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Sunday, July 14, 2024

The Cherokee tribe’s wager on marijuana portends another regional economic boost

West of Birdtown, CoopersCreek tumbles out of the dark coves of the Smoky Mountains, luring fly-fishing buffs with plump trout. Near Cherokee, in recent years, the fish themselves have become a crop, in stocked ponds where anglers pay to tempt them with exotic flies of elk hair and such.

Eighteen months ago, another crop sprouted here, little noticed by few outside the tightly knit Eastern Band of the Cherokee Indians. Its spiky leaves are now flourishing in two-dozen hoop-domed, climate-controlled greenhouses.

This is North Carolina’s first industrial-scale, medical marijuana project. If successful, its economic impact on western North Carolina could complement the gambling industry that has become an economic bulwark since 1997. After an investment topping $50 million, it stalled in early May after internal dissent over its financing.

Today, two Harrah’s casinos, four hotel towers with 1,800 rooms, restaurants and other developments generate more than $600 million a year. The complex has transformed the
once-poor Qualla Boundary, home of the Eastern Band, into a regional dynamo.

Approval of the gambling operations in the 1990s also stalled along similar lines to those recently muddying the future of the marijuana project.  Within the tribe, there were concerns over ownership of the casinos — resolved in a deal in which the Eastern Band owns them, and Harrah’s manages them — and squeamishness about the morality of gambling. Today’s stumbling blocks for the marijuana project include similar concerns.

“They’re already the largest employer in western North Carolina and the economic engine of this area,” says Mike Clampitt, the N.C. House member for Swain, Jackson and Transylvania counties, which include the Cherokees. “This will have a tremendous impact.”

Annual revenue of $350 million is possible, creating opportunities to boost tribal member’s economic mobility, officials say.

Under best-case scenarios, the tribe’s planned medical-cannabis operations could generate $350 million a year in sales of more than 1,000 pounds a week produced and sold at its own dispensary, says Forrest Parker, manager of Qualla Enterprises, created by the Eastern Band to launch the project. It would be “the largest retail center in the world” for medicinal marijuana.

The Eastern Band has already developed two proprietary strains of the plant, adapted specially for the cooler, mountain climate. At peak, he says, it could employ 400, on top of the 7,000 jobs tied to the Eastern Band’s casinos, resorts and other enterprises. About 60 people now work on the project.

Cannabis experts say the Cherokee undertaking could serve as a model for an influx of similar businesses in North Carolina. Clampitt and other Tar Heel legislators who’ve visited the budding project in recent months says its rigid controls aimed at preventing diversion of the psychoactive cannabis for nonmedical purposes has influenced the debate over medical marijuana legalization at the N.C. General Assembly.  While Cherokees and others expect a bill to pass during the current session that ends this summer, the measure was stalled at press time.

Non-psychoactive industrial hemp has been legal in North Carolina since 2017, though it is now regulated by the U.S.Department of Agriculture. Some industry experts say hemp holds potential cautions for the Cherokees. Tar Heel farmers rushed into producing it, creating surpluses, some of which rotted in storage.  For now, only products with a tiny amount — less than 0.9% — of the psychoactive component THC are legal in North Carolina.

As N.C. lawmakers mull legalization of medical marijuana, the Cherokees expect to be market leaders once officials agree on fiscal management issues.

If projections are accurate, the Cherokee could produce nearly 1 million ounces a year. A fractio

n of that would go to the tribe’s 15,000-some members, who are limited to 6 ounces per month under tentative tribe rules. They have to apply, with a physician’s  recommendation, to the band’s Cannabis Control Board, which would issue cards, initially for tribe members. Later, plans call for allowing the general public to buy an ounce a day, no more than six times a month.

They would have to prove they suffer from illnesses that could benefit from cannabis, according to researchers at the Mayo Clinic and elsewhere. That includes AIDS, autism, autoimmune diseases, muscle spasms, chronic pain and cancer.

