Flandreau Case Highlights Immunity Issue for non-Indians Consulting with American Indian Tribes on Cannabis Matters

Author: Garrett L. Davey, Esq.

On Wednesday, a South Dakota jury found Eric Hagen, president and CEO of Colorado based Monarch America, not guilty of drug charges. Hagen helped the Flandreau Santee Sioux tribe grow marijuana for a cannabis resort the tribe hoped would generate millions in tribal revenue. South Dakota prohibits cannabis in all forms, and Hagen faced state-law charges of conspiracy to possess, possession by aiding and abetting, and attempted possession of more than 10 pounds of marijuana. Ultimately, the Tribe abandoned its plans for the resort, burning millions of dollars in marijuana in the process.

The verdict is good news for Hagen, the tribe, and more generally, advocates of marijuana reform. However, the case highlights a central concern for non-Indians consulting with tribes on cannabis matters – tribal immunity. In most states, state jurisdiction does not extend onto tribal lands because American Indian tribes are sovereigns. Tribes in the U.S. have their own laws and are governed by those laws. Thus, most states lack jurisdiction over tribal members and tribal conduct within Indian country. In the Flandreau case, South Dakota lacked jurisdiction to arrest and charge tribal members associated with the marijuana grow and planned resort.

Immunity from state law jurisdiction does not extend to non-Indians, however, such as Hagen. South Dakota could only arrest and charge Hagen and his business partner Jonathan Hunt, in connection with the proposed marijuana resort. Hunt previously pleaded guilty to a drug conspiracy count after agreeing to cooperate with law enforcement.

Hagen’s prosecution damaged his company, Monarch America, both financially and publicly. The entire event could have been avoided had Hagen or Hunt been aware of risks for non-Indians working in Indian country. These risks increase in the context of marijuana, and especially in prohibition states, such as South Dakota, that are openly hostile to the marijuana industry.

Individuals and companies conducting business in Indian country, especially in the marijuana context, should be aware that tribal sovereign immunity does not extend to their conduct. Thus, before contracting to work on cannabis matters in Indian country, non-Indians should apprise themselves of the particular jurisdictional circumstances at hand. This is not a one-size fits all approach either, as many tribes face different jurisdictional circumstances. To this end, McAllister Garfield, P.C. is available to work with businesses on these issues and has extensive experience advising clients on the intricacies of conducting business in Indian country.