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New York cannabis regulations are in limbo. But the pot industry is booming on reservations

In this small town in western New York, nearly 20 marijuana dispensaries have opened up in just the last few months.

Located on the Seneca Nation of Indians’ reservation, the shops sell weed from behind the counters of gas stations, in roadside sheds and on Main Street storefronts, all without a license to do so.

The proliferation of the shops has beaten New York’s own plans to open dispensaries after the state Legislature legalized recreational marijuana last year.

State officials said it is legal for the tribes across New York to sell marijuana before regulators have adopted their own rules because the tribes have sovereignty.

Therefore, tribal governments have been able to develop and implement their own rules and regulations around retail sales and cultivation of marijuana, outpacing the statewide plans and reaping the financial benefits. New Yorkers on the other hand must wait until the state finishes developing regulations in the Marijuana Regulation and Taxation Act — with regulated sales expected before year’s end.

“There’s a considerable amount of money to be made in the industry, especially with New York lagging behind,” tribal lawyer Lee Redeye said.

But doing so has raised a series of questions about how the tribes are procuring the marijuana, how it may ultimately be regulated and whether the tribes could have to reach a compact with New York to tax sales.

For many in Western New York, the Seneca reservation is the closest place to purchase legal weed, far from other legal destinations like Massachusetts or Canada. A customer in a dispensary in Kill Buck, a town on Seneca Territory, said they had driven over an hour to visit the dispensary.


A step ahead for American Indian reservations

On at least four of the federally recognized Native American tribal reservations in the state, pot shops are everywhere, a sign that Native Americans have gained a significant head start in retail cannabis sales.

Across the U.S., as other states move to legalize adult-use and retail marijuana sales, Native American tribes are also moving to get a slice of the fast-growing industry. So far, tribes in Washington, California, Nevada, New Mexico, Wisconsin, Minnesota and Montana have leveraged their sovereignty from state governance to begin cannabis cultivation and sales.

As for prospective New York cannabis retailers, they will likely have to wait for the end of the year to tap into what is expected to be a $4.2 billion industry. The state Office of Cannabis Management is facing a several-month lag behind the anticipated start date in an attempt to ensure the state’s equity goals are fulfilled in the regulations. Recently, the Cannabis Control Board announced it is moving to approve a measure that would give the first licenses to New Yorkers with cannabis-related offenses.

According to Redeye, who has helped multiple tribes establish their cannabis regulations, the most common practice for tribal governments is to create a central Native-owned and operated dispensary. The Cayuga Nation in central New York and the Shinnecock Indian Nation on Long Island have opted for that route.


The Cayuga Nation recently announced plans to open its own 15,000-square-feet greenhouse for cannabis cultivation, which they say will be open before the end of the year, according to tribe spokesperson Maria Stagliano.

The tribe began marijuana sales last October at their two tribal-owned gas and cigarette shop locations called LakeSide Trading.

“Similar to the Nation’s other economic development initiatives, cannabis presents an opportunity to generate economic growth for the Nation and its members, while creating jobs for the community,” the nation said in a statement.


How can reservations sell marijuana?

New York’s marijuana law offers tribes the ability to enter into state compacts, which would allow them to integrate their recreational market into the state program. But, so far, they have been able to begin sales without state approval due to their tribal sovereignty.

“Native Americans living on federally recognized, sovereign tribal land are legally allowed to operate dispensaries that are not regulated under the New York State cannabis law,” said Freeman Klopott, spokesperson for the state Office of Cannabis Management.

According to Klopott, no tribes have expressed interest in entering a compact with the state.

Social equity has been the main focus in the development of New York’s cannabis policy, and Klopott said Native Americans might be considered social equity applicants under state law. The Legislature, though, is still discussing whether Native Americans living on reservations will be able to apply for such licenses, Klopott said.

Like gas and cigarettes, sales of cannabis on tribal land are not subjected to state retail tax, which means weed can be sold at cheaper prices than at state-licensed dispensaries.

“You can see how far people will drive to save $5 on a tank of gas on native territory, how far will people drive to save $50 on a bag of weed?” said state Sen. George Borrello (R-Chautauqua), whose district encompasses the Seneca territory. “That’s really going to hurt the legal market.”

The Saint Regis Mohawk Tribe launched New York’s first retail cannabis sales.

Business and cultivation licenses were issued as early as last December, which allowed tribal members to begin to build facilities and start cannabis cultivation. However, they would have to wait to sell until each retailer’s facilities and operations are approved by the tribal council.

Despite the guidelines, many dispensaries began to sell cannabis without a tribe-issued license. The Mohawk tribal council asserted that these were rogue dispensaries that were breaking tribal law by operating without a license.

Owners of the Mohawk dispensaries maintained that they did not have to follow the tribal council’s rules, according to The New York Times.

Concerned with the risks to health and safety the sales of unregulated cannabis posed to the community, the tribal council ordered the dispensaries to shut down. The owners, however, refused, resulting in the tribal council suing in tribal court.


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