Island Peži Heads to Mankato Without an Automatic Tax Break

Island Peži is open at 6030 Sturgeon Lake Road in Welch, Minnesota, a Prairie Island Indian Community cannabis dispensary now preparing a first off-reservation shop in Mankato. The Dakota name is spoken pay-zhee and means grass. The Welch counter already sells to adults 21 and older beside Dakota Station, the tribe’s gas station and convenience store.

The 2024 pitch was a shop on the island. The 2026 fight is the compact: it lets Island Peži leave Prairie Island, while Minnesota’s cannabis tax waiver is written for tribally regulated land.

The Welch Shop Next to Dakota Station

Prairie Island’s council announced Island Peži for summer 2024, subject to tribal licenses, as a Native-owned adult-use store run by CBH, Inc. The live store is past tense on the company’s own site. It takes walk-ins and online orders for same-day pickup. There is no delivery and no on-site consumption. Tobacco stays next door at Dakota Station.

Tribal Council President Grant Johnson tied the brand to money the tribe controls, not only to a new product line.

Island Peži is a step forward in our efforts to diversify our economy and strengthen our Tribe’s long-term financial sovereignty

Grant Johnson, Prairie Island Tribal Council President, community announcement

He also said the community wanted to be among the first into the adult-use market and to create work for tribal members. A Cannabis Regulatory Ordinance and a Cannabis Regulatory Commission sit over the business on Prairie Island land, a tribal system the announcement compared with the state’s then-planned 2025 rollout.

HOW THE WELCH SHOP RUNS

• Address and phone: 6030 Sturgeon Lake Road, Welch, MN 55089, at (651) 327-2239.
• Hours: The shop is open 8 a.m. to 10 p.m. daily, seven days a week.
• Payment: Cash only, with two ATMs on site and a pay-by-bank option; debit cards are not taken.
• Purchase caps listed: Adults 21 and older may buy 2 ounces of flower, 8 grams of THC concentrate, and 800 milligrams of edibles.

Those limits match the recreational FAQ on the company site. Valid government ID with name, date of birth, and photo is required. Jobs are posted on the brand’s own recruiting board, a leftover of the original hire-up for a general manager, an HR manager, and floor staff.

What the Compact Allows Off Tribal Land

On Oct. 30, 2025, Minnesota’s Office of Cannabis Management said the state had already signed four tribal-state cannabis compacts, with White Earth Nation, the Mille Lacs Band of Ojibwe, the Prairie Island Indian Community, and the Fond du Lac Band of Lake Superior Chippewa, and announced a new compact with the Leech Lake Band of Ojibwe that day. The Prairie Island agreement is executed by Governor Tim Walz and the community, and it is effective on signature.

Minnesota’s adult-use cannabis compact statute tells the governor to negotiate those deals and says tribes do not need a compact to regulate cannabis on their own land. The compact is the document that sets how a tribal enterprise may operate a storefront outside tribally regulated land, sell into the state system, and keep its own commission in the room.

For Prairie Island, the off-land retail grant is specific. The tribal regulator may issue up to eight retail licenses, each one storefront, with no more than one licensee in any city and no more than three in any county. That is a statewide map with a hard local spacing rule, not a blank check to cluster shops.

LICENSE CAPS IN THE PRAIRIE ISLAND COMPACT

Cannabis grown or made on tribally regulated land for sale off that land has to go through batch sampling and full testing. The compact names Metrc as the state’s starting seed-to-sale system and requires a tracking setup that can follow product that crosses from tribal rules into state rules. Edward Buck is listed as cannabis commission chair for notices under the agreement.

The 15 Percent Tax Stops at the Reservation Line

Minnesota imposes a cannabis gross receipts tax equal to 15 percent of gross receipts from retail sales of taxable cannabis products in the state. That tax is on top of other taxes on the same sale. The statute then carves out sales on tribally regulated land by a cannabis business licensed by a Minnesota tribal government, and it also carves out use tax on products bought there.

The compact repeats the on-land break in plainer compact English. The tribe is not required to collect or remit any state sales, use, or gross receipts tax for cannabis sales by tribally licensed businesses on tribally regulated land, citing the cannabis tax statute and the sales-tax chapter. Welch sits in that box. A customer who drives to Prairie Island is shopping on land the compact and the statute treat as tribal for this tax.

Off the reservation, the compact does not copy that waiver. It says a tax agreement, under Minnesota Statutes section 270C.19, subdivision 6, for sharing of sales and gross receipts tax collected from a tribally owned cannabis business that operates off-reservation, may be negotiated later with the Minnesota Department of Revenue. If the 15 percent holiday already traveled with every compact store, that future-deal clause would have nothing to do.

The consumer rumor that follows Island Peži is that every new door will ring up like Welch. The legal text is narrower. The locked break is the island. Mankato is a city storefront under tribal license, and its tax treatment is a Department of Revenue conversation the compact leaves open.

