At least twenty adult-use dispensaries are operating on Native American reservations in New York, well ahead of state regulators, who say the earliest recreational sales will begin is in a year and a half. And there are more tribal vertically integrated companies opening up retail shops in the coming months.
Selling adult-use cannabis before state regulators get the ball rolling is “critical to the success of the tribal marijuana industry,” Lee Redeye, counsel at business law firm Lippes Mathias LLP in Buffalo, which assists tribal nations in creating seed-to-sale companies on reservations, told Grown In.
“The first mover advantage is always important, no matter what sort of business you’re in,” he said. “Given the sheer number of businesses that have popped up I imagine that sales are doing really well. Tribes are sophisticated entities and even if they were on par with the state, I think they would still be able to make this industry work, given the unique advantages of sovereign nations. It’s important, but it’s not the only factor for success for tribes.”
The federally-recognized Shinnecock, St. Regis Mohawk, Cayuga, and Seneca nations have a mixture of licensed and unlicensed shops selling cannabis mostly along the Niagara Frontier and Long Island.
Increasingly, tribes and their members are entering joint ventures with established non-Native American companies that provide logistical and capital support.
Redeye said these types of partnerships can generally be positive.
“Diversified economic development for tribes is always a good thing. That’s my personal view on it. Some of these tribes who enter into agreements don’t have a lot of resources. They need outside investors to help them set up. Creating the cannabis or marijuana industry from scratch is a monumental task and you need experts in that field to really make it work and work well,” Redeye said.
The Shinnecock Nation on Long Island in August 2021 entered a partnership with Arizona-based TILT, which provides services to marijuana brands and retailers across 36 states, and Canada, Israel, Mexico, South America, and the European Union.
Little Beach Harvest, regulated by the Shinnecock Cannabis Regulatory Division under the Nation’s tribal cannabis laws, will be a two-story dispensary and lounge, along with a 60,000-foot cultivation, processing, and packaging facility located a short drive from Southampton, Long Island.
While Little Beach Harvest will be wholly owned by the Shinnecock Nation, the development is financed through a joint project with TILT Holdings and cannabis project development firm Conor Green, who will retain 25% ownership of the project. TILT will invest up to $18 million, and provide management services for the development of the facilities, including planning and design and training for Little Beach Harvest staff.
In return, Little Beach will pay 9% financing on capital provided by TILT and 11.25% of the gross revenue as well as 18.75% of free cash flows from all Shinnecock cannabis operations during the initial term of up to nine years, according to the release.
In a separate partnership, Rick Hamelin, a member of the Saint Regis Mohawk Nation, entered into a letter of intent in December 2021 with multi-state operator AUDACIOUS, through an LLC called First Americans. First Americans LLC was granted a vertically-integrated license by the tribe. The partnership will create cultivation, processing, and manufacturing facilities, and two retail dispensaries.
One dispensary will be located across the Akwesasne Mohawk Casino and Resort, which sees approximately 2.4 million visitors each year and is a 90 minute drive from Montreal.
Even though the dispensary is far from New York City and the state’s main population center, Leah Bailey, Chief Business Development officer of AUDACIOUS, said in an interview with Grown In that she’s not worried about that.
“Do I think people will come? Yeah, I think they’re coming to the casino so there’s no reason that they wouldn’t come up to the dispensaries,” she said. “And of course other people on the St. Regis Mohawk Tribe will be licensed to cultivate and dispense as well. So I believe that people will make that drive.”
The 55,000-foot cultivation facility will have a goal of producing 10,000 pounds of dried marijuana annually, including processing and manufacturing of derivatives.
Regarding the future of tribes’ relationship with state regulators, the state’s Marihuana Regulation and Taxation Act allows for it to enter into tribal-state compacts that would authorize nations to “acquire, posses, manufacture, sell, deliver, transport, distribute, and dispense adult-use and medical cannabis.
But Redeye said federally-recognized tribes are sovereign nations and have their own prerogatives. Whether any tribe would embrace such a compact is still unknown, but it depends heavily on the state’s relationship with local Nations.
“As a whole here in New York state, the state and the tribes for the most part don’t get along.I don’t think that that’s a very attractive proposition for most tribes to enter into such a compact with the state. But each tribe is different. Some may want to do it because they feel that it reduces the risk of engaging in the industry, which is a very valid concern. Some tribes may just want to go in on their own and not care what the state has to say,” Redeye said.
Each tribe may have varying degrees of laws and regulations regarding marijuana sales, he said.
“There are some tribes in the state that are licensing members to engage in the industry and then there’s other tribes in the states that have essentially monopolized the industry, which is not a bad thing. Each tribe can pick its own path,” he said.
