Michigan Governor Signs Bills Allowing Marijuana Commerce With Tribal Businesses

Michigan’s governor has signed bipartisan legislation that will allow state-licensed marijuana businesses to conduct trade with tribal cannabis entities.

The pair of bills, SB 180 and SB 179, were passed by the Senate in June and approved by the House of Representatives earlier this month. On Thursday, Gov. Gretchen Whitmer (D) signed them into law.

Though the two pieces of legislation work together, the bulk of the policy changes are packaged in SB 180, sponsored by Sen. Roger Hauck (R). Adjustments in tax revenue allocation, meanwhile, are contained in SB 179, sponsored by Sen. Jeff Irwin (D). The bills are tie-barred, meaning neither could have taken effect unless both became law.

Michigan’s legal cannabis industry and tribal marijuana businesses on Indian lands “are currently in two separate silos, meaning that product cannot be sold between these businesses,” according to an analysis prepared by House staff. “The bills are intended to allow for the sale of product between the two types of businesses while maintaining a level playing field by requiring tribal businesses to pay the same tax rate as other businesses.”

SB 180 will allow the state’s Cannabis Regulatory Authority (CRA) to enter into agreements with tribal governments over marijuana-related regulatory matters and make clear that it is not unlawful for a state-licensed company to transport cannabis products to a tribal marijuana business. It will also except tribal cannabis businesses operating on tribal lands from the state’s 10 percent marijuana excise tax in certain conditions, although tribes entering into agreements with CRA will need to impose their own tax of at least 10 percent, which will be retained by the tribe itself.

SB 179, meanwhile, will funnel a portion of state cannabis tax revenue back to tribes based on sales attributable to retailers or microbusinesses located on that tribe’s lands. Under prior law, municipalities received a portion of money left over in the state’s Marihuana Regulation Fund, which comprises revenue collected through the marijuana excise tax and industry fees. The new change will instead route a comparable portion to back to tribal governments.

Specifically, it will mandate that “to the degree marihuana retail stores and microbusinesses are located on tribal lands, the share of the revenue accruing from those stores and microbusinesses that would have otherwise been distributed to county or local governments [will] instead be allocated to the respective Indian tribe,” according to the House Fiscal Agency report.

Both new laws will take effect immediately.

CRA, the Michigan Cannabis Industry Association and the cannabis company Common Citizen were among those supporting the legislation. Tribal governments in favor of passage included the Grand Traverse Band of Ottawa and Chippewa Indians and the Saginaw Chippewa Indian Tribe.

Elsewhere in Michigan’s legal cannabis landscape, a change approved in July by the Michigan Civil Service Commission took effect this month to end pre-employment marijuana testing for most government employees. The shift also gives people who’ve already been penalized over positive THC tests an opportunity to have the sanction retroactively rescinded.

Michigan voters approved adult-use marijuana legalization in 2018, with legal sales beginning the next year.

Between adult-use and medial marijuana sales, Michigan sold nearly $277 million in cannabis products in July, beating a record set the month before.

The state is seeing these consistent record-setting sales even as the average cost of marijuana has remained at record lows, with the price of an ounce for adult-use cannabis now hovering around $98. In December 2021, by contrast, the cost of an ounce was about $180.

Meanwhile a bill recently introduced in the legislature would legalize psychedelic plants and fungi so long as activities like cultivating and distributing the substances are done “without receiving money or other valuable consideration.”

And last month state lawmakers called on the U.S. Congress, Department of Defense and Department of Veterans Affairs (VA) to prioritize research and investment in “non-technology treatment options”—including psychedelics—to treat psychological trauma from military service.

Tribal governments in a handful of U.S. states have entered the marijuana business as more jurisdictions legalize. Notably, in Minnesota, where state lawmakers passed an adult-use marijuana program earlier this year, tribes are leading the way.

The White Earth Nation voted in July to authorize marijuana sales and has since opened an adult-use cannabis shop. And the Red Lake Nation, which also began sales in August, announced plans to launch a mobile marijuana retailer—effectively a cannabis “food truck” that can travel and do business on tribal land throughout the state. Another tribe located within the state, the Leech Lake Band of Ojibwe, is also moving to legalize.

Under Minnesota’s marijuana laws, the state’s governor can also enter into compacts with tribal governments, allowing them to operate on non-tribal land within the state. Many have seen that option as a way to allow the sale of legal cannabis in Minnesota ahead of state licensing, which isn’t expected until 2025. Cannabis regulators said in August that “several” tribes have expressed interest in the arrangement so far.

Meanwhile in New York, where hundreds of licensed growers have only 23 legal retailers at which to sell their products, 66 state lawmakers late last month urged Gov. Kathy Hochul (D) to sign a bill that would allow licensed marijuana producers to sell products to tribal retailers.

In North Carolina, where marijuana remains illegal for both recreational and medical use, the Eastern Band of Cherokee Indians voted in early September to legalize adult-use cannabis with a 70–30 margin despite threats from some North Carolina lawmakers. The tribe passed regulations in 2021 for a medical marijuana system, for which it opened registration to all North Carolina residents this past June.

It’s believed that in 2020, the Oglala Sioux Tribe, located in South Dakota, became the first tribe to vote to legalize marijuana within a U.S. state where the plant remained illegal.

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Photo courtesy of Brian Shamblen.