Other groups familiar with cannabis are preparing to operate in North Carolina, including Mockingbird Cannabis, which operates in Mississippi, Missouri and  Oklahoma. CEO Marcy Croft says the Raymond, Mississippi-based company is “excited and optimistic about North Carolina.” It is backing a Cullowhee-based startup SkyRidge Unlimited, which was chartered in April.

“Each state is individually passed, but yes, some of the founders of Mockingbird are working with the North Carolina hemp industry,” she says. “We’re looking at the law proposed up there, and hoping to apply for a license and to open a facility there.”

It’s unclear whether SkyRidge would compete with or complement the Cherokee project. “We’re certainly interested in talking with and working with them,” Croft says, “but we haven’t yet.” The Eastern Band’s Parker also stresses growth potential for the industry. More than three-dozen states have legalized medical cannabis in various iterations, he says. Twenty-one others,including Virginia, have legalized recreational use of small quantities, indicating a softening of attitudes about what in the 1930s was branded the precursor to “reefer madness.”

North Carolina state law lays out misdemeanor fines for possession of small amounts of marijuana, but classifies any amount of 1.5 ounces or more as a felony. The state is one of 10 yet to legalize medical marijuana, though the Cherokees and potential competitors think it will.

Meanwhile, adding to the project’s uncertainty, medical marijuana remains illegal under federal law. The Haywood County Sheriff’s Office, which has authority in areas around tribal land, has indicated no desire to strictly enforce the marijuana laws except in unusual circumstances.

Nationwide, industry experts say the cannabis market will hit $35 billion this year, then double by 2030. Though Cherokee leaders stress that the tribe is a sovereign nation under federal

law, Chief Richard Sneed has raised red flags, causing their cannabis project to tiptoe ahead, pending actions in Raleigh and Washington, D.C. They are being deliberate, watching how state lawmakers rule on medical marijuana.

N.C. Gov. Roy Cooper and Attorney General Josh Stein, a Democratic candidate hoping to succeed Cooper in 2024, favor decriminalizing possession of small amounts of the drug. Lt. Gov. Mark Robinson, who is the leading Republican candidate for governor, opposes legalization of recreational marijuana.

Rep. John Autry, a Charlotte Democrat, is promoting an effort to allocate $4.5 million to state research universities to study psychedelic drugs derived from certain mushrooms and other sources for treatment of post-traumatic stress disorder, anxiety by cancer patients and other illnesses.

Parker, Sneed and other Eastern Band marijuana proponents agree that the state’s approach to medical marijuana could be important to their success. They note that North Carolinians’ use of illegal marijuana ranks second in the nation according to FBI statistics, indicating significant demand. Their best-case scenario depends heavily on outside sales.

CHIEF PUMPS THE BRAKES

Chief Richard Sneed

Regardless, 500 miles away in Raymond, a Natchez Trace town in central Mississippi, medical marijuana is no longer just an alliterative topic of conservation. Its widespread acceptance could come to North Carolina, say proponents.

Already, in the muted light of greenhouses, more than 50 mostly Cherokee workers recently were primping lush, chest-high plants, prior to harvesting and drying the leaves, and carefully grading them for drying.

Dried marijuana waiting final processing for medical use was recently being stockpiled in sub-zero storage, awaiting processing for sale in a retail dispensary on the reservation.

Based on tribal council proceedings and other sources, the Eastern Band voted in 2021 to make medical marijuana sales legal on the sprawling, 50,000-acre Qualla Boundary. In April, it
approved a $64 million loan to Qualla Enterprises, bringing the tribe’s commitment to the
N.C. project to nearly $100 million.

Then Chief Sneed got cold feet. In early May, he vetoed the council’s April decision to pump more money into medical marijuana, concerned that it could damage the tribe’s lucrative gambling operations. About half of the tribe’s annual $732 million annual budget comes from gambling. He also demanded a full accounting of about $30 million spent on the project, raising questions about Qualla Enterprises.

