Hicks proposes loan to fund cannabis enterprise
In one of the first pieces of legislation of his new term, on Monday, Oct. 9, Principal Chief Michell Hicks presented Tribal Council with a resolution that would provide Qualla Enterprises an additional $19 million in funding — under certain conditions.
Under the resolution, Qualla Enterprises — which to date has received $31 million from the tribe — would acquire the additional $19 million as a loan. It would be required to repay the principal with interest, and to agree to “other conditions as may be required.”
Further, the resolution names specific members of tribal government that “shall” participate in discussions leading up to executing the loan. These include Tribal Council and the offices of the principal chief, vice chief, attorney general and budget and finance.
“I’m going to ask that the resolution be tabled,” Hicks said. “I hope that we can go into a work session as soon as today to get into some details. I think that this is definitely headed in the right direction based on the information I have, but I still need additional information, and I’m sure some of the new Council needs additional information also to make a firm decision.”
Qualla Enterprises, the LLC charged with making a profit on behalf of the tribe in the cannabis industry, has been engaged for nearly a year now in at-times contentious conversations about funding with tribal leaders. In December 2022, Tribal Council approved the company’s $63 million request but said $53 million of that would have to come from a bank loan, guaranteed by the tribe. However, due to marijuana’s continued status as a federally illegal drug, securing such a loan proved impossible.
Qualla Enterprises continued to discuss funding with Tribal Council as the body sought to find money available that was not tied to casino proceeds — using such funds could trigger repercussions from federal agencies — and as then-Principal Chief Richard Sneed grew increasingly concerned about what he saw as a worrying lack of transparency and accountability within the enterprise. During his last months in office, Sneed pressed Council to approve a forensic audit of the company, but legislation requiring the audit was never passed.
Now, the issue of funding has become urgent.
“To-date Qualla Enterprises, LLC, has spent more money than the Tribe has provided, presently does not have a source of revenue other than the Tribe and needs more money immediately or it will have to start laying off Tribal member employees,” Hicks’ resolution reads.
In response to Hicks, newly seated Birdtown Rep. Jim Owle said that, should a work session be held, “we need to have the principals in here from the other group we went into business with,” likely referring to Sovereign Solutions Carolina, which is under contract to help with management of the enterprise.
“We need to talk about maybe the contract, the percentage and everything else we have on the table,” Owle said. “I’d like for those folks to be here. I’d like to hear from their CEO of maybe what they’re looking at. Maybe we need to take a look at letting those guys be an investment partner. We’re doing all the investment here, and there’s no return right now.”
Hicks did not respond to those points directly, but implied this might not be the moment to open such a wide-ranging conversation.
“There is a concern just about payroll and making sure that this employee base is taken care of,” he said. “I think timing is of essence.”
Tribal Council is next scheduled to meet at 8:30 a.m. Thursday, Oct. 12.