Native American Organics: Another Tribal Gaming Industry?

Tex “Red-Tipped Arrow” Hall, a former Chairman of the Mandan, Hidatsa and Arikara (MHA) Nation, could be spearheading a movement to establish cannabis businesses among Native American tribes.

Investors have been salivating over opportunities to partner with Native American tribes to grow and sell marijuana since last year, when the Department of Justice released a memo stating that the legal enforcement priority policies outlined in the Cole Memo also apply to “Indian Country.” But tribes in the United States have still been slow-going when it comes to launching dispensaries and cultivation facilities, and many have expressed conflicted views about whether they even desire to enter the industry.

From a business perspective, it seems like a natural match—Native American tribes have been profiting from their tribal sovereignty for years through the casino and gaming industry. Exempt from federal taxes and certain legal regulations, these self-governing political bodies seem all but guaranteed to flourish in another industry facing volatile laws and tax regulations.

Tim Wright, who partnered with “Red Tip Arrow” Hall to form Native American Organics, a business geared towards helping Native Americans establish cultivation and dispensary businesses, believes these communities have competitive advantages beyond their tribal sovereignty when it comes to cultivating marijuana.

“They’ve got the land. They’ve got the water. And the tax revenues aren’t going to the state. They’re going to the tribes for infrastructure, schools, and hospitals.” Wright anticipates that tribes will utilize greenhouses and outdoor-growing mediums, which could potentially lead to lower market price points.

It is impossible to ignore the parallels between tribal gaming and the burgeoning marijuana industry, which is perhaps one of the reasons why many Native American tribes are hesitant to dive into this new industry. Casinos were once glorified as a panacea to address the extreme poverty and unemployment pervading Indian reservations. But the industry has been disappointing for many and the wealth created from casinos is rarely evenly distributed across tribe members. The tribal gaming industry brought in $28 billion in revenue in 2013, but many Native Americans still live below the poverty line.

“In a matter of time, this industry could be just as big as gaming is for tribes, if not bigger,” Hall mentioned in an interview shortly after announcing his partnership. Wright expects the potential revenue to be potentially three to five times greater in the cannabis industry.

“The infrastructure cost of a casino can range $200MM to $400 MM and your ROI could be 3-5-7 years,” Wright said. “[With marijuana], you’re looking at a $10MM investment, and your EBITDA is 60 to 70% greater.”

Whether the marijuana industry will contribute to economic development on Native American reservations is yet to be determined, but Hall and Wright have a vision for Native American Organics beyond revenue. For the first phase of their business, they are looking to establish partnerships with tribes to produce and sell medical marijuana to patients suffering from epilepsy, Alzheimer’s, Parkinson’s and PTSD.

“What really made an impact on me was the potential that cannabis has for healing and easing the pain of our people who suffer from Post Traumatic Stress Syndrome across Indian Country,” Hall said in a press release. “The Department Of Veterans Affairs Estimates the rates of PTSD among American Indian Veterans at up to 25%.”

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