An increasing number of Native American tribes are looking to the marijuana business to break the poverty on reservations, but they are treading quietly over uncertainties in federal policy, which could shift under President Donald Trump.
Cannabis is big business in states that have legalized its medical or recreational use. Arcview, a California cannabis investor network, says the U.S. marijuana market earned $6.7 billion in 2016.
Apart from its medical and euphoric properties, proponents of cannabis cite the industrial potential of hemp, which is derived from the male cannabis plant. It is used globally in more than 25,000 products, from fabrics to food to pharmaceuticals. Because of its association with marijuana, hemp cultivation is strictly controlled in the U.S., and manufacturers must import hemp fiber, seed and oil.
Environmental, financial benefits
“Let’s just look at one small piece of what hemp can do,” said Leslie Bocskor, founder of Electrum Partners, which works with states and tribes looking to enter the cannabis industry. Hemp, Bocskor said, can be used to manufacture plastics that are more environmentally friendly than plastics made from oil and gas, which aren’t biodegradable.
“When you put hemp plastic into landfill, it will break down into things that are not damaging, at worst, and, at best, it can be additive to the soil it’s put into,” he said. “It also causes far less pollution to produce hemp plastics.”
Tribes stand to realize even greater profits than states due to their tax advantage.
State cannabis producers and retailers can’t deduct business expenses on their federal tax bills and end up paying a larger part of their gross earnings to the government.
But recognized tribes and tribal corporations don’t pay federal income tax on earnings gained on reservations.