Tribal Council focuses on cannabis enterprise
As the Eastern Band of Cherokee Indians prepares to launch its medical marijuana program, cannabis was the main topic of conversation in Tribal Council this month. The body discussed six resolutions and ordinances Jan. 12 related to cannabis laws and the boards and LLC leading the industry.
Funding the enterprise
The tribally owned Qualla Enterprise expects to start producing cannabis this year, but funding has proven a major obstacle in building out the infrastructure to grow the product securely and at scale.
In December, General Manager Forrest Parker asked Tribal Council for $63 million to build out the facilities. Tribal Council was more than willing to grant the funds, but the transfer is complicated by federal rules that restrict how tribes can spend profits from their casinos. The National Indian Gaming Commission has said that gaming proceeds can’t be used to profit from cannabis, which is still illegal under federal law, and the tribe could not identify $63 million in funding that was not tied to gaming and available to be given to the LLC. Instead, Tribal Council allocated $10 million and authorized Qualla Enterprise to seek a loan for the rest.
But that avenue proved a dead end, Parker told Council Jan. 12. The bank told Qualla Enterprises that lending for cannabis infrastructure and enterprises is not common and said the only way it could grant a $53 million loan would be if Qualla Enterprises guaranteed it with $53 million already in the bank.
“The lending aspect to this is pretty challenging, if not impossible,” Parker said.
Finance Secretary Cory Blankenship said the tribe does not have a $53 million reserve of non-gaming money to deploy but could look into making incremental investments in the business over the next several years as funds become available. Over the last four months, about 13% of the distribution from Harrah’s Cherokee Casinos came from non-gaming activities like hotel, food and beverage sales. However, allocating those funds to Qualla Enterprises would require revisions to the tribe’s revenue allocation plan, which already earmarks those funds for other purposes.
“I don’t think it’s impossible to get there, but I think we need to do a lot more work,” Blankenship said.
The clock is ticking, however. Qualla Enterprises only has operating funds to continue through June 30, at which point it needs to start generating revenue to sustain payroll and production. Thus far, the project has not slowed down from an infrastructure standpoint and probably won’t until February, Parker said. The business has enough money to put the buildings up but not to fill them with needed equipment.
As she did in the December meeting, Big Cove Rep. Teresa McCoy tried to convince her fellow Council members to ignore NIGC restrictions and fund the enterprise with gaming revenues.
“If you go ahead and do it, what is the implication?” she said. “Oh, they’ll pull your gaming license? I think that is a scare and I don’t appreciate it.”
That opinion did not gain much traction around the horseshoe. At the podium, Principal Chief Richard Sneed addressed it directly.
“Whether we want to say or not or whether you believe or not the NIGC has the ability to take our license or to suspend operations, they absolutely do have that ability,” Sneed said. “I for one am not willing to put that at risk. I want cannabis to be successful, but we can’t do it at the expense of putting our gaming at risk.”
Council voted unanimously to table the ordinance for further discussion, with Birdtown Rep. Boyd Owle suggesting that Tribal Council members discuss the issue with the NIGC on a planned trip to Washington, D.C.
Loosening hiring restrictions
In a divided vote, Tribal Council passed a separate piece of legislation reducing criminal history hiring restrictions at Qualla Enterprise. As introduced, the ordinance would have slashed the amount of time a person must wait to qualify for employment after completing a felony sentence from 10 years to three.
“Should an individual have the courage and the humility to face their past, to overcome it be humble about it, we don’t think as Qualla Enterprise we should be a barrier to allowing them to work in our facility,” said Carolyn Ward, chair of the Qualla Enterprise board.
Parker said that only a couple of people have been turned away from employment due to a criminal record, but that the existing law has deterred “dozens” more from even applying.
“Often, when folks are in a turning point in their life, they may be on probation, they’re in an inflection point, a positive influence on them during that time is a really good thing, so being able to be employed, be a part of something bigger than themselves, part of a team, in those moments that they are in recovery or they are working through life is very important,” he said.
Tribal Council agreed — and decided that even three years was too long a waiting period.
“Whenever you get done with probation, you should be done. You should be acclimated,” said Yellowhill Rep. T.W. Saunooke. “I would be fine putting it at zero months, just leaving the requirement that you complete your probation.”
“When it’s over, it’s over,” McCoy agreed. “Don’t keep holding people down. Don’t keep condemning them for something that they paid for.”
However, some Council members said there should be some waiting period involved.
“I think a full year of reflection after the probation can do a lot for everybody involved,” said Painttown Rep. Michael Stamper.
The final vote — on an amended version that took away the three-year wait — was split, with nine Council members in favor and Stamper, Painttown Rep. Dike Sneed and Yellowhill Rep. David Wolfe opposed.
Several of the remaining cannabis-related votes dealt with board appointments.
Two boards are involved with the tribe’s current cannabis initiatives. The Cannabis Control Board sets the rules for the medical cannabis operation on the Qualla Boundary, including decisions as to which medical conditions qualify someone for a card. The Qualla Enterprise Board oversees the LLC producing the product and operating retail sales.
On Jan. 12, Tribal Council set staggered terms for the Qualla Enterprise Board with unanimous approval and appointed Brooke Coggins to the Cannabis Control Board. Stamper and Dike Sneed opposed that move.
Council also discussed at length an ordinance brought forth by tribal member Brenda Norville. If passed, it would have required that all five members of the Cannabis Control Board be tribal members.
“Anytime you have a board that’s in our backyard, you put on EBCI members,” Norville said.
Currently, the board has four members, of whom two are tribal members and two are not. A fifth member, who is a tribal member, will be considered for appointment soon.
Sneed was sympathetic to the spirit of Norville’s request but said it wouldn’t be a good idea in practice.
“I appreciate what you’re trying to do, but the level of expertise that’s required to be on this regulatory oversight board, it’s not like there’s a huge pool of candidates who are interested,” Sneed said. “We certainly have people who are qualified, but they have not expressed interest in it.”
The budding cannabis business has a lot of moving parts as it works toward launching retail sales, and replacing key members of the board at this point would be “chaotic,” Sneed said.
Norville replied that the tribe should fund contracts to continue working with the non-enrolled board members as long as their expertise is needed but should appoint tribal members to sit on the voting board seats.
“We’re paying board members, but we want to take away and create a contract position and then still pay the board members?” Saunooke asked. “So were going to double up?”
“I’m not about to take two off to contract two and bring two enrolled members in,” Owle said, adding, “I’d love to have all five on there being enrolled members but you’re just not going to find them.”
While Norville didn’t find much support for her ordinance as written, Tribal Council didn’t dismiss it outright. Of the 12 members, 10 voted to table it. Wolfe, who had moved to pass, voted with Owle against the move to table.
Lobbying for decriminalization in N.C.
The final cannabis-related item discussed Jan. 12 dealt with state law. In 2021, Tribal Council voted to decriminalize possession of small amounts of marijuana on the Qualla Boundary. But both possession and medical use remain illegal under state jurisdiction. During the current legislative session, the tribe will lobby North Carolina to change that.
The resolution states its support for legislation establishing a system in state law allowing “the lawful cultivation, processing, testing, distribution, sale and use of medical marijuana within the state,” adding that the tribe “supports decriminalizing adult possession of small amounts of marijuana for personal use.”
Tribal Council passed the resolution unanimously.