Tribes cut out of California’s pot market might grow their own




American Indian tribes that say they have been cut out of California’s legal marijuana market have raised the possibility of going their own way by establishing pot businesses outside the state-regulated system that is less than two months old.

The tribes floated the idea of setting up rival farms and sales shops on reservations after concluding that rules requiring them to be licensed by the state would strip them of authority over their own lands and their right to self-governance.

The possibility of the tribes breaking away from the state-run system is one more challenge for California as it attempts to transform its longstanding medicinal and illegal marijuana markets into a unified, multibillion-dollar industry.

For tribes to participate in the state-run market, “they have to give up their rights to act as governments, with regard to cannabis,” said Mark Levitan, a tribal attorney.

Marijuana dries in a special room in on January 1, 2018 at the Green Pearl Organics marijuana dispensary in Desert Hot Springs, California.

ROBYN BECK/AFP/Getty Images

At issue are legally thorny questions about who governs whom, taxation and the intersection of state marijuana laws with tribes that the federal government recognizes as sovereign nations within the U.S.

Under regulations issued last year, California would retain full control over licensing. Tribes would have to follow state rules, including “submission to all enforcement,” to obtain a license to grow or sell marijuana. Any application must include a waiver of “sovereign immunity,” a sort of legal firewall that protects tribal interests.

Without state licenses, businesses cannot take part in the legal state pot market. California has over 100 federally recognized tribes, the most of any state, and estimates of the number either growing and selling pot or eager to do so varies, from a handful to over 20.

Unlike those that have prospered from casino gambling, some are in struggling rural areas and would welcome a new source of cash to improve schools and pave roads.

Laura Torgerson and Ryan Sheehan, visiting from Arizona, smell cannabis buds at the Green Pearl Organics dispensary on the first day of legal recreational marijuana sales in California, January 1, 2018 in Desert Hot Springs, California.
Laura Torgerson and Ryan Sheehan, visiting from Arizona, smell cannabis buds at the Green Pearl Organics dispensary on the first day of legal recreational marijuana sales in California, January 1, 2018 in Desert Hot Springs, California.

ROBYN BECK/AFP/Getty Images

After long-running negotiations between tribes and state officials failed to produce an agreement before broad legal sales began Jan. 1, the California Native American Cannabis Association warned state officials that tribes “may engage in commercial cannabis activities through our own inherent sovereign authority.”

If tribes choose to step away from California’s market, “the state will have no jurisdiction to enforce its cannabis laws and regulations on tribal lands,” the group said in a sharply worded letter to Democratic Gov. Jerry Brown’s administration in December.

Tribes “just want to be able to do business in the state of California and elsewhere, just like anybody else,” said Paul Chavez, former chairman of the Bishop Paiute tribe.

The dispute in California differs from another legal pot state, Washington, where seven tribes have marijuana compacts with the state and others are in negotiations or awaiting the governor’s approval. The compacts allow tribal marijuana businesses to participate in the legal system, such as selling tribe-grown pot to retailers off the reservation.

A green cross indicating medical marijuana in the window at the Higher Path dispensary in the Sherman Oaks area of Los Angeles, California, December 27, 2017.
A green cross indicating medical marijuana in the window at the Higher Path dispensary in the Sherman Oaks area of Los Angeles, California, December 27, 2017.

ROBYN BECK/AFP/Getty Images

In California, the tribes are circulating a proposal that calls for the governor to strike agreements with them. Those pacts would allow them to participate in the legal market, while the state would recognize a tribe’s “exclusive authority” to regulate commercial marijuana activity on its lands.

Tribes are eager for a settlement, but reaching a deal in the Legislature could take the remainder of the year.

“Everyone agrees conceptually there should be an even playing field, a level playing field,” said state Assemblyman Rob Bonta, a Democrat at the center of the negotiations in Sacramento.

In addition to the problems in Sacramento, tribes are facing uncertainty at the federal level.

Earlier this year, Attorney General Jeff Sessions lifted an Obama-era policy that kept federal authorities from cracking down on the marijuana trade in states where the drug is legal, which also guided enforcement on tribal lands.

Agave plants are seen in desert mountains south of Palm Springs, California where agaves were harvested for the annual traditional agave roast on the Morongo Indian Reservation near Banning, California, April  11, 2015.
Agave plants are seen in desert mountains south of Palm Springs, California where agaves were harvested for the annual traditional agave roast on the Morongo Indian Reservation near Banning, California, April 11, 2015.

DAVID MCNEW/AFP/Getty Images

The shifting ground has put a chill over development plans — including in an isolated stretch of eastern San Diego County.

Nevada-based GB Sciences Inc. announced last year that it would build and manage a commercial cannabis company on tribal lands, nurturing plants, manufacturing products and distributing them across the state.

The tribe, the Los Coyotes Band of Cahuilla and Cupeno Indians, would get an ownership stake, jobs and 40 percent of the profits. GB Sciences would get income for its marijuana research and a foothold in the largest legal pot market in the U.S.

But the projected $8 million project is on hold, with the status of tribes in the pot market unclear.

Issues involving sovereignty touch a sensitive subject for tribes, and they see the predicament with marijuana as part of a history of exploitation.

The state rule “harkens back to the end of the 19th century … when federal and state policies favored extermination or forced assimilation of California tribes,” the tribal group wrote.

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Associated Press writers Gene Johnson in Seattle and Kathleen Foody in Denver contributed to this report.