Mankato, Adams Street, and a Fall Target

The first off-reservation site is 1809 Adams Street in Mankato, the former Mankato Clinic Occupational Medicine campus. Location general manager Erik Arvidson said on July 29, 2026, that the shop was aiming for August or early fall, pending final approvals and licenses. Flower, pre-rolls, vape cartridges, disposable vapes, and edibles are planned at open. Cannabis drinks wait for the Minnesota market. Hemp-derived CBD products are also planned.

The build is a retrofit, not a new box. Arvidson described ID scans at a secured entry, a pickup lane for online orders, several checkouts, and a product window customers cannot reach. Flower goes in climate-controlled vaults. Concentrates go in refrigerated storage. Hemp storage was cut into the old clinic layout. He said the floor has to satisfy both the Office of Cannabis Management and the Prairie Island Cannabis Regulatory Commission.

We run a stricter ship. That’s to our advantage and to the advantage of the public. I know where our product is coming from. I can go visit where it was grown. I can see the manufacturing facility all right there in one place. So I’m confident of the product, the source of the product, the material that goes into the product.

Erik Arvidson, Island Peži Mankato general manager

He put opening staff at about 20 people, most hired from Mankato and nearby towns. Brand ambassador Demetria Buck, a Prairie Island member, said Mankato was the right first city because Dakota history there is close. On Dec. 26, 1862, 38 Dakota men were hanged in Mankato. Buck said that history is near to Native people in the area, and that it made Mankato “a great place to start.”

Tribal public relations representative Eric Pehle said the Mankato move followed talks with local officials and that the community wanted measured growth, relationships, and quality control rather than a fast chain. Mankato has limited adult-use cannabis retail licenses to four, the minimum the city can set under state law based on population.

WHAT WE KNOW

• Site: 1809 Adams Street, former occupational-medicine clinic, first announced off-reservation Island Peži store.
• Menu at launch: Flower, pre-rolls, cartridges, disposables, and edibles, with drinks later.
• Staffing plan: About 20 jobs, described as mostly local hires.

WHAT IS UNCONFIRMED

• Open date: Arvidson’s July 29, 2026 target was August or early fall, with licenses still pending in that account.
• Register tax: Off-reservation sales tax and gross receipts treatment awaits any later deal with the Department of Revenue.
• Next cities: The compact allows seven more off-land stores after Mankato, with the one-per-city rule.

As of that July account, Adams Street was still a build and a licensing file, not a public counter.

Tokáhe Already Supplies More Than 80 Shops

Prairie Island CBH Inc. is the tribal corporation over cultivation, making, distribution, and retail. The compact’s single wholesaler license is the legal slot for that middle step. Arvidson said Tokáhe Distribution, the wholesale arm, already supplies more than 80 dispensaries across Minnesota. Product can reach a state-licensed shelf long before a second Island Peži door opens.

That is the quiet half of the compact. Eight retail licenses are the visible map. One wholesaler license plus a manufacturing license and a transporter license let the tribe sell into other people’s stores while the Mankato remodel finishes. Indoor canopy is capped at 30,000 square feet, or two acres outdoors, unless a later state maximum is higher. Those figures are ceilings in the compact, not a published as-built tour of the grow.

Vertical control is also Arvidson’s sales pitch. He said budtenders will ask what a customer wants, ring the order, and send it to an inventory room for fulfillment, and that many people arrive for a product without knowing how they want to use it. Education is part of the floor plan he described, next to the vaults.

The same seed-to-sale language that the compact uses for tracking is the language he used for the Mankato back room. If Island Peži’s flower is already on other Minnesota menus through Tokáhe, the Mankato store is a branded front end on a wholesale network that is already running.

Treasure Island Bingo Came First

Prairie Island is a Mdewakanton Dakota community on an island in the Mississippi River, 14 miles north of Red Wing and 30 miles southeast of St. Paul. The United States recognized 534 acres there in 1936. Economic recovery, in the state’s tribal-affairs sketch, starts in 1984 with Treasure Island Bingo and continues in 1988 when gaming expanded into what is now Treasure Island Resort & Casino. Cannabis is the next compact industry on the same small land base, next to the same highway traffic that already feeds the casino and Dakota Station.

THE PATH FROM BINGO TO CANNABIS

1. 1984: Treasure Island Bingo opens on Prairie Island.
2. 1988: Gaming expands into the casino operation now known as Treasure Island Resort & Casino.
3. 2023: Minnesota’s adult-use cannabis law is on the books; Island Peži’s own FAQ dates recreational purchase limits to July 1, 2023.
4. 2024: The community long-term financial sovereignty announcement names Island Peži, CBH, Inc., and a summer opening next to Dakota Station.
5. October 30, 2025: The Office of Cannabis Management lists Prairie Island among four tribes with signed cannabis compacts.
6. July 29, 2026: Arvidson describes 1809 Adams Street as targeting August or early fall, with about 20 jobs.

The casino sequence was ordinance, compact, then a business that draws people onto tribal land. Island Peži started with the land-based shop and the tax statute that follows that land. The cannabis compact then adds a limited right to operate in Minnesota cities, under spacing rules the bingo hall never needed, and with a tax page that still treats the reservation and Adams Street as different places.

Johnson’s 2024 line about financial sovereignty still fits the Welch register. It does not