South Dakota charges 2 men trying to help launch pot resort

FLANDREAU, S.D. — South Dakota’s top prosecutor charged two consultants who worked with a Native American tribe on its plans to open the nation’s first marijuana resort with drug offences, accusing them of having seeds shipped from the Netherlands hidden in CD cases and sewn into clothing.

The charges announced Wednesday come eight months after the Flandreau Santee Sioux destroyed their crop amid fears of a federal raid, abandoning an ambitious scheme to develop “an adult playground” that they estimated could net as much as $2 million a month in profits. Tribal leaders this week said they don’t plan to revisit the proposal, and instead will use their greenhouse to grow vegetables, including tomatoes. The tribe declined immediate comment on the charges against the consultants.

Attorney General Marty Jackley, who warned against the tribe’s proposal from the start, said that a range of marijuana possession charges had been brought against two top officials of Monarch America, the Colorado-based company hired to work with the tribe on the resort idea.

Eric Hagen, Monarch’s chief executive, was charged by indictment with conspiracy to possess, possession and attempt to possess more than 10 pounds of marijuana. Jonathan Hunt, the vice-president and cultivation expert, was charged with conspiracy to possess between a half-pound and a pound of marijuana.

Hagen, 34, of Sioux Falls, declined to comment. Hunt, 43, of Denver, Colorado, didn’t immediately respond to telephone messages requesting comment. Jackley said Hunt was expected to plead guilty Aug. 15.

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Court documents say Hunt ordered marijuana seeds from a company in the Netherlands that were put in CD cases and sewn into shirts and shipped surreptitiously to the tribe’s office in 2015. Authorities say Hunt and others cultivated the plants at the Flandreau grow facility before they were burned in batches — about 600 plants in all.

“It is very clearly a violation of both federal and state law what was proposed and what was happening,” Jackley said.

Jackley portrayed the tribe as a victim. Moody County State’s Attorney Paul Lewis also took pains to say the charges were “not an indictment against the members of the Flandreau Santee Sioux.”

But Lewis also added the charges are “a clarion call” to the tribe “to reconsider their efforts to move forward on an adult playground for marijuana ingestion and consumption.”

A court affidavit says the tribe still had unused marijuana seeds after their crop was destroyed. Jackley said he hoped the tribe would turn them over to law enforcement.

The Santee Sioux began exploring a marijuana growing operation after the Justice Department in 2014 outlined a new policy clearing the way for Indian tribes to grow and sell marijuana under the same conditions as some states that have legalized pot. When tribal leaders initially touted their plan to open the resort on tribal land in Flandreau, which is about 45 miles north of Sioux Falls, President Anthony Reider said they wanted it to be “an adult playground.”

They projected as much as $2 million in monthly profits, with ambitious plans that included a smoking lounge with a nightclub, bar and food service, and eventually an outdoor music venue. They planned to use the money for community services and to provide income to tribal members.

Jackley warned against the idea from the outset, saying that changes in tribal law to permit the operation wouldn’t protect non-tribal members.

Federal officials had concerns, too, that Reider said were about whether the tribe can sell marijuana to non-Indians, along with the origin of the seeds used for its crop. After the tribe destroyed its crop in November, he said they wanted to demonstrate good faith in trying to resolve concerns about the project.

Many tribes have hesitated to move into marijuana cultivation, in part because of uncertainty over the risks involved due to a tangle of state, federal and tribal law enforcement oversight on reservations. Just a few months before the Santee Sioux burned their crop, two California tribes had their growing operation raided by federal authorities who cited concerns about third-party ownership and pot distribution off tribal land.

“This adds additional weight to the notion that tribes that are within states who are still not warmed up to the idea of medical marijuana or recreational marijuana are going to have a very difficult time moving those projects ahead,” said Blake Trueblood, an attorney at a Florida-based economic development and Indian law firm.

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Nord reported from Sioux Falls, South Dakota.

Regina Garcia Cano And James Nord, The Associated Press