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Compared with Colorado, state’s marijuana tax revenue nearly triple in first 6 months


Marijuana buds (KSNV file)

Tax revenue from Nevada recreational marijuana sales were nearly triple what Colorado brought in during its first six months when it introduced similar sales in 2014.

According to a report released Friday by the Nevada Department of Taxation, more than $30 million in tax revenue was produced from July 1 through the end of 2017.

Colorado received $11 million in taxes during the first six months of sales four years ago.

Nevada marijuana sales dipped slight in November, but were up in December with about $35.8 million in sales, a rise from $33.4 million in sales in November. October sales were the high mark at $38 million.



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Leaving Las Vegas? Dump your pot at the airport first


The sale of recreational marijuana has been legal in Nevada since last summer, but pot is not legal at Las Vegas’ McCarran International Airport.

So to keep travelers from getting in trouble in the airport security line, big green bins — dubbed amnesty boxes — were set up a week ago outside McCarran, allowing people to toss their pot before catching their flight. Twenty of the boxes were installed at McCarran and its car rental facility, Henderson Executive Airport and the North Las Vegas Airport.

The bins are about the size of a mailbox, bolted to the ground, monitored and designed to keep what’s tossed in them inside the box. In addition to pot, the bins can also be used to drop off prescription drugs.

“We’ve had a variety of other things disposed of in the bins,” Christine Crews, McCarran airport’s public information administrator, told CNN. “For example, I was sent a picture of one of the bins containing pills, vape pens, rolled tobacco-looking products, prescription bottles and marijuana-infused drinks.”

The boxes are periodically emptied by a contracted company that disposes of the contents.

Conflicting laws

The bins were necessary after Clark County, Nevada, which owns and operates the airport, banned marijuana possession and marijuana advertising on airport property last fall to stay in compliance with federal law.

Similar amnesty boxes were installed in airports in Colorado after that state legalized marijuana in 2012.

Nevada’s marijuana law lets adults 21 and older possess up to an ounce of marijuana. Voters approved the law in November 2016.

Nine states and the District of Columbia now allow for recreational marijuana use, and 30 allow for medical use, but weed remains illegal under federal law.



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Pazoo Inc (OTCMKTS:PZOO) Comes Off the Mat With a Bang


Pazoo Inc (OTCMKTS:PZOO) is a deep sub-penny name that went absolutely into orbit on Thursday, rallying over 1,000% on the day, scoring a new all-time record in trading volume. The catalyst was the company’s announcement that MA & Associates LLC, (DBA: MA Analytics), a cannabis testing laboratory located in Las Vegas, Nevada partially owned by Pazoo, has made reportedly “significant strides in completing operations and procedures” ahead of the laboratory’s final inspection by the State of Nevada.

According to the release, “MA Analytics is finalizing the policies and procedures as well as the operations ahead of the above mentioned final inspection and its much-anticipated opening for business to customers. The lab has completed some and is close to finishing the remaining standard operating procedures including methods and validations while ensuring everything is up to the rigorous testing and compliance policies set forth by the State of Nevada.”

Pazoo Inc (OTCMKTS:PZOO) bills itself as a company focused on health, wellness and safety. Our focus is to provide best-in-class laboratory testing of cannabis and cannabinoids to protect consumers from impurities, contaminants and other irregularities. Through our wholly-owned subsidiaries, Harris Lee and MA & Associates, Pazoo provides industry-leading laboratory testing of cannabis.

Pazoo is licensed to test cannabis in Nevada, with a focus on expansion into other states. Additionally, Pazoo delivers a comprehensive array of health and wellness information on its website www.pazoo.com, and features industry experts from both the health and wellness arena and the pet industry.

Lastly, our newly formed wholly owned subsidiary CK Distribution LLC, provides the marketing and sales agent for the distribution of non-controlled hemp products throughout the USA. Non-controlled hemp products are the items utilized by the industry that support grow facilities, infusion companies and dispensaries.

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As noted above, the stock exploded higher this week on the company’s claim that its partially-owned cannabis testing laboratory in Las Vegas is readying for a final inspection by the state ahead of the possible issuance of permits, and, so the company claims, has made significant progress toward heading into full operations.

Nevada has become a focus for cannabis-related speculation given the state’s status as one of the primary markets where both medical and recreational cannabis access has been made legal.

Pazoo’s acting CEO Steve Basloe said, “We are very pleased to announce that the lab is close to scheduling the State inspection, the last major step needed in order to finally be open and start generating revenue. We are excited to start the sales and marketing of the lab along with our general manager. We understand the frustration in delays in the lab opening but we are ensuring that as the State continues to tighten their testing limits and standards, we are not making the mistakes some other labs have made in the past. We look forward to getting the lab open and making this a profitable business moving forward.”

The chart shows a bit less than 270% during the past month in terms of shareholder gains in the company, a rally that has pushed up against longer standing distributive pressure in the stock. That said, PZOO has evidenced sudden upward volatility on many prior occasions. Furthermore, the name has seen a growing influx of trading interest, with the stock’s recent average trading volume running a bit less than 570% over the long run average.

At this time, carrying a capital value in the market of $957K, PZOO has virtually no cash on the books, which compares with about $3.2M in total current liabilities. One should also note that debt has been growing over recent quarters. PZOO is pulling in negligible trailing 12-month revenues. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling precipitously in recent periods. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $PZOO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $PZOO, either long or short, and we have not been compensated for this article.



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