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Bigger Than Bingo: Seminole Chief Jim Billie On His New Cannabis Advisory Firm And A Tax-Free Environment

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Bigger Than Bingo: Seminole Chief Jim Billie On His New Cannabis Advisory Firm And A Tax-Free Environment
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One of the largest problems cannabis entrepreneurs face right now is taxation. Since marijuana is still illegal on a federal level in the United States, businesses operating legally on a state level don't qualify for federal tax deductions covering things like rent and employee salaries.

However, as per Section 280E of the Internal Revenue Code, these businesses still have to pay taxes, even though the federal government considers their income derived from an illegal source. In fact, effective income tax rates can reach 70 percent in some occasions, industry insiders have told Benzinga.

Some experts have predicted some kind of federal tax relief will come soon. Nonetheless, effective rates are expected to remain high for the foreseeable future.

A Creative Solution

Interestingly, cannabis investing and strategy firm Electrum Partners and Seminole Indian-owned company MCW came up with a creative solution to the taxation issue. A couple of weeks ago, they announced a new partnership for legal cannabis business development and expansion in a tax-free environment under tribal government.

"This collaboration will spur massive economic stimulus for the Native American community and give investors in legal cannabis an unmatched competitive advantage," a spokeperson told Benzinga.

See Also: Nevada Marijuana Emergency Shows The Real Size Of America's Demand For Cannabis

Back in March, Cronos Group Inc (CVE: MJN) (OTC: PRMCF) CEO Michael Gorenstein told Benzinga about Indigenous Roots, a similar project that had been very successful in Canada.

Now, here's a story about how the most famous Indian Country leader, James E. Billie, former Chief of the Seminole Tribe of Florida and alligator wrestler, made a fortune off the gambling business and eventually transitioned to the marijuana industry.

Hitting The Jackpot

“Before I became Chief in 1979, Indians of the United States, including the Seminoles, were having a lot of financial difficulties,” Chief Billie said. “One day, somebody came to me about doing bingo on a reservation. The game was regulated in the state of Florida, but we could play it according to our own rules, with higher stakes.”

The story of how lucrative bingo, and gambling in general, became for Indian tribes is pretty well known. What’s important to understand is that “the key element was sovereignty,” the possibility to create their own regulatory framework, Chief Billie explained, alluding to the tax-free environment in which these businesses operate. Now that Florida has legalized medical marijuana, Native Americans can once again leverage their sovereignty to gain an edge over other players in the industry.

“I think this is going to be bigger than bingo,” Chief Billie said. In states were cannabis is legal, tribes can get a new economic influx. This is where the new partnership between MCW and Electrum comes in.

The success Chief Billie has had in his business career and the respect he enjoys among Native American Nations are unprecedented.

"He is a living legend," Electrum President Leslie Bocskor told Benzinga. "Just like Chief Billie changed the bingo and casinos industries forever, we see an opportunity now for this to be a game-changer for the cannabis industry."

Bocskor continued, "Chief Billie and I agree that this has to be done to the highest standards, even exceeding the standards of the states where the tribes reside. This will sow the field, so to speak, to prepare for this industry covering many different areas like industrial hemp cultivation and R&D partnerships.”

The Partnership

What exactly will this partnership do?

This alliance was conceived to create a financing and advisory team for cannabis entrepreneurs in Indian Country. The idea is to leverage Chief Billie’s and MCW’s tribal relationships, and Electrum Partners’ understanding of the cannabis industry, while taking advantage of the tax-free environment provided by Native American reservations.

“Right now we are interviewing and auditing the potential partners and investors," Bocskor said. "We had a tremendous amount of interest, so we want to make sure to establish the right partnerships and the right investors participate.” Bocskor mentioned he's been approached by some of the companies he works with including GB Sciences Inc (OTC: GBLX), Solis Tek Inc (OTC: SLTK), Kush Bottles Inc (OTC: KSHB), Grow Solutions Holdings Inc (OTC: GRSO) and Terra Tech Corp (OTC: TRTC).

“The next step will be locating the Native American partners we want to work with.”

At first, the company will likely focus on cultivation, industrial hemp and dispensary operations, he added. Even though Indian Nations can create their own rules and regulations, the firm will only conduct business with tribes that live in states that have legalized cannabis and implemented a regulatory framework – just to play it safe and avoid having to go to court over each venture.

Editor's note: MCW isn't owned by the Seminole Tribe, but instead by former Chief James E. Billie.

Image Credit: Javier Hasse

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