With oil and tobacco declining as investment opportunities for tribal nations, building a strong cannabis investing network may be a viable option instead.
The pro-business yet family-focused atmosphere within Native American tribes affords unique advantages in the cannabis industry, as does their independent status. But there are also a number of risks to keep in mind and prepare for.
Read on to learn more about the opportunities and risks that Native American tribes should be aware of when preparing to set up their cannabis investing network.
Advantages for Tribal Nations in the Cannabis Industry
As a sovereign nation on sovereign land, your tribe is immune to many federal regulations, including heavy cannabis taxes and real estate restrictions. A cannabis investing network can be a great way to right social injustices perpetrated against Native Americans and bring money back to the people without excessive taxation.
While regular cannabis establishments have to go through their local government’s planning and zoning divisions, permitters, and inspectors, most tribal nations don’t have to deal with all that bureaucracy. Instead, you’re able to draw on a collaborative community to get things done much faster and without the red tape.
There’s also a lot of crossover from the gaming industry into cannabis. So if you own a gaming establishment already, you can easily translate your knowledge of inventory, cash handling, security measures, and other operational considerations into a cannabis investing network.
Most importantly, tribal nations own a powerful story that makes them stand out from the rest of the competition in the industry. In cannabis, everyone is a startup. Most brands will have to make up their story and imagery, but for tribes, that story is already deeply rooted in the culture itself.
Protecting Against Potential Risks
While the opportunity to create a strong cannabis investing network is great, tribal nations should also be aware of the risks to take precautions against them.
It’s true that your tribe isn’t required to tell the state or federal government anything, but no communication at all would be a missed opportunity. If possible, it’s best to learn and operate within some of the state’s regulations while maintaining some of your own internal ordinances.
Not doing so can result in a dilemma similar to that faced by a South Dakota tribe in 2015. In response to rumors of an impending federal raid, the tribe ultimately decided to burn their entire cannabis crop and start completely over in better compliance with state regulations.
Another tribe in Washington called us in for an audit on their compliance. They didn’t feel the need to be told by the state how to comply, but they did want guidance on whether they were compliant. It’s always better to be safe than sorry when it comes to your state’s regulations.
In the event that issues arise, operating separately from the state also means you’ll need to conduct investigations yourself on your own people. As a solution, we suggest creating a charter document or agreement with the state, which can also solidify your tribe’s own internal regulations.
Next Steps for Your Cannabis Investing Network
If you’re looking to create a cannabis investing network within your tribe, a consultant can help you set up regulatory structures both internally and at the state and federal levels. Be sure to choose someone who has experience working with tribes and is familiar with the culture.
For example, we worked with a tribe in New York to help them create a business plan and set regulations. We also spent about a week with them working on site selection. Native American tribes often have the necessary land available, but it’s important to know what pieces of land work for what parts of the business.
The process is complex and involves many people and resources, including HR, construction, technical writers, lawyers, and accountants. You’ll need to understand the state market and whether you will operate independently or within the state program to determine if a vertically integrated model is right for you.
Keep in mind that if you go fully independent, you won’t be able to work with anyone. Working with the state to meet certain requirements, on the other hand, would allow you to work with other businesses if the need or desire should arise.
At HYC, we are passionate about righting social wrongs and creating generational wealth for Native American tribes. Get in touch with us to discuss whether a cannabis investing network is the right move for your community.