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Monday, January 30, 2023

The Cherokee cannabis company receives $63 million from the board

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“It gives us a lot of confidence that we’re surrounded by people who’ve done this so many times, who have the experience, who have the understanding,” Forest Parker, general manager of Qualla Enterprises LLC, told Tribal Council. “This tribe, I’m very proud of us because we’ve been put in a position to learn from other people’s mistakes, so when we do this right, that number is accurate. It’s not $150 million because we’re trying to cover all these things that we don’t know. We actually feel like we We really know.”

The Tribal Council in August 2021 voted to Create a medical marijuana program On Qualla’s borders, an ordinance created the Cannabis Advisory Committee of the Cherokees to study cannabis-related issues and make regulatory recommendations, as well as the EBCI Cannabis Control Board to set regulations. EBCI formed Qualla Enterprises on March 13, and registered with the NC Secretary of State’s office on July 28, 2022.

While the tribe has so far only allowed the production of medical marijuana, Qualla Enterprises is looking forward to the possibility of future expansion for adult use in general. In May 2021, the Tribal Council voted Remove criminal penalties For possession of 1 ounce or less of marijuana or 0.15 ounce or less of cannabis. Last week, Parker told the Tribal Council that the company estimates it could produce and sell $50 million worth of medical marijuana, but that sales could be as high as $350 million if the program is opened up for general adult use. The facilities planned for $63 million will accommodate the larger capacity needed to reach $350 million.

“We’ve designed the infrastructure and facilities to be able to produce that,” he said, “and to be honest and honest with you and tell you we feel confident we can produce that.” “We know that if adults use that we can also sell that.”

According to the decision, the money will fund the completion of the strategic plan presented by the Kala Foundation to the Clan Council. The plan calls for headcount, an in-house growth facility, and a retail facility. Parker said the company expects to see a very high return on investment, around 60%.

“I’ve never seen such an opportunity in my time here,” Parker said.

Finance knowledge

The proposal garnered widespread support around the horseshoe, but there was strong disagreement about how federal law might affect financial planning.

Principal Richard Snead was concerned about how marijuana’s illegal status under federal law would affect the financial side of the business. Quote Bank Secrecy Act 1970a federal law intended to prevent money laundering that prohibits banks from accepting money derived from certain illegal activity, including the sale of marijuana.

“How will this money go back to the tribe, and will our local bank accept this deposit?” Sinead asked.

Attorney Darian Stanford of Sovereign Solutions Carolina dismisses this concern, pointing to 2014 guidance from the US Treasury Department that bank cannabis revenues can be appropriately realized. As of last year, he said, there were 515 banks and 169 credit unions through the US Bank’s cannabis proceeds.

He said, “It’s just paperwork.” “It’s more of a problem, but some banks, 515 and 169 credit unions, have chosen to do that and that’s the future. So there’s no question that it’s OK to bank.”

However, Sinead’s other concern proved difficult to dismiss. He told the clan council that Indian Games Regulation Act, which authorizes tribes to operate casinos on their land, does not allow gambling proceeds to be used to fund illegal activities. While federal policy has become more favorable toward cannabis over the past decade, it is still illegal.

“We don’t have $62 million in non-gaming revenue in the general revenue fund that we can give to Qualla LLC,” Snead said.

Big Cove Representative Theresa McCoy bristled at the idea that the federal government could dictate how a tribe could or could not use its own money.

She said, “When we spend our money it’s none of your business, that’s what they should be told.” “That’s my opinion. They can’t come here and tell us you can make this money and here is where you have to spend it.”

Snead said he supports the cannabis project, but there is no reason to risk closing the gaming operation to lift it. Just under half of the tribe’s $732.5 million budget for 2022-23 comes from gaming revenue, which also provides handouts twice a year to tribe members.

“If we say we’re going to use gaming revenue to fund this, what we’re putting at risk is being shut down in our gaming operation by NIGC for being out of compliance with federal law,” he said.

“I definitely want to make sure this works too, but I certainly wouldn’t jeopardize shutting down a casino with gambling money if that says so,” agreed Birdtown Rep. Boyd Owl.

Qualla Enterprises chairwoman Caroline West proposed an amendment to keep gaming revenue out of it—the $63 million would be funded with $10 million in tribal tax money, unrelated to the games, and the tribe would guarantee a loan to cover the rest. Both the amendment and ordinance passed, 8-2, with Benttown Rep. Dyke Snead and Yellowhill Rep. David Wolfe opposing.

Changes to the board

Later that day, the Tribal Council made decisions on the Qualla Enterprises Supervisory Board. With four members voting at the table and six passing, the panel approved a new compensation structure for the board. The president will receive an annual salary of $86,403, the vice president $83,491, and the other members $80,600.

The decision table was voted on by Penttown Rep. Dyke Snead, Yellowhill Rep. David Wolf, and Snowbird/Cherokee County Representative Bucky Brown and Adam Wachcha. The vote was to pass Lifttown Rep. Beau Crew, Yellowhill Rep. Tou Sunuk, Birdtown Rep. Albert Rose and Boyd Owl, and Big Cove Rep. Richard French and Teresa McCoy.

Snead then submitted names to fill the vacancies on the board. The Qualla Enterprises Board of Directors consists of five members, four of whom go through the nomination and appointment process. Seated were Vice Chairman Albert Rose and Yellowhill Vice Chairman TW Sunoc, who served temporary six-month terms without compensation. These periods ended on September 14, and there are now three vacancies.

There was a horseshoe dispute over whether to consider legislation introduced by Snead. At the start of the day, Snead approached the council to ask why the resolution was not on the agenda, given that it had been presented on time and in the proper form.

President Richard French said he was suspended because Snead had not submitted the resumes of his recommended candidates until that morning and because no confirmation hearings had been held for the candidates. Snead replied that since the council was formed, six people had been appointed to a seat, without a confirmation hearing being held for any of them.

“Precedent has already been established that appointments to boards for this particular board do not go through a confirmation process,” he said.

Currently, there is no tribal law governing how appointments are made. Snead added that if confirmation hearings are needed, it will be another two or three months before the new members are seated.

“We need people in this forum right now,” he said.

Three of the five positions are vacant, and none of the current members have a financial background. This is much needed expertise, because the company has, to date, spent about $21 million and will soon have an additional $63 million at its disposal.

While there were three positions to be filled, Snead recommended only two names, saying his third candidate still guaranteed he would be able to take the position. Sinead nominated Jacob Reed, MBA holder, and Bette Grant, BBA holder. Both of them are members of the tribes. The Tribal Council eventually approved Snead’s nominations without opposition, adding a six-month probationary period to the appointments.

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