Project supporters say the extra $64 million, which would bring total funding to $100 million, can be raised from non-gambling sources. Sneed is doubtful.

In Washington, a spokesman for the National Indian Gaming Commission, says its rules are clear: Because possession of marijuana remains illegal under federal law, gambling funds “should not be used to finance such an operation.”

The future of Cherokee marijuana? Some council sources say it will happen, though likely at a more cautious pace.  Parker and Qualla Enterprises had hoped to begin sales this summer.

The tribe, they say, could provide a smaller amount — possibly $10 million to start —  from revenue streams clearly not associated with gambling.

The money will, among other things, convert a former bingo hall building at the base of a hill to a retail dispensary.

During tribal-council hearings, Parker, who heads the project, told members they could expect returns as high as 60% on the tribe’s investment. At minimum, he anticipates $50 million a year in sales. That could soar to $350 million if North Carolina law frees up sales to the general public.

Not everyone is on board, of course, just as some Cherokees raised concerns about gambling nearly three decades ago.

Here, in the deep hollows in isolated communities such as Wolftown and Snowbird, political and moral beliefs run the same spectrum as in the outside world. Some see gambling and marijuana as sin enterprises, while Sneed, a native Cherokee and former U.S. Marine, view them as economic bootstraps for the Eastern Band. He says gambling has funded the tribe’s modern hospital, healthcare programs, school and other amenities.

Some families still refuse on moral grounds to accept per capita payments from casinos that go to each tribal member. Payouts totaled about $12,000 per member last year, split half to the tribe and half to individuals.

Parker shrugs off such concerns. “Everybody has to come to cannabis in their own way,” he says.

More than moral queasiness is at stake.  Despite Eastern Band sovereignty, Sneed and others are wary of the North Carolina legislature’s slowness in legalizing medical marijuana versus most other states. The tribe is banking on public sales to meet its high-end revenue estimates and avoid the reservation wallowing in unsold crop.

In Mississippi, Croft says Mockingbird Cannabis faced similar hurdles. Last year it was forced to destroy about $1 million worth of its crop —  about 5,000 plants — when the Mississippi Department of Health, which regulates medical marijuana production, concluded a greenhouse didn’t meet state requirements.  The state, which has a third of the population of North Carolina, licenses nearly 50 production plants and about 90 dispensaries.

Cherokee leaders hope to avoid such pitfalls, but otherwise, the Qualla Enterprises project could be similar to Mockingbird’s.  Croft says Mockingbird expects to ultimately employ about 200 people.

“We pay a minimum of $18 an hour, and I would expect it would be similar in North Carolina.” If the company builds a North Carolina plant, she adds, it would be in one of the
40 Tier 1 counties, which have the weakest economic prowess. “You can expect millions of dollars in operating fees, licensing and tax and other revenue. Not to mention our electric bill. It’s enormous, because we grow inside.”

Already, the fledgling Cherokee project resembles Mockingbird’s. A prime reason is that the potential for medical marijuana being diverted to a thriving recreational market dictates high security. Mockingbird has guards, guard dogs, cameras and other measures.

In Cherokee, Parker and others say similar steps are underway, “from seed to sales.” Outsiders are impressed by the project’s sophistication.  “Everything is tracked and monitored,” says an eastern North Carolina legislator who visited in February. “A lot of people think it’s just produced in a field and farmers grow it. That’s just not how it’s done.”

N.C. Rep. Clampitt has met with Chief Sneed and tribal council members a couple of times this year. “It’s an upscale operation, with a lot of checks and balances and tracking of every plant.”

Meanwhile, the Cherokees are receiving encouragement from others in the industry.

“We’ve been watching the North Carolina legislature, and we’re optimistic about the outlook there,” says Croft, the Mississippi co-founder of Mockingbird Cannabis. “This is my home state — I grew up in Mississippi — and I’ve seen the changes we’ve brought about here. It’ll happen in North Carolina too.”

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