CA’s Tribal Nations Are Shut Out of The Legal Cannabis Industry

Unless they give up their sovereignty, native tribes of California are excluded from participating in the regulated cannabis market. How does this fit into California’s “social equity” program?
CA's Tribal Nations Are Excluded From Participating In The Legal Cannabis Industry
Tribal Hall (Courtesy of AJ Herrington/High Times)

The former tribal hall for the Iipay Nation of Santa Ysabel is disintegrating; its stucco walls sloughing off like the skin of diamondback rattlesnakes, a slithering native to these rolling hills in rural San Diego County. The decay is a stark contrast to the Native American tribe’s economic development venture two miles down the highway: a state-of-the-art cannabis cultivation and manufacturing campus. The facility sits atop a chapparal-covered hill, overlooking a pastoral valley with grazing cattle and farmland plowed into neat rows. The hub of the tightly secured compound is the former casino building, now the home of cannabis industry tenants and the Mountain Source dispensary the tribe opened last week.

Like many other Native American communities, the tribe at Santa Ysabel hoped to create jobs and a source of revenue through gaming. But when the gamblers didn’t come, opting instead for larger, flashier casinos closer to metro San Diego, the tribal community was left with 50 million dollars of debt and an empty building. Santa Ysabel then turned to cannabis as a solution to its financial woes. With the guidance of the 2014 Wilkinson memorandum from the Obama administration, the tribe drafted California’s first comprehensive cannabis regulations the following year. The tribe transformed its vacant casino, already bristling with robust security, into a cannabis business park.

Ten tenants were chosen from 300 applicants vying to locate their operations on the reservation. Advanced greenhouses utilizing a mix of sunlight and high-tech lighting were erected at tenant expense and manufacturing equipment was installed. Besides cultivation and production companies, an organic waste processor was selected to transform cannabis waste into marketable products. The tenants pay rent and the tribe assesses a tax on any cannabis products that leave the reservation. Proceeds from the enterprise are used to pay down the debt on the failed casino and fund tribal infrastructure projects.

The cannabis producers at Santa Ysabel were supplying medical dispensaries operating in the state’s grey marijuana market. But Prop. 64 requires everyone in the market to obtain a license from the state. Native American tribes and their non-tribal tenants are being denied the opportunity to obtain licenses, however, and are thus prohibited from participating in California’s cannabis economy.

“We were told by the governor’s office ‘there’s no place for you. There’s no place for tribes in the California cannabis market. You’re not included in the state legislation,” Dave Vialpando, the executive director of the Santa Ysabel Tribal Cannabis Regulatory Agency, tells High Times.

CA's Tribal Nations Are Excluded From Participating In The Legal Cannabis Industry
Santa Ysabel Reservation (Courtesy of AJ Herrington/High Times) 

Continuing the Cycle of Oppression

Virgil Perez, tribal chairman of the Iipay Nation of Santa Ysabel, says tribes are being discriminated against.

“I don’t think it’s justified,” he says. “It’s not because we’re a business that isn’t going to meet or exceed their expectations. It’s because we’re tribes. That’s the bottom line.

Perez says the discrimination is fueled by misguided notions that all tribes benefit from gaming– an industry perceived to be overtaken by tribal nations–or receive huge subsidies from the federal government.

“Unfortunately, when tribes are trying to get into these markets, it’s not just the state government, but the average person is looking at these things and thinking ‘tribes have enough.’ They don’t see tribes like mine that are out in the middle of nowhere.”

The reality is, Perez says, that most reservations are located in rural or even remote areas of the state where economic opportunity can be problematic.

Legislative Fix Unsuccessful

Santa Ysabel and other tribes considering economic development through cannabis joined to form the California Native American Cannabis Association and drafted Assembly Bill 924, legislation that would give them access to the state’s market. Vialpando explains the bill would allow tribes to regulate cannabis on their land and subject them to rules just as strict as the rest of California.

“That legislation actually matched the state regulation for regulation [and] condition by condition,” he says. “There was absolutely no advantage that tribes were carving out for themselves in participating in the California market.”

Tribes already attempted cannabis legislation in previous years but received opposition from law enforcement, local governments, and industry groups concerned that tribes would create rules that gave them an unfair advantage. Vialpando says their concerns were addressed in AB 924, and tribes were able to persuade those groups to either support or take a neutral stance on the bill.

“All the efforts resulted in legislation that all relevant stakeholders could agree with,” Vialpando says. “And if you think about it, who wouldn’t? Basically, tribes that are desiring to participate in the California market are saying ‘We’ll play by the same rules.’ In fact, any product that leaves the reservation and goes into the California market can be taxed just as any other cannabis sales product. And those taxes go to the State of California. They don’t come back to the tribes.”

But proposed amendments to the bill (prompted by objections from the governor’s office, according to Vialpando) would have forced tribes to waive their right to sovereignty, get approval from local government, and give jurisdiction to state regulators. “There was no way tribes could get behind what the state was proposing, so the bill went nowhere,” Vialpando says.

CA's Tribal Nations Are Excluded From Participating In The Legal Cannabis Industry
Greenhouse on Santa Ysabel Reservation (Courtesy of AJ Herrington/High Times)

Economic Development Through Cannabis

Tina Braithwaite, a former tribal chairwoman of the Utu Utu Gwaitu Paiute of Benton, California, tells us that sovereignty is central to tribes’ status as independent nations.

“Our sovereign immunity is basically all we have,” Braithwaite says. “We’re out in a rural area. If we allow the state to take away our sovereign immunity, what are we going to have for our future generations? All the decisions that we make now are going to have either a positive or negative impact, and they’re going to be dealing with this.”

