Eastern Band’s Qualla Enterprises loan to be converted to equity
Tribal council passed a resolution converting a $50 million loan from EBCI to tribal-owned cannabis retailer into equity.
File photo
The Eastern Band of Cherokee Indians during a Sept. 4 tribal council meeting passed resolution 576 nearly unanimously, converting its $50 million loan — made pursuant to a February 2024 promissory note —- into equity in tribal-owned cannabis retailer Qualla Enterprises, LLC.
As EBCI is already the sole shareholder of Qualla Enterprises, the new agreement does not increase tribal stake in the venture. Instead, it changes the funding classification: debt Qualla owes to the Eastern Band becomes equity the tribe has chosen to invest.
Qualla Enterprises, as per the resolution, will revise its own agreement and pay a dividend distribution to EBCI “in an annual amount no less than $5 million per calendar year beginning in 2025” as long as the resolution is in effect. It was clarified during the Sept. 4 meeting that the dividend distribution will be paid in December and take effect for the 2026 budget.
“The Tribe loaned Qualla Enterprises, LLC (“QE”) money pursuant to a written agreement between them (a promissory note). The resolution that Tribal Council passed yesterday authorizes the Tribe and QE to revise the agreement (the promissory note) so that it becomes an equity agreement. This will help QE and the Tribe, and provide a more direct avenue by which the Tribe can distribute a share of the money received to Tribal members in the form of per capita distributions,” EBCI Attorney General Mike McConnell said in a written comment to The Smoky Mountain News.
The resolution does not dictate how EBCI must use the dividend distributions — that part is left to the discretion of tribal leadership. However, per capita distribution is a large chunk of an annual budget funded by casino — and now, cannabis — revenue.
During the meeting, Principal Chief Michell Hicks expressed the reasoning behind the decision. “I believe this proposal, if I’m understanding this correctly, will help the [2026] budget in a pretty significant way,” Hicks said. “And so again, that’s the avenues that, you know, I’ve been looking for with this particular business, because right now, we haven’t received any distribution.”
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But Vice Chairman David Wolfe, the sole voting member to oppose the resolution, objected precisely because of what Hicks used as further reasoning to invest. Qualla hasn’t made its first payment yet, he said, which was due in January.
“If you’re 100% owner and you were promised all these revenues, and you’re not going to get them, then you’re just saying, ‘Hey, we’re going to let you pay when you can,’” the vice chairman added.
Wolfe also had questions about operational accountability. Residents of his community, he said before the vote, will have “a bigger question about the whole facility and how things are operating” if the resolution is passed.
According to the resolution, Qualla has been “operating at a profit and remains a viable going concern with annual audits demonstrating its best practices and compliance with all applicable standards.”
Other council members were eager to invest in a product of the tribe that they believed had been a success so far, even if profits fell short of initial expectations.
Councilmember Adam Wachacha, who spoke in support of the resolution, framed it as a means of supporting the community through business.
“We have 300, 400 [Qualla] employees, and 90-some-percent of those are enrolled [tribal] members,” he said.
Vice Chief Alan Ensley emphasized the importance of a workforce where about nine in 10 staff were enrolled members. Ensley said employment at Qualla Enterprises had even brought those who “had been down the wrong road … on the road to recovery.”
The vice chief theorized another variable that could’ve affected the cannabis retailer’s profit margins.
“We never fully funded [Qualla], the program. We piecemealed it,” he said.
Hicks didn’t make excuses for the inflated projection of funding first assured to tribal members.
“Was the mark missed prior? I mean, it’s obvious that it was. But we still got a viable business that, through this vehicle [of tribal expenses], is still paying for itself,” Hicks said in a comment supporting the resolution.
