KBIC to vote on marijuana business
The Keweenaw Bay Indian Community (KBIC) tribal council is considering the purchase of a $3 million medical marijuana business, Fresh Coast Farms, built into the Extremely Low Frequency (ELF) transmitter site formerly run by the U.S. Navy in Marquette County, south of Humboldt.
The issue is being brought to a referendum vote on June 1. Tribal members will vote on whether or not to invest $4 million from the elder’s trust fund into purchasing and launching a medical marijuana business. The money not part of the purchase cost would be used for representation, fees and other start-up costs.
In a video of the April 11 meeting of the tribal council posted on the KBIC website, the current owner of the business, Derek Parker, pitched the sale of the 6.9 acre facility along with Joseph Derocha, vice-chairman of the Marquette County board of commissioners.
“So you know, I have the only Class C-licensed medical marijuana cultivation facility in the upper peninsula,” Parker said.
According to Parker, the facility, which was decommissioned by the Navy in 2004, has been converted into a 2,700-square-foot indoor grow facility. The facility uses about 300,000 watts of power and produces about $50,000 per week in profit by selling product at wholesale. That comes to $2.6 million annually. He said his product sells as fast as it is produced.
“If you do want to get into this business, we have a turnkey operation for you,” Parker said.
Derocha compared the move to Fred Dakota launching the first tribal casino.
“This is the new gold rush,” he said.
Parker is currently operating the facility on a temporary license while this permanent license is in dispute with the state.
“The reason that I’m selling this is to make sure that my license is not denied, that these plants never have to be cut down, and this crop continues,” he told the council.
Parker said the plants currently growing are worth $2.5 million.
At the council’s May 9 meeting, Manny Lentine and Craig Aronoff from the Quadrant Consulting Group presented their ideas on how the KBIC could make the investment.
“We have the understanding that the first and foremost objective is the maintaining and bolstering the elder trust fund,” Lentine said.
Aronoff said the consultants have been in contact with state officials to make sure plans would be legal and acceptable. He said the tribe forming an independent limited liability company, or LLC, to actually own and control the facility would enable them to control the business while not directly owning the facility. Owning the facility directly would trigger state vetting requirements for each member of the KBIC.
“The language in the statute does not provide for a public entity to be licensed,” Lentine said.
Quadrant said money from the operation would have to be funneled back to the tribe through indirect means, but did not get into details.
Lentine, Aronoff and Parker all highlighted the potential growth of the facility. Parker pointed out the potential for adding more plants to the grow or opening a medical marijuana provisioning center. Quadrant Consulting said money could be made from brand licensing.
Council Vice President Gary Loonsfoot, Jr. said he has toured the facility and definitely favors going through with the purchase. He said the budget is getting increasingly difficult to meet as casino gaming revenues decline, and that internet gaming could cut into revenue even further. Buying a turn-key operation like Fresh Coast Farms would provide a badly-needed new revenue stream.
While the legalities of the purchase and operation are complicated, he is confident the tribe is doing its due diligence.
“We are following all state applicable laws,” he said.
Gary said after his brother had trouble with opioid addiction following an accident, he became interested in marijuana as an alternative treatment, too.
“The side effects are a lot safer,” he said.
At the May 9 meeting, council President Warren “Chris” Swartz said he thinks the purchase would be a good opportunity to get a return on investment of greater than 4% for the elders trust fund, where money for the investment would be drawn from. He could not be reached for further comment.
“We need to proceed with caution,” said tribal council member Rodney Loonsfoot.
Rodney said he is in favor of the move, but wants to show an abundance of caution and transparency with the community. He is especially concerned with the founding of an autonomous LLC that would be responsible for such a large investment.
A KBIC community meeting on the topic is being held at the Big Buck Bingo Hall in Baraga on May 23 at 6 p.m. The initial meeting is open to the public but there will be a closed session for tribal members only to ask questions and further discuss the matter in more detail.
Both Gary and Rodney encourage tribal members to attend and ask questions so they can make an informed decision at the referendum.