On This Reservation, Cannabis Is the New Casino

In Washington State, an enterprising Native American tribe is betting big on bud. Not everyone thinks it’s such a brilliant idea.

On This Reservation, Cannabis Is the New Casino

This is the third story in the series, Cannabis Country: The New Normal, proudly produced in collaboration with Cannabis Wire – a unique publication exploring issues of regulation, technology, law, criminal justice, and individual liberties at the intersection of this booming billion-dollar industry.

It’s a Tuesday morning on the Squaxin Island Tribe’s reservation in Mason County, about fifteen miles northwest of Olympia, Washington. Elevation, the first tribal-owned-and-operated recreational-use cannabis store in the country, is open for business. One of the first customers to walk in, a vacationing middle-aged man wearing a golf shirt and Thai fisherman pants, is like a kid in a candy store – eager, curious, and loud.

“This is incredible!” he shouts. “How much does a gram go for these days?” With unconstrained glee, he peruses the gleaming glass cases stocked with flower buds. “What is ‘Green Crack;’ is it local? Do you grow it here?”

He rushes over to the liquid concentrates of cannabis, cannabis oils, vape pens, and THC pills.

“Are these oils? Do you put them on your skin? This is so cool!” he gushes. “These look like vitamins; what are they?”

Finally, he moves to the edibles, brownies and candies.

“What flavors of cookies do you have?” he asks. “These look amazing. I’ll grab whatever you’ve got!”

Elevation is the first tribal-run retail cannabis store in the country.
Elevation is the first tribal-run retail cannabis store in the country.

Employee Marcella Cooper, a Squaxin Island tribal member with a sunny smile and a calm demeanor, patiently answers the excited customer’s many questions: Grams range from eight dollars to thirteen dollars, depending on the strain. Cookie flavors come in chocolate chip, triple chocolate, peanut butter and snickerdoodle. The vitamin lookalikes are actually THC pills. And “Green Crack” is a strain of cannabis grown locally, but not here on the reservation – at least not yet; the tribe is going to see how well the store does first.

Elevation is one of 229 cannabis retailers to open in Washington since voters in the state chose to legalize the plant for adult use in 2012.

The store, which first opened last November, is located among the lofty pines of “timber country” in a small, cabin-like building across the street from the Little Creek Casino and the Kamilche trading post, also owned by the Squaxin Island Tribe. An RV park and a golf course are nearby, other new additions to the tribe’s growing entertainment complex on the corner of State Highway 108 and West Kamilche Lane.

Elevation became possible after the Squaxin Island Tribe signed a historic compact with the Washington State Liquor and Cannabis Board; they did so along with the Suquamish, another Coast Salish tribe whose reservation is located on the Kitsap Peninsula across the Puget Sound from Seattle. The legislation granted the two tribes a sovereign right to sell cannabis on their lands. (The Suquamish opened their first retail cannabis store, Agate Dreams, in December.)

The tribe has a unique tax arrangement with Washington that exempts sales of cannabis that are either grown on the reservation or are sold to native customers from the state’s 37% excise tax. This gives the tribe a kind of competitive edge on “home-grown” products, and the tax revenue can be used to fund tribal government services such as programs for youths and elders, and job training.

From the outside, Elevation looks like a woodsy outpost, but on the inside, the store’s four muted olive-green walls help generate a relaxed, earthy, clean, almost spa-like ambiance. There are elaborately painted drums, original native art from the Squaxin Island Tribe and a massive dark wood cabinet displaying natural pine sculptures, ferns, candles, and logs against the back wall. Elevation feels like a mellow oasis compared to the tribe’s casino across the street that’s filled with busy, splashy carpets, dim lights, islands of slot machines blinking and beeping, and a cigarette smell baked into the furniture.

More customers flow in to Elevation throughout the morning, some who look like cannabis enthusiasts, some who don’t. There’s the man in a tie-dye hat who evokes Jeff Bridges’ character in “The Big Lebowski” when he tells everyone “be good, dudes.” A young couple on their way to work from the nearby city of Shelton stop in, along with a retired couple who are staying at the casino.

