Special to Indian Country Today
FLANDREAU, S.D. — The first Native nation to legalize marijuana continues to break new ground in the evolving — and expanding — cannabis industry by opening South Dakota’s first medical marijuana dispensary and laying plans to significantly expand its cultivation and processing operations.
The Flandreau Santee Sioux Tribe, a small tribe whose homelands are on the eastern edge of South Dakota, made history in 2015 by legalizing marijuana on tribal land located 40 miles north of the state’s largest city, Sioux Falls. Tribal leaders were confident they were within their rights as a sovereign nation but when federal authorities threatened to shut down the operation they opted for a tactical retreat.
“We decided to burn the crop,” said Flandreau Santee President Tony Reider, “so we could live to see another day.”
By destroying the marijuana plants they removed the threat to the investments they had made in the indoor growing and processing operation. “So here we are five, six years later and we’re able to just fire up the grow (operation) as the state moves to legalize” marijuana, Reider said.
Watch: Stewart Huntington reports from South Dakota
In 2020, South Dakota voters overwhelmingly approved Measure 26 that legalized medical marijuana. The regulatory process remains a work in progress and no dispensaries are yet operational in the state.
Except on Flandreau.
In July, the tribe opened its Native Nations Cannabis Dispensary and began issuing its own tribal medical marijuana identification cards, cementing its leadership position in the blossoming cannabis industry in Indian Country.
“They are breaking down barriers,” said Mary Jane Oatman, the executive director of the Indigenous Cannabis Coalition, or ICANNC. “and they’re doing it with so much transparency.” Oatman, a Nez Perce citizen, lauded Flandreau leaders for inviting state legislators in to see their operation and committing to establishing and maintaining high standards. “They're raising the bar on raising the bar on issues like public safety.”
In 2020, ICANNC took a snapshot of the industry and identified 18 dispensaries in Indian Country. Today, that number is 30. And with fewer than 100 of the nearly 600 federally recognized tribes actively exploring entry into the industry, Oatman sees real growth on the horizon. “Especially when federal legalization comes,” she said, which would remove some tribes’ fear that entry into the industry could jeopardize other federal funding streams.
While other tribes have entered the cannabis industry on a significant scale, like the Fort McDermitt Paiute and Shoshone Tribe in Nevada and Oregon that has a large-scale growing operation but little retail, Flandreau’s operation stands alone in its vertical integration. The tribe controls everything from cultivation to processing to retail sales. “The money stays in the community,” said Oatman.
And business is booming.
“We’ve grown to approximately 50 employees right now almost overnight,” Reider said recently after touring the tribe’s indoor marijuana production operations. “We can’t pump products out fast enough. We don’t have the correct grow capacity which is why we’re adding more grow capacity.”
The tribe’s current cultivation floor covers 10,000 square feet and it has two new growing facilities under construction that, when they come online in the next six months, will add another 20,000 square feet to its capacity providing raw material for its state-of-the-art processing lab. But the tribe has even greater ambitions. Soon state licensed dispensaries will open and Flandreau eyes serving customers off tribal land.
“We’re looking to expand onto the stateside in South Dakota as well as other jurisdictions,” said Reider. To meet that demand, the tribe last month closed on the purchase of a vacant big box store in Mitchell, South Dakota. “The former Shopko building, it’s a decent set up to get started,” said Reider. The Shopko site, with more than 71,000 square feet, could more than double the tribe’s existing production capabilities and capabilities already under construction combined.
The building had been vacant for some time, said Mitchell Mayor Bob Everson, adding he welcomed the new business venture. The tribe estimates the growth operation planned for the Shopko site could generate up to 70 jobs. “We’d like to see that,” said Everson.
Flandreau Santee Attorney General Seth Pearman said there is real opportunity in the South Dakota marijuana market.
“Really, there is no other legal product in the state right now except for what we’re doing,” said Pearman, a Cheyenne River citizen. He noted that there is lots of interest in operating retail outlets. Indeed, state regulators have begun assigning a limited number of dispensary licenses — county by county by lottery drawing — and at each juncture more businesses have applied than there were spots available. But the supply side of the equation remains less competitive. “Everybody is going after dispensaries but there is no marijauna,” said Pearman.
President Reider agreed.
“In the Midwest, we’re the only operation that’s growing, processing and selling from Denver to Illinois,” he said.
But that doesn’t mean the legal tussles are all behind them. Because the tribe’s dispensary opened up on its sovereign territory before there were licensed operations in the surrounding state, some law enforcement officials felt the tribe jumped the gun. A small number of Native Nations Cannabis Dispensary patients have been arrested after they left tribal land and had their product and medical marijuana identification cards confiscated.
“We have 9,500 plus patients and tens of thousands of transactions and we’ve had just a handful of people who have had poor interactions with the police,” said Pearman who added he didn’t want to see patients shouldering the legal problems alone. “The tribe has taken the position that anyone who gets arrested for having products from our facility, we’ll pay for their criminal defense,” he said.
The skirmishes over the validity of the tribe’s marijuana operations are expected to subside after the state dispensaries open up and the tribe hopes to realize a bright future for the industry — in Flandreau and throughout Indian Country.
Reider said he saw paralells with the birth of Indian gaming when many saw risks in making investments based on broad and untested assertions of tribal sovereignty. “A lot of people back in the day put their livelihoods on the line in Indian Country to get gaming up and going,” he said.
The president was speaking in the kitchen of the tribe’s medical marijuana dispensary situated across the street from the tribe’s modern Royal River Casino & Hotel — a business venture that has brought certain prosperity to the citizens of the Flandreau Tribe — and adjacent to the gaming resort’s ancestor. “We see (the marijuana industry) as the same opportunity,” he said. “We see this as the same opportunity.”
One the tribe stands willing to share.
“If anyone is interested in talking, we’re easy to get a hold of and we’re willing to help any way we can,” he said.
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