By CHRIS AADLAND, CUJ
The Confederated Tribes of the Umatilla Indian Reservation’s (CTUIR) Board of Trustees (Board) on July 15 voted against a resolution to pursue cannabis related businesses by a 5-0 vote, with three members abstaining. The resolution also rescinded the tribe’s hemp code.
Years of tribal members pushing for cannabis legalization culminated with the Board approving a resolution legalizing hemp and marijuana on the reservation in January 2023.
Since that action, the Board prioritized looking into whether to launch tribally owned cannabis-related businesses, citing additional revenue for the tribe and the potential sustainability and regenerative agriculture benefits of a hemp crop.
A feasibility study, which was shared with tribal leaders during a July 10 work session, estimated how much revenue a hemp production business would produce for the tribe.
In a best-case scenario, the study found, a hemp business would lose money in its first three years and generate an estimated profit of about $20,000 over the project’s first five years. The project, which would start out with 25 acres and grow to 300 acres over the first five years, would see about a $70,000 profit afterwards.
At best, growing and selling hemp would lead to slim profit margins, would require water allocations and likely require infrastructure investments, CTUIR Office of Legal Counsel attorney Brent Leonhard told Board members during the work session.
“Bottom line, it’s just not profitable,” he said.
Leonhard also said the study didn’t account for the costs of building a new facility that would likely be needed to dry hemp crops, which would further decrease the venture’s minimal estimated profits. A crop on the reservation would also need irrigation because the plant requires between 20 and 30 inches of rain – much more than the area receives annually on average – during the growing season, he added.
“Yeah, not a good business opportunity,” Leonhard said. “I don’t believe that’s going to be a profitable commodity at any time.”
It’s also not a good business opportunity for tribal members who wish to grow hemp themselves, nor is it legal on the reservation.
On-reservation hemp production plans must be approved by the U.S. Department of Agriculture (USDA) and the CTUIR’s June 2023 hemp code, which established regulations for hemp farming and related businesses on tribal lands, was also repealed by the Board because it didn’t comply with USDA requirements.
That means individual tribal members are prohibited from starting their own hemp production businesses within reservation boundaries unless the CTUIR creates a hemp code compliant with federal regulations. Given the grim outlook for commercial hemp production on the reservation, tribal staff recommended that tribal leaders rescind the code to prevent tribal members from starting a business that was unlikely to succeed, Leonhard said.
“I think it’d be a bad thing to set up tribal members for that kind of failure,” he said at the work session.
Although the analysis didn’t include a feasibility study for a tribally owned marijuana business, Leonhard pointed out a marijuana retail business wouldn’t be competitive because state marijuana tax policies would essentially force the CTUIR to charge higher prices than its competitors.
While some tribes have found success with marijuana-related businesses, it would be a require a “long-haul” effort to get to a point where such a venture could be profitable for the CTUIR, Leonhard said.
According to Leonhard, a complicated and costly lobbying campaign would be necessary to convince state lawmakers to change tax policies so a CTUIR marijuana retail business could be competitive. A tribal/state compact negotiation would also require a commitment from a unified Board.
Since cannabis is illegal at the federal level, tribal officials told Board members starting a marijuana retail business could jeopardize some federal funding or make it more difficult to obtain loans.
For example, CTUIR contract Attorney Dan Hester said the bank that the tribe hopes to borrow from to finance the planned Wildhorse Resort & Casino expansion prohibits borrowers from being involved in any enterprise in the cannabis industry, though he said the tribe is negotiating to have prohibition provisions removed from a final loan agreement proposal.
Board Treasurer Raymond Huesties agreed that the projects should be postponed indefinitely, citing concerns about potential loss of some federal funding and an already crowded marijuana market.
Tribal leaders could, however, reexamine the issue if regulatory changes occur and funding loss concerns are resolved, he said.
If that happens, Huesties added, the tribe could easily resume pursuing cannabis businesses because so much of the initial work, like a hemp farm feasibility study, has already been completed.
“It’s a flooded market and I think we’re doing the right thing by shelving it and just waiting,” he said. “If there’s a big switch that somebody’s going to push, as they push it, that resolution’s already there and the work’s already been done.”
Although hemp and marijuana plants are the same species of cannabis plant and resemble each other, they differ in tetrahydrocannabinol (THC) content, which is primarily responsible for producing the intoxicating effect of marijuana. Hemp contains such a low amount of THC compared to marijuana that it is unlikely to get someone high.
Marijuana possession and purchase by anyone 21 and older remains legal on the reservation.
