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LOS ANGELES — American Indian tribes that say they have been cut out of California’s legal marijuana market have raised the possibility of going their own way by establishing pot businesses outside the state-regulated system that is less than two months old.

The tribes floated the idea of setting up rival farms and sales shops on reservations after concluding that rules requiring them to be licensed by the state would strip them of authority over their own lands and their right to self-governance.

The possibility of the tribes breaking away from the state-run system is one more challenge for California as it attempts to transform its longstanding medicinal and illegal marijuana markets into a unified, multibillion-dollar industry.

For tribes to participate in the state-run market, “they have to give up their rights to act as governments, with regard to cannabis,” said Mark Levitan, a tribal attorney.

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At issue are legally thorny questions about who governs whom, taxation and the intersection of state marijuana laws with tribes that the federal government recognizes as sovereign nations within the U.S.

Under regulations issued last year, California would retain full control over licensing. Tribes would have to follow state rules, including “submission to all enforcement,” to obtain a license to grow or sell marijuana. Any application must include a waiver of “sovereign immunity,” a sort of legal firewall that protects tribal interests.

Without state licenses, businesses cannot take part in the legal state pot market. California has over 100 federally recognized tribes, the most of any state, and estimates of the number either growing and selling pot or eager to do so varies, from a handful to over 20.

Unlike those that have prospered from casino gambling, some are in struggling rural areas and would welcome a new source of cash to improve schools and pave roads.

Read the full story at The Cannifornian.