This compact will give the Suquamish Tribe some competitive advantages over state marijuana licensees. For instance, if the Tribe opts to produce, process, and retail all of its own marijuana, the 37% excise tax will not apply unless the Tribe opts to impose its own taxation on the transactions. The Tribe will also be able to sell medical cannabis in concert with medical treatment on Suquamish land without the 37% excise tax. We expect that the Suquamish (and subsequent tribes that legalize) will set up health spas and retreats that incorporate medical marijuana treatments and products at consumer-friendly tax rates.

The Liquor and Cannabis Board will almost certainly use this compact as a model for future compacts with other Washington State tribes. This begs the question as to whether the other Washington tribes will choose to sign compacts with the state or look to go outside of the Washington compact system. We see most Tribes choosing to sign such a compact because it will be tough to get the federal Department of Justice to sign off on a Tribe creating its own stand-alone marijuana system when Washington State already has a robustly regulated, turnkey state system under which they can operate. Nonetheless, if a Washington tribe develops its own robust regulations in line with the Cole Memo, such a system could pass muster with the Department of Justice without a state compact. The practical catch would be that those tribes would not be able to conduct any business within the state’s regulated marijuana system.

The big question though is whether tribal marijuana will look like tribal gaming or like something altogether different. If compacting is the way to go, tribal marijuana is more likely to resemble tribal gaming than anything else. Nonetheless, I am sure some tribes will set up their own regulatory schemes outside a state’s compact system. Time will tell.