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What is the best deal structure for a tribal OZ fund on Native American land?

We are developing hemp farms in tribal Opportunity Zones. What are the best OZ deal structures for those projects?


Answers
  • Shawn Neidorf

    Shawn Neidorf

    Arizona Commerce Authority
    May 23, 2019

    I'm sure if there is an ideal deal structure. That's more of a determination for an attorney to make with you. However, tribal lands generally cannot be sold, so the deal will have to be structured to feature a lease.

  • Neal Bawa

    Neal Bawa

    Grocapitus
    May 15, 2019

    That question is too specific for me to answer. You would need to talk with an Opportunity Zone lawyer.

  • Blake Christian
    May 13, 2019

    Structuring is very fact-specific, but generally you will want the QOF (top-tier fund) to be an LLC taxed as a partnership and the QOZ business (HEMP) to be an LLC taxed as a partnership also. This allows any debt financing to increase some or all of the investors' tax basis, and start-up losses may then be eligible for deduction. Otherwise, there is likely no basis and no tax losses available to the investors. The investor profile, the financing structure and the ultimate exit plan needs to be weighed to fully evaluate.

  • David LeGrand

    David LeGrand

    LeGrand Legal
    May 13, 2019

    Without doing any research, I do not see any special structures for a properly approved Opportunity Zone on tribal land. However, there may be some complexity in the tribal approval process and making sure the tribal law properly addresses the panned development structure. That is more a tribal law matter than a federal tax law matter.

  • Adam Yormack

    Adam Yormack

    Escalante Yormack (EY) Law, PLLC
    May 13, 2019

    Really interesting question. The structure depends a lot on who’s involved and how many parties are in and out of different farms. I’m a personal fan of the GP/LP structure for larger deals and LLC parent, sub for the smaller ones.

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