The Benton Paiute Reservation is in a remote area of Northern California near the Nevada border. Economic opportunity is slim. The tribe runs a gas station, but it only turns a profit during the Sierra summer tourist season. “There’s really not much more that a tribe like us can do, except for cannabis,” Braithwaite says.

The Benton Paiute tribe also passed its own cannabis regulations and has cultivation and processing operations on the reservation. On April 20, 2017, the tribe opened the first recreational cannabis dispensary in California. Braithwaite noted the Benton Paiute cannabis program has provided benefits beyond economic opportunity.

“Since legalizing cannabis on our reservation,” she says, “I’ve seen a decrease in the numbers for opioid, methamphetamine, and alcohol addiction, and our crime rate has dropped substantially.”

Perez is also passionate about the opportunities that cannabis can provide to his community in Santa Ysabel. Tribal members are already employed by tenants. The revenues generated from the enterprise are being used to pay down the debt from the casino venture, funding education programs, and improvements on the reservation–including plans to rebuild the crumbling tribal hall.

Democratic Assemblymember Rob Bonta, who represents a district in the East Bay, sponsored AB 924. He tells High Times he continues to look for a solution for the state’s Native American tribes.

“They should have access to the legalized cannabis marketplace that we’ve created in California,” Bonta says. “And to the extent possible [they] should be following the same rules as everybody else and have an equal opportunity to participate. That’s the goal. The details and how we get there have proven very challenging.”

Bonta says he agrees that tribes should not be required to give up their sovereign rights and submit to a local jurisdiction in order to operate a licensed cannabis facility. They shouldn’t have to request approval from a city or a county. They’re a tribal nation.

“How do you have them participate on the same rules as everyone else and retain their tribal sovereignty?” Bonta continued. “That’s where it gets tricky. And that’s frankly where we’ve fallen short in years past— answering that question. That’s the crux of the problem.”

What About Social Equity?

The irony of state policy which denies Native American tribes access to California’s cannabis market while simultaneously promoting social equity programs for communities negatively impacted by drug prohibition isn’t lost on Vialpando.

“We were at the hearings for that pending [social equity] legislation,” he says. “We heard from those underserved communities, those minority communities. But there was absolutely no mention whatsoever of Native American communities who have been the victims of disparate treatment at the hands of a failed Drug War just as much as any other minority community in California.”

Denying tribes the right to participate in the cannabis economy is also contrary to one of the goals of legalization: creating a uniform, regulated market for all Californians. But even if left out of the state system, Native American communities pursuing economic development through cannabis are free to engage in intertribal commerce and market directly to consumers who visit the reservation.

While working for a better solution, cannabis operations continue at Santa Ysabel. The newly opened dispensary gives the tenants a new market for the goods. Producers on the reservation are still supplying to medical marijuana dispensaries that continue to operate under grandfathered Prop 215 rules that expired last month, but those customers are dwindling as shops without licenses are being shuttered by the state.

The community is also seeking opportunities in intertribal commerce that would include reservations closer to urban areas building dispensaries that are supplied by cultivation operations in rural areas. Vialpando says the tribe maintains a good relationship with local law enforcement, who are aware of the activities on the reservation and respect the right of the tribe to govern itself and engage in commerce.

CA's Tribal Nations Are Excluded From Participating In The Legal Cannabis Industry
Santa Ysabel Reservation Dispensary Courtesy of AJ Herrington/High Times

What’s the Solution?

Bonta says he is willing to introduce a new bill if a solution to the impasse over tribal sovereignty can be found.

“We need something that will provide an opportunity to succeed in ways that we haven’t been able to yet,” he says. “We need a gamechanger of sorts. It could be an idea, it could be a willingness to do something where there wasn’t a willingness before by certain stakeholders. But something to kind of spark an opportunity to get this across the finish line.”

Despite the challenges, however, Bonta is optimistic. “The problem is delicate and that’s why we’ve been working on this for a number of years without a final solution yet. And I say ‘yet’ because I still believe it’s possible.”

Other states with legal cannabis have been able to reach an agreement with tribes allowing them access to the regulated marketplace. Vialpando says he believes California should follow the example set in those jurisdictions.

“Tribes in Washington interested in legal cannabis have signed compacts with the State of Washington and the state appears to have been very respectful of the sovereignty and civil regulatory authority fo tribes in that state,” he says. “Likewise, Nevada has established agreements with tribes in that state similar to Washington’s mutually respectful model. California would do well to study the mutually successful models negotiated in Washington and Nevada.”

The gamechanger Bonta is looking for could be as simple as leadership from California’s federal legislative contingent. Laurie Danzuka is the cannabis project coordinator at the Confederated Tribes of Warm Springs reservation, the first Native American community in Oregon to sign a cannabis compact with the state. Her community is now creating the infrastructure for their cannabis enterprise and expects to be in business later this year. She credits Rep. Earl Blumenauer for calling on state officials to respect the sovereignty of Oregonians living on reservations, which are under federal jurisdiction.

Whether Calfornia’s congressional team will step up for their constituents who live on reservations remains to be seen. Vialpando is hopeful that Calfornia’s new governor Gavin Newsom, who took office this month, will support tribal access to the state’s cannabis market.

“We’re hopeful that the Newsom administration will be more receptive to respectful dialogue with tribes and the California Native American Cannabis Association in finding a pathway for tribes to participate in the California market under the same regulatory umbrella as everyone else,” he says.

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