Why Native American Tribes Are Getting Into the Marijuana Business

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Tribes are weighing the risks and opportunities of legalizing pot

This New Year’s Eve, Tony Reider wants to throw a party unlike any his South Dakota tribe has seen.

There will be live music, food, outdoor games—and, floating over the revelry, a haze of marijuana smoke, from a first-of-its-kind pot lounge that is set to open by the end of the year, said Reider, the tribal president of the Flandreau Santee Sioux in Flandreau, S.D.

That pot lounge—modeled on an Amsterdam coffee shop, where customers would be able to buy and smoke up to 2 grams of marijuana a day—would be illegal anywhere else in South Dakota, which, like most U.S. states, bans the sale, possession and public smoking of pot.

But Reider says his plans are above board, based on a federal memo late last year that cleared the way for American Indian tribes to legalize marijuana on tribal...

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