But during discussions, which according to The Associated Press culminated with a meeting with the Justice Department and U.S. Attorney for South Dakota Randolph Seiler, tribal leaders were told a raid on their grow facility was still a possibility.
Federal officials concerns were said to center on whether the tribe would sell marijuana to non-Indians and the origin of the seeds used for the crop.
Mr. Pearman told The Washington Times that the Flandreau Santee Sioux still plan to move ahead with the marijuana grow facility and pot lounge, but the tribe is still working out exact details so as to not run afoul of the law.
“It’s more like how to move forward whether than whether to,” Mr. Pearman said. “We still intend to.”
Results elsewhere have been mixed among tribes seeking to enter the pot business.
In Kamilche, Washington, where marijuana is legal statewide, the Squaxin Island Tribe opened what is believed to be the first retail marijuana store on an Indian reservation in November.
But the Bureau of Indian Affairs and the Drug Enforcement Administration in July raided marijuana-cultivation facilities located on tribal lands in Modoc County, California — seizing at least 12,000 marijuana plants and over 100 pounds of marijuana, and in October, federal agents destroyed more than 30,000 cannabis plants found on the Menominee Indian tribe’s Wisconsin reservation. The tribe was growing industrial hemp, which is has lower levels of the high-inducing THC than marijuana.
“Unless you have some sort of cooperation between local, state and federal law enforcement it can be hard to get these things off the ground in a state were it hasn’t been legalized yet,” Mr. Williams said.
Mr. Pearman said more than 45 tribes had been in contact with the Flandreau Santee Sioux about similar marijuana projects, but Mr. Williams predicted little real movement until the law is clarified and the 2016 presidential vote is over.
“I would be surprised to see any rush between now and the November elections,” Mr. Williams said.