Michigan Indian tribes seek way to access cannabis industry and tax revenue

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The Michigan House is considering legislation that would expand commercial marijuana licensing opportunities to Michigan’s 13 Indian tribes, enabling key agreements that have been lacking since the legalization of recreational marijuana in 2018.

The bill would allow the Marijuana Regulatory Agency to enter into compact agreements with each of Michigan’s tribes so that marijuana businesses located on tribal lands can be licensed by the state and have access to several aspects industry – including products from producers, processors, etc. testers and carriers and the state-used marijuana tracking software system called Metrc.

“Really, this is a problem we’ve been trying to solve for almost four years,” said Whitney Gravelle, chair of the Bay Mills Indian Community Executive Council. “When Michigan legalized cannabis in 2018, the tribes were left behind. That’s not usually the process for other states that legalized. … But from the time it was legalized in Michigan, we caught up our delay.”

The bill — which was removed from a committee’s agenda on Tuesday for some technical fixes — would also ensure that tribal marijuana businesses are subject to the same tax rate as state-licensed facilities: 6% sales tax and 10% excise tax.

Tribes are generally already subject to the state’s 6% sales tax through existing covenants, but the bill being considered by the House would ensure that state-licensed marijuana facilities on tribal lands collect also a 10% excise tax.

It is expected that the distribution of these excise tax revenues will change during the compact agreement negotiations. The law calls for a shift from the current distribution model—about 15% of marijuana tax revenue goes to the municipality where the facility is located and 15% to the county where the business is located—to a distribution model that shifts that share 30% revenue to the tribe on whose land the business is located.

The bill’s sponsor, R-Union Township Rep. Roger Hauck, said the legislation levels the playing field in terms of tax rates between tribal and non-tribal marijuana businesses while “recognizing the tribal sovereignty”.

“Like most marijuana regulatory issues we face today, this stemmed from an unintended consequence of the 2018 marijuana ballot initiative,” Hauck said, arguing the law didn’t hold up. into account the unique laws governing Indian tribes or taxes on marijuana. would work on tribal land.

Several tribes already have marijuana retailers operating on tribal land, including businesses operating independently of the state’s regulatory structure as well as state-licensed facilities allowed to operate on tribal land, Andrew said. Brisbo, director of the Marijuana Regulatory Agency.

But independent tribal businesses do not have access to the state-licensed supply chain, and tax revenues generated by state-licensed facilities on tribal lands generally do not benefit the tribe.

The legislation gives tribes the chance to realize some of the “economic benefits of this burgeoning industry,” Brisbo said.

“Completing the compact agreements will allow us to provide access to the tribes because they will essentially be recognized as a business in the same way as state-licensed businesses so that they can participate in the Metrc system,” Brisbo said. “They could source from state-licensed operators and all of their sales could be tracked as well.”

The proposed compact deals are not unique, Brisbo said. The state has similar agreements for revenue and regulation of gambling and liquor taxes, and Michigan has turned to Washington State and Nevada to develop the parameters of the agreement for recreational marijuana.

Because Bay Mills implemented its own tribal licensing system, it overcame some of the revenue shortfall caused by casino closures during the pandemic, Gravelle said. But the tribe is unable to expand to buy products from state-licensed facilities or sell its products to state-licensed facilities without some sort of agreement with the state, she said. .

“I am extremely grateful that the Michigan Legislature has finally resolved to address this issue after four years of shutting the state’s cannabis economy down,” Gravelle said.

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