LLRBC Approves Cannabis Regulatory Act

CASS LAKE – On August 31, 2023  the Leech Lake Reservation Business Committee adopted a new ordinance allowing for adult-use recreational cannabis businesses to operate on our tribal lands in northern Minnesota. Through the new ordinance, we’ve established a regulatory framework for cannabis sales and consumption, responding to the needs and preferences of our community members. While not enforcing separate criminal laws, we rely on existing authorities for enforcement.

The intent of our new ordinance  is to foster entrepreneurship, with a cannabis commission overseeing licensing, which will eventually allow band members to explore business opportunities. We’re exercising our tribal sovereignty to chart our unique path in regulating and supporting the cannabis industry, prioritizing the voices of our community members.

The preliminary plan is for the Band to open and operate at least one adult-use, recreational dispensary and use revenue generated from that business to help develop and fund the regulatory body needed to allow individual band members to own and operate cannabis businesses.

Leech Lake Legal Director Christopher Murray expands on these topics in the information below in response to public comments received during the comment period.

A general overview of the legal landscape will help set the stage for this topic. Federal Indian law provides that when a State regulates an activity as legal and does not prohibit the activity as a criminal act, then an Indian tribe within that State can regulate that activity according to the tribe’s laws without regard to the State’s regulations. This is based on the same legal theories that originally allowed Indian gaming and led to the creation of the Indian Gaming Regulatory Act to provide general regulations for Indian gaming to operate within. Cannabis is more complicated because under federal law cannabis is completely illegal; however, when States began experimenting with legalizing cannabis in different forms, the Department of Justice indicated that they would not pursue criminal investigations of cannabis businesses that follow State and/or tribal law and comply with enforcement priorities identified in memos to United States Attorneys. So, in order to operate legally, any cannabis business must follow the laws and regulations established by the state and/or tribe with jurisdiction and must not violate the enforcement priorities outlined in the U.S. Attorneys’ memos.

Minnesota explicitly recognized the sovereignty of Minnesota Tribal Governments in Minnesota cannabis laws, specifically providing for a compacting process that recognizes the authority of Minnesota Tribal Governments to regulate the cannabis industry within their jurisdictions. Minnesota laws provide that compacts may be entered, but that a compact is not generally required for Tribes to regulate cannabis according to their own laws. However, in order to avoid federal criminal interventions, the Tribes’ laws must effectively prohibit violation of the federal DOJ enforcement priorities. The DOJ has indicated that it will focus enforcement efforts related to marijuana on the following priorities:

The Band is planning to enact a Cannabis Code that will regulate cannabis business operation within the jurisdiction of the Band consistent with the DOJ enforcement priorities. The Band does not currently exercise any criminal jurisdiction and plans to rely on Minnesota law for limitations on individual possession and cultivation, cannabis distribution to minors, and other aspects of Minnesota law that are criminal-prohibitory in nature. Please refer to Minnesota laws for specifics regarding these limitations. The Band will be authorizing Cannabis Businesses to operate within the Leech Lake Reservation according to regulations developed by a cannabis regulatory entity to be established by the RBC in compliance with the Code currently under consideration. Compliance with the DOJ enforcement priorities will be more difficult for Tribes to regulate while Minnesota lacks a regulatory structure and licensing for private cannabis businesses. These circumstances will make regulating private cannabis businesses difficult prior to Minnesota issuing cannabis licenses. Operating the cannabis business directly under Band management will ensure that the regulated entity is not attempting to circumvent regulation while the Band’s regulator develops policy and builds capacity. Licensing private cannabis businesses under the Cannabis Code will be pursued when the regulatory capacity is well developed and the relationship with Minnesota licensees is better understood following the compacting process.

The most common questions regarding the Code relate to eligibility for cannabis business licenses. The current draft Code provides two (2) types of licenses that can be issued for cannabis operations. The Cannabis Business License allows retail operations and is required for any cannabis facility (physical operations related to cannabis production) within the Leech Lake Reservation. The Cannabis Supplier License allows businesses licensed to provide Cannabis Goods or Services by another jurisdiction to provide Cannabis Goods or Services to a Cannabis Business licensed by the Band, but does not allow physical facilities with the Leech Lake Reservation. In the current draft of the Code, a Cannabis Business License would only be available to businesses wholly owned by the Band and not to any privately-owned businesses.

The intent of only licensing Band owned businesses for retail operations at the beginning is to allow the Cannabis Commission, established to regulate the cannabis industry within the Reservation, to develop a robust regulatory structure and, in the future when the regulatory capacity is matured, expanding Cannabis Business License availability to businesses owned by Band members. Anyone interested in helping develop the regulatory structure, especially anyone with knowledge of the industry, is encouraged to remain engaged as the RBC selects Commissioners for the Cannabis Commission. There will also be opportunities to get involved with developing a Band owned Cannabis Business to operate retail and other cannabis related business opportunities as planning moves forward.

It currently is not clear when Minnesota will make cannabis licenses available to the general public, but Band members will be able to pursue licenses through Minnesota when they become available. However, whether cannabis businesses licensed by Minnesota will be able to operate within the Reservation is an outstanding question. The Minnesota cannabis laws provide for approval of cannabis businesses licensed by Minnesota within reservations, unless a compact providing general approval is negotiated. The intent is currently to negotiate compacts that would allow Band licensed businesses to interact with Minnesota licensed businesses without needing a Minnesota license, but limit the number of Minnesota licensees as appropriate. If a compact of this nature is achieved, then licensing Band member owned businesses to operate in the cannabis industry will be pursued.

Similar to Indian gaming, nothing in federal, state, or tribal law authorizes individuals to operate cannabis businesses without some form of government license. The Band needs to gain experience regulating cannabis businesses operated under Band management to ensure that regulatory capacity can effectively regulate private businesses in an emerging market with potential criminal liability if regulations are not enforced effectively. At this time, the reasonable path forward for establishing a cannabis industry on the Leech Lake Reservation is to authorize and pursue a cannabis business owned, operated, and regulated by the Band. The RBC plans to pursue licensing cannabis businesses to operate within the regulatory jurisdiction of the Band in the future.