Defense Denies ‘Conspiracy’ in Tribe’s Attempted Pot Resort

Marijuana plants in the “grow room” of the Santee Sioux Tribe’s now-defunct pot facility.
Photo credit: Lacey Louwagie

Flandreau, S.D. (CN) – There was no “conspiracy” involved in a Colorado consultant’s work with a South Dakota tribe in an attempted marijuana grow facility and resort, the consultant’s attorney told a state jury Friday.

“The evidence will show that this would have to be the most transparent conspiracy ever,” defense attorney Michael Butler said in his opening statements at the Moody County Courthouse in rural South Dakota. He added that “legislators and law enforcement were invited in” to the marijuana grow facility, nightclub and smoking lounge that the Santee Sioux Tribe was constructing in 2015.

“This thing was laid out on a platter – what was being done on tribal land, in a tribal building. There were no secrets. Meetings were held with the attorney general’s office, the U.S. attorney’s office, and the U.S. Department of Justice. The contract entered into with my client’s company was filed with the Securities and Exchange Commission and approved. No one files a conspiracy with the SEC.”

In August 2016, the state of South Dakota charged Butler’s client, Eric Matthew Hagen, with conspiracy to possess more than 10 pounds of marijuana, possession of more than 10 pounds of marijuana, and attempt to possess more than 10 pounds of marijuana for his role assisting the Santee Sioux Tribe in setting up the proposed facility.

Hagen is president of Monarch America, a Colorado-based cannabis consulting firm. The tribe hired Hagen in June 2015 to help it add a marijuana grow facility and smoking lounge to its Royal River Casino. Although marijuana remains illegal in South Dakota, the tribe relied on a 2014 Department of Justice memo implying that it would look the other way when it came to prosecuting certain marijuana-related crimes in Indian Country. The memo also gave reservations the same authority to legalize the drug that states enjoy.

The facility never came to fruition, however – the tribe burned its marijuana crop in Nov. 2015 in response to a tip that the federal government was planning a raid.

Despite the state’s lack of jurisdiction to prosecute the tribe, assistant attorney general Katie Mallery argued in court that Hagen and Monarch America’s vice president, Jonathan Hunt, maintained possession and control of the marijuana at the tribe’s facility.

“Hagen says, ‘no one from Monarch purchased these seeds,’” she told the jury.

She then explained that the tribe was “dragging its feet” in ordering the marijuana seeds, so Hagen and Hunt completed the transaction on their own.

“Jonathan Hunt in a hotel room in South Dakota placed that order with MSNL, a company that sells marijuana seeds in the Netherlands,” she said, adding that the money order for the purchase came from another Monarch America associate. The method of delivery was “stealth guaranteed.”

“They do that because they know they are not supposed to be shipping marijuana seeds to South Dakota,” she said.

The seeds arrived at the tribal office hidden in CD cases, brochures and novelty gifts, according to Mallery, and were taken into possession by Hunt.

Hunt then cultivated the seeds in the tribe’s grow facility. “He was the one who gave it the nutrients, he was the one who watered it, he was the one showing two tribal members how to grow this marijuana,” Mallery said.

Hunt pleaded guilty to drug conspiracy charges shortly after being charged in August 2016.

State’s witness Cory Johnsen, who did sales and marketing for Monarch America, referred to Hunt as the “cultivator” of the crop, and Hagen as the “business” guy.

“He was kind of the deal guy, the money guy, you could say,” Johnsen said.

According to Johnsen, he and Hagen grew up together in Aberdeen, South Dakota, and later both worked at a South Dakota publication before Hagen left for Colorado in 2012. Hagen contacted Johnsen years later in 2015 about doing promotional work for a proposed marijuana grow facility on tribal land.

“We never really put together a marketing plan or strategy,” he said. “I never planned on promoting marijuana. I planned on promoting events [at the venue], and if people attended and wanted to partake, then they could.”

Hagen’s attorney said the trial was unlikely to reveal any “bombshell” information that was discovered between the time that the tribe burned its crop in Nov. 2015 and when his client was charged nine months later.

He also criticized the state for not attempting to confiscate security footage from the facility or emails or text messages from Hagen and Hunt. It didn’t execute a search warrant for Hunt or Hagen’s vehicles, either, and law enforcement declined an invitation to visit the grow facility.

State’s witness Sam Kavanagh, a South Dakota Department of Criminal Investigation agent, said they did not visit the facility because they “didn’t want public perception that law enforcement was ‘supporting the venture.’”

“Do you commonly decline invitations to look at evidence of a crime?” Butler pushed.

Kavanagh admitted that he did not.

Butler said that at the time the crop was burned, there was no “usable” marijuana ready. And although Hagen and Hunt had recommended destruction of the crop before a federal search warrant was executed, the tribal council made the decision to follow through on it.

“If Mr. Hunt and Mr. Hagen were in control, why do they have to ask the Santee Sioux Tribe for permission to destroy the crop?” he asked. “My client did not have control to make those decisions. They were exclusive to the Santee Sioux Tribe. The evidence will show this was their marijuana, from beginning to end.”

Butler practices privately in Sioux Falls, and Mallery is with the state attorney general’s office in Sioux Falls.

State Circuit Judge Patrick Pardy is presiding over the trial, which is expected to continue through next week.

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