Dykema Gossett PLLC

Cannabis Law Blog

Adverse Decision in Menominee Hemp Case Still Leaves Path for Tribal Hemp Activities

Cannabis Law Blog

News and analysis focusing on the full spectrum of cannabis-related issues facing businesses, investors, financial institutions and all levels of government throughout the United States

Adverse Decision in Menominee Hemp Case Still Leaves Path for Tribal Hemp Activities

As most readers are aware, in late 2014, the U.S. DOJ issued a Policy Statement extending the premise of the August 2013 Cole Memo to tribes. Although this Policy Statement, sometimes referred to as the Wilkinson Memo, was framed as a response to tribal concerns about negative impacts state legalization of cannabis might have on tribal communities, it was widely interpreted as allowing tribes to explore their own legalization models. This view was a natural reaction to the Wilkinson Memo’s statement that the Cole Memo priorities would guide federal enforcement (and prosecutorial discretion) “in the event that sovereign Indian Nations seek to legalize the cultivation or use of marijuana in Indian Country.”

Following the Wilkinson Memo, a number of tribes have sought to engage in cannabis-related business activities. While application of the memo will continue to be heavily case-specific, to date, the success of tribal efforts has been most significantly influenced by whether and to what extent cannabis is legal under state law. This outcome appears consistent with the Cole Memo concern that legal marijuana not be diverted to states that continue to criminalize possession. Thus, the Flandreau Santee Sioux have to date been unsuccessful in developing a “cannabis resort” in South Dakota, where it is illegal to have THC in one’s bloodstream, and California tribes that far exceeded local limits on the size of grows had plants seized. Tribes in Washington, though, have opened and continue to operate marihuana growing and retail establishments under state law authorized compacts, and tribes in Oregon and Nevada are moving forward pursuant to state law as well.

In Wisconsin, the Menominee Indian Tribe of Wisconsin (MITW) attempted to cultivate industrial hemp, defined by federal law as cannabis with a THC concentration less than .3 percent. In doing so, MITW did not simply rely on the Wilkinson Memo and the hope that the federal government would not prosecute, but sought to fit within an exemption from the Controlled Substances Act (CSA) enacted as part of the Agricultural Act of 2014. This provision allows the growth of industrial hemp for research purposes by an institution of higher learning if “growing or cultivating… is allowed under the laws of the State in which such institution of higher learning… is located.” 

Although Wisconsin prohibits the growth of cannabis and does not allow for growing or cultivating industrial hemp, MITW passed its own law allowing hemp growth and research and licensed the College of the Menominee Nation to engage in these activities. MITW then began growing hemp, but disputes arose with the federal government over the scope of the activities and, according to a search warrant, the federal government questioned whether the hemp crop exceeded allowable THC limits. Federal agents then destroyed MITW’s hemp crop.

In response, the Tribe sued the federal government, seeking a declaration that MITW’s actions met the terms of the Agricultural Act exemption. MITW argued that the term “State” includes tribes, and, alternatively, that Wisconsin law effectively “allows” hemp growth and research on MITW’s lands because the State’s prohibitory law regarding cannabis does not apply within MITW’s lands.  

This Monday, a U.S. District Court rejected the Tribe’s arguments, ruling that because Congress failed in the hemp sections of the law to define the term “State” to include tribes, tribes cannot be treated as states for these purposes. The court then agreed with MITW’s proposition that state law does not apply to the Tribe or its members within the MITW reservation. But the court nevertheless found that the Agricultural Act’s exemption turns on whether state law more generally allows the growth of hemp—in other words, although state law cannot govern or regulate MITW’s activities, the threshold question as to whether MITW can grow hemp under federal law turns on whether there is state authorization for growing hemp within the state’s borders. The court analogized Congress’s chosen structure for the Agricultural Act to the Indian Gaming Regulatory Act (IGRA), which permits tribes to engage in Class II and Class III gaming only if “such gaming” is permitted under state law, even though state law would not regulate the resulting tribal gaming. 

The IGRA analogy here is far from perfect. IGRA itself arose out of a very different legal history and has been repeatedly recognized by courts as representing a careful balancing of state and tribal interests that was entirely absent in Congress’s authorization of hemp research. Canons of construction applied to federal statutes governing activities of Indian tribes may also provide a basis for an appeal by MITW. For the time being, though, this week’s decision reinforces that substantive state law will still inform federal reactions to tribal cannabis activities. Critically for tribes, however, the decision also reinforces that, except when federal law expressly provides otherwise, state regulatory laws cannot directly govern tribal cannabis activities on tribal lands. This has implications beyond just the hemp context, of course, and the decision also should clarify that tribes located in states that have authorized hemp research may also do so themselves.