Indigenous cannabis ventures have grown in incremental prominence since the Squaxin Island tribe opened the first tribal retail location in the U.S., Elevation.
Cristala Mussato-Allen (Caddo Nation) and executive director at business development and community education venture Native Workplace, Inc., told Benzinga that between 20 or 30 tribes, or roughly 5% of the 576 federally recognized by the U.S. government, have legalized operations in some form.
In 2020, Emerald Media Group featured over 100 Indigenous-owned cannabis businesses compiled by co-authors Mary Jane Oatman, Melissa Hutsell, Taylor Short and Katie Bryan.
"It is becoming more common as elders and communities embark upon self-healing journeys and seek alternatives from pharmaceuticals," said Oatman (Columbia River Plateau). Oatman is the founder of the Indigenous Cannabis Coalition (ICANNC) and the tribal cannabis-focused publication THC Magazine.
Differing Investment Strategies
Mussato-Allen said those pursuing outside partners often look for expertise, investors or operational support. Tribes that are opposed tend to cite previous bad deals that harm the community rather than help.
"I have seen partnership deals fail due to 'back door' sales issues, skimming, poor planning and fraud," Mussato-Allen reported.
"Tribes are cautious of partnerships," she added, citing several incidents, including the Pinoleville tribe. Moscato-Allen alleged that Colorado company United Cannabis Corp (OTC:CNABQ) raised millions and left the Pinoleville Pomo deal in 2015.
More recently, some tribes have reported success through their business partnerships.
Shinnecock Nation in the Southampton, New York region is often featured for its Indigenous-owned ventures. In 2019, Shinnecock Hemp Growers launched.
Co-founders Rainbow and Nasha Chavis lead the mother-daughter venture with support from private local investors and Hudson Hemp. Shinnecock Hemp is owned by individual tribal members and not the tribe itself.
"The investors have not only helped us at Shinnecock Hemp, but they also have given to other land reclamation efforts and have helped the Graves Protection Warriors Society of Shinnecock regain a sacred site," Chavis added.
Little Beach Harvest is the next cannabis venture for the community, with a vertically integrated dispensary and wellness center in development. The company is a joint endeavor between Shinnecock Nation and TILT Holdings Inc (OTC:TLLTF).
TILT CEO Gary Santo told Benzinga that, unlike most deals, investing in tribal cannabis is not about gaining a stake in the company. Under their agreement, Shinnecock remains the owner of the venture, with 75% of the cash flow going to the tribe.
Chenae Bullock, Little Beach Harvest's managing director, said that TILT has helped develop the venture through weekly conversations, brainstorming, collaborations and practically any other form of support requested.
"It's not just lip service," she said. "There are results that are coming out of these conversations."
Santo added maintaining the partnership is vital. "If we hold up our end of the bargain, our belief is we will continue along in a prosperous relationship with the Shinnecock."
Possible Business Benefits
Ideally, companies would altruistically form partnerships with tribes to help marginalized communities enter the marketplace.
Such involvement "Can truly help these business owners and their families get out of poverty-like conditions," said Chavis.
Various business benefits may also entice operators if altruism isn't the motivator.
ICANNC's Oatman touched on "several premium value propositions that most partners do not," highlighted by land and water. She and others also discussed potential tax relief.
Mussato-Allen said the absence of tax could lead to roughly 30% in additional annual income. She added that property and building costs could also be much lower on tribal land, sometimes at zero cost, depending on the deal.
Oatman noted that some tribes also offer incentives to outside developments, including additional tax incentives, access to tribal CDFIs, leasing opportunities and rev-sharing deals.
While beneficial, predatory practices may come with fewer regulations, just as some state marketplaces have experienced. "Some external companies want to flood the Native communities with their brand because they know it can be sold with no limitations," Chavis said.
As such, many tribes remain opposed to outsider investment.
"Other tribes have made it evident through their tribal laws that the economic opportunities are intended only for the tribal people, excluding outside investors or multi-state operators from capitalizing on reservations, cannabis farming or business development," Oatman said.
Beyond taxes, she advised that cannabis brands would be wise to build with tribal ventures to demonstrate their awareness of consumer values centered on industry inclusivity and equity.
Oatman cited Cookies' work with tribal nations' farms, including California-based, Indigenous women-owned Native Humboldt Farms and South Dakota's Indigenous Grown.
"It is interesting to see the models, but there is no doubt that tribal people are reaping the rewards in addition to tribally owned enterprises," she said.
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