Elevation is perhaps the riskiest venture yet for the enterprising Squaxin Island Tribe. The tribe is a trailblazer, often the first in the region to assert their mix of economic and sovereign rights. Cautiously, with the opening of Elevation, the tribe is testing the waters of the booming cannabis industry, its profit potential for their tribe, and their own attitudes about cannabis.

Items available for purchase at Elevation, including a coconut oil infused with cannabis.
Items available for purchase at Elevation, including a coconut oil infused with cannabis.

Perceived as a gateway drug in many Native American communities, cannabis has become a complex issue for Washington’s tribes since it was legalized by the state. Many tribes, both within and outside of states where the plant has become legal, don’t want to jump on the cannabis bandwagon. One tribe, the Yakama Nation in eastern Washington, has banned cannabis on their reservation completely, and is pushing to stop cannabis sales and growing facilities on their ceded lands as well.

And since cannabis is not federally legal, The Squaxin Island Tribe can still face lawsuits and possibly raids from the federal government – even as a sovereign nation, and even with the unique protections of the state agreement.

“Something could still happen,” says Lael Echo-Hawk, Pawnee tribal member and an advisor on tribal economic development and legislative issues for the National Indian Cannabis Coalition, an organization formed last year that seeks to educate tribes about entering the complex cannabis market.

“But the compacts,” Echo-Hawk explains, “are very clever.” One provision of the agreement between Washington and the tribes says that if legal challenges from the federal government arise, the state will co-defend alongside the tribe. This mutual assertion of both state and tribal rights “is major, it’s a very big deal,” according to Echo-Hawk. “The tribes and states have kind of locked arms together and said to the federal government: what’s going on in our state and on our reservation is none of your business.”

Another Elevation staff member describing the locally produced product grown within an hour of the store.
Another Elevation staff member describing the locally produced product grown within an hour of the store.

Tribes based in other states have to navigate the murky waters of the Wilkinson Memorandum, issued by the Department of Justice (DOJ) in 2014, alone. The memo wasn’t a legal ruling, but a policy statement that suggested the DOJ would take the same approach to tribes as it has states like Colorado and Washington: mostly hands-off, unless priorities, like preventing diversion and youth use, were violated.

But the memos were confusing, according to Echo-Hawk, and the excitement around them, generated by the media and outside groups clamoring to work with the tribes, had many thinking the memos had effectively legalized cannabis on tribal lands. They did not.

“At that time,” Echo-Hawk explains, “tribes were just getting spammed with businesses that wanted to come out to Indian country and they were saying things like marijuana is legal in Indian country, which is not true.”  It was a similar story for tribal gaming: outside investors were eager to get in on the action, and often not to the best interests of the tribe.

This led to misunderstandings across the country as a flurry of plans failed to come to fruition or faced backlash. The Menominee Indian tribe in Wisconsin saw their hemp crop destroyed by the DEA, and the Flandreau Santee Sioux Tribe in South Dakota had their dreams of a “cannabis resort,” set to open on New Year’s Eve, go up in flames when they had to torch their own crop after threats of a federal raid.

“It was very chaotic,” Echo-Hawk says. “I think some tribes jumped in too fast.”

The decision to enter into the retail cannabis industry wasn’t easy for the Squaxin Island Tribal Council. After the state legalized cannabis in 2012, “we had kind of started to talk about it,” says Tribal Council Member Jim Peters. But it seemed too expensive, too risky, too controversial, he says. “Even myself, I wasn’t thinking it would be a good idea for us to get into it.”

But as they started to see the industry grow, and when the Wilkinson Memorandum came out in October 2014, the seven-member council began to discuss the matter more seriously.

Peters says that, over the course of the next year, the council sought information, toured grow rooms and production facilities, and consulted stores around Olympia, Washington. The council wanted to know how a profitable cannabis operation was run, if they should grow or just sell, and what scale of investment would be appropriate for the tribe.

The tribal council’s education on cannabis involved “hours and hours of deliberation,” says Peters, a broad shouldered, easygoing man with a full beard and a single long braid that you can’t see until he turns around.

“And still, the council was…there was a handful of us that were [for] it, and a couple were on the fence,” Peters says. “But some of us were just ‘no’ – not even on the fence – just ‘no.’”

Squaxin Island Tribal Council member Jim Peters.
Squaxin Island Tribal Council member Jim Peters.

Peters says the cons for tribal council members on the “no” side “were that it is was an illegal drug and gateway drug. And there are health issues.”

Peters himself began to change his mind during that year after seeing the benefits of cannabis for a friend’s father who was dying of cancer. The man, who had also previously been “anti-drugs,” had begun to self-medicate with the plant as his symptoms worsened.

“We were over there for a barbecue one time,” Peters recalls, “and suddenly he was just himself again, giving us a hard time and joking around. I’m thinking his cancer was gone, but it wasn’t!”

The man’s quality of life – for the few months that he had left – was “like night and day,” according to Peters. “And that was a big thing for me, when it came to the medical potential of marijuana, because I saw it firsthand.”

While Peters was moved in part by the medical potential of cannabis, it was the economic potential that pushed him over the fence. Other tribal council members “kind of came around to it and said, ‘yeah, let’s do it.’ So we bit the bullet and went for it.”

Construction for Elevation broke ground in June of 2015, just a few months after the final decision was made. He says that the tribal council’s decision to ultimately enter into the cannabis industry was primarily because the business venture could eventually bring substantial economic benefits to the tribe. And there is plenty of proof to support that perspective.

According to the Washington State Liquor and Cannabis Board, retail cannabis sales accounted for almost $260 million in sales in fiscal year 2015 alone, with both excise and sales taxes reeling in almost $65 million. Colorado’s raked in over $85 million in taxes 2015 from nearly $1 billion in sales, according to the state department of revenue, and Oregon sold at least $14 million dollars in adult (recreational) use cannabis this January alone, collecting almost $4 million in taxes, after legalizing it in 2014.

After nineteen years in social service for the tribe, Marcella Cooper decided to transition into retail sales at Elevation. “[It’s] a new way of helping people,” she said.
It’s tough to say if the potential of cannabis could ever be equal to that of casinos and gaming for Native American tribes. Despite the hype around the Wilkinson Memorandum, Echo-Hawk says probably not, since gaming is exclusive to tribes while, in states where it is legal, cannabis production is not.

When the Gaming Regulatory Act passed in 1988, it brought with it an unparalleled revenue boom for Native Americans. Tribal gaming saw almost 119 percent revenue growth, from $12.8 billion in 2001 to $28 billion in 2013. However, a host of complex choices about where and how to invest that revenue emerged.

The Squaxin Island Tribe chose to diversify their casino earnings, investing in a variety of businesses in addition to handing out small per-capita payments to tribal members. By doing so, they managed to cut their poverty rate from 31.4% in 2000 to 12.4% in 2010, according to a 2014 study that appeared in American Indian Law Journal.

Elevation represents another business that can help the Squaxin Island Tribe diversify. Peters summarizes the Tribal Council’s general position on cannabis these days as: “it’s legal, and there’s other people making money off of it. Why not us?”

A number of neighboring tribes are adopting this perspective as well. In Washington State, the Puyallup became the third tribe to sign a compact with the state in January, though, this time, it only allows for a cannabis testing facility. Two tribes previously on the fence are now exploring their cannabis business options: the Quinault and the Jamestown S’Klallam. And the Warm Springs tribe in Oregon just voted to begin a large-scale grow operation and is working on drafting a similar compact with their state.

Outside the states where cannabis is legal, the tribal focus is on medical cannabis and hemp. The Paiute tribe is discussing plans with the state government to open one of the largest medical dispensaries in Nevada, and the Omaha tribe in the state has been looking into industrial hemp. Alongside the formation of organizations like the National Indian Cannabis Coalition, the first tribal cannabis business conference occurred last year at the Tulalip Resort Casino on the Tulalip reservation in Washington State, where more than four hundred people representing 75 tribes discussed jurisdictional issues of possession and usage, the cultural and economic ramifications of cannabis legalization, and the possibility of forming a tribal business alliance.

Cannabis certainly has promise for Indian country in terms of earning power. But that power comes with its own set of risks and consequences, not just from the patchwork nature of its legality across the country, but also in terms of the potential public health issues within Native American communities.

Like any state legalizing cannabis, the Squaxin Island Tribe had considerations that came with their decision. But the ramifications of each decision would affect the small community in more direct ways. Some changes were straightforward; they had to update their tribal codes that banned cannabis on the reservation, for example. Other changes, like how to approach youth outreach about cannabis, law enforcement priorities, and treatment options, required serious debate.

During the council’s deliberations, they invited the wider tribal community into a discussion about how the cannabis business will affect the tribe. Peters admits that “even to this day, the community is a little 50/50 about it.”

Peters compares the conversations about cannabis in tribal members’ talking circles to past debates about getting involved with other “vices,” like gambling and selling tobacco and alcohol on the reservation.

The Squaxin Island Tribe has historically been very direct when educating their people about the dangers of alcohol and tobacco use, says Peters.

“We’re not going to tell people that our products are not going to kill [them],” he says. “We need to be responsible.” Peters knows that this responsibility comes with an obligation to not only educate tribal members about the risks of substance abuse, but also to “back it up with a really good treatment facility for people who need it.”

Founded by the Squaxin Island Tribe in 1994, the Northwest Indian Treatment Center serves tribal members throughout the Pacific Northwest by incorporating traditional food and medicine in their approach to alcohol and substance abuse recovery.

Drug Task Force prevention program signs on the Squaxin Island Reservation.
Drug Task Force prevention program signs on the Squaxin Island Reservation.

June O’Brien, 71, who served as the Center’s director between 1994-2011, observes that various tribes have provided abundant education about tobacco and alcohol to their members, but her concern is that there may not be sufficient knowledge about the effects marijuana, particularly on developing adolescents. “We’ve gone from the days of ‘reefer madness’ to the days of ‘marijuana only heals,’” O’Brien says.

She says that cannabis is “healing for some conditions,” but prefers the tribe take a more holistic view of the drug’s pros and cons. O’Brien would like to see a comprehensive education plan put together that is appropriate for a tribal community. “And tribes are positioned to do this better than anyone else,” O’Brien says. “They could create models of education that could help other communities to find their feet in this territory as well.”

Of all the ventures run by Island Enterprises Inc., the business arm of the Squaxin Island Tribe, the Snookum Creek Tobacco factory is the most successful thus far. The factory employs 24 people – seventeen of them tribal members – and produces millions of cigarettes a day. For the Squaxin Island Tribe, manufacturing their own tobacco was a step toward empowerment and opportunity – but it also comes with a public health price.

Tobacco was one of the Squaxin Island Tribe’s very first economic ventures, stretching back to their first smoke stand in an old schoolhouse in 1972. Back then it was a means to an end that flourished under less-than-legal circumstances. Since Native Americans could legally buy cigarettes tax-free, they would do so, but then illegally re-sell them on the reservation and keep the difference.

The entrance to Skookum Creek Tobacco.
The entrance to Skookum Creek Tobacco.

From the early 1980s until Skookum Creek Tobacco opened in 2005, there were state and federal raids, guns drawn, while the tribe figured out a better way to fight for their right to sell state tax-free goods on tribal-owned land.

“I’m not going to say it was a tobacco war,” says manager Cameron Goodwin, 42. “But after a tobacco disagreement with the state of Washington, we decided our best avenue for the future would be to develop our own factory and make our own cigarettes,” he continues. The Squaxin Island Tribe was the first Native American tribe in Washington to do so.

Goodwin says starting the factory created an energy within the tribe “where we knew we could do these things on our own, and we proved it to everyone. We proved it to the state, we proved it to ourselves, and it started to create other economic opportunities and just an overall good feeling that we can do whatever we put our mind to.”

On the factory floor, shouting over the rumbling of machines, Goodwin is quick to point out that thirteen of tribal members who work there also live on the reservation, which he sees as a “huge win” – jobs that keep tribal members in the community.

The Skookum Creek Tobacco production floor.
The Skookum Creek Tobacco production floor.

Like tobacco, cannabis is in that tricky position of being both a new vice for potentially vulnerable members of the community, and also a job creator.

According to the Centers for Disease Control and Prevention, American Indians and Alaska Natives have a higher prevalence of smoking than most other racial and ethnic groups in the United States by almost thirty percent. The rate of alcoholism among Native Americans is six times the U.S. average, and one in ten Native Americans deaths are alcohol related.

And according to the 2014 Native Youth Report released by the White House, “compared with the national average for adolescents aged 12 to 17, Native adolescents had the highest rates of lifetime tobacco product use, marijuana use,” and other substances. At the same time, unemployment levels among Native Americans are nearly double the national rate.

Goodwin admits: producing tobacco, a product that kills, is a difficult position to be in. And cannabis has its own drawbacks. But, similar to tobacco, profits from cannabis sales will also be sent “up the hill” to fund essential tribal government programs.

 A Skookum Creek Tobacco quality control staff member checks cigarettes.
A Skookum Creek Tobacco quality control staff member checks cigarettes.

“What I do every Monday morning is I have to tell myself: this is a huge benefit to my family and my community,” he says, “and then that gives me enough energy to make it through the week.”

His usually jovial face turns serious for a moment, looking slightly resigned.

“It’s absolutely a tough moral decision to create this type of product, but at the same time, it’s an opportunity that you cannot pass up.”

Elevation’s store manager and Squaxin Island Tribe member Mike Ogden, 36, is passionate about the power of cannabis. Born in Aberdeen, Washington, Ogden moved to the Squaxin reservation at the age of twelve, after living on the Quinault reservation of the Olympic Peninsula.

Ogden uses cannabis to relax, he says, and “because it’s nice for anxiety.” He studies the science of it so he can recommend products to friends and, now, to strangers who walk into the store. “I love sharing knowledge, and I love cannabis,” he says, “so sharing knowledge about cannabis with the folks who come in here is just a win-win for everyone.”

His favorite customers, and a surprisingly large percentage of Elevation’s clientele, are “the older folks who maybe haven’t partaken in quite a few years, and going down to the street corner just hasn’t been a bridge they were willing to cross.” Ogden sees the opening of Elevation as “an opportunity to help them re-embrace something that they’ve put away for a long time.”

Ogden used to work at Skookum Creek Tobacco – first as a laborer, then lead operator, and then eventually he was hired as operations manager before transferring over to manage Elevation. Tobacco work wasn’t as rewarding as working at Elevation, he says.

“I don’t have any tie to tobacco so I guess my justification was that it was a tribal enterprise,” he says. But cannabis is ideal because it’s “something I can take care of my family with, and still have it benefit the tribe.”

While he thinks it’s too early to know if opinions about cannabis are changing on the reservation, Ogden says Elevation’s opening has “started a conversation.” He observes: “People are opening up to it. The stigma’s been [present for] so long, but now here’s this public, credible business to go to. It’s going to make a difference to see this place succeed here.”

Ogden says the majority of products sold at Elevation are from vendors and producers within thirty miles of the store. However, he doesn’t want the tribe reliant on outside growers and manufacturers; Ogden would like to see the entire business, “from seed to sale,” centralized on the reservation.

For such expansion plans, the 2016 election creates uncertainty, and Echo-Hawk says tribes don’t know “what’s going to happen with Congress and the presidency: it could all change on a dime.” In any case, she adds, the Squaxin Island Tribe and the Suquamish were the very first ones out of the gate, and it was smart of them to make agreements that the state will back up and defend.

A carved wood house post created by tribal artist Andrea Wilbur-Sigo marks the entrance to the gathering space at Squaxin Island Tribal Administration.
A carved wood house post created by tribal artist Andrea Wilbur-Sigo marks the entrance to the gathering space at Squaxin Island Tribal Administration.

Ogden understands the many changes afoot, and says the stability that could even out the industry will take some time. In the interim, Echo-Hawk says Native American tribes across the country right now are “in a sort of wait-and-see mode,” watching the states where cannabis has been legalized, and watching the tribes within them find their way.

As clarity emerges around cannabis’ legal status across the United States, tribes like the Suquamish and The Squaxin Island Tribe can have significant economic and political advantages over non-tribal cannabis businesses as a result of asserting their sovereignty.

As for the Squaxin Island Tribe, they seem to have dotted all their i’s and crossed all their t’s: partnering with the state, starting slow and small with just a retail store, and seeking to educate their community. It could be a model for other tribes to follow, but in this quickly changing landscape, there’s a tension between doing it fast and doing it right – staying ahead of the curve while also protecting the best interests of their communities.

And sovereignty, as Jim Peters points out, is the ability to say both yes and no. In this case, it’s striking just the right balance between caution and risk on a harvest whose future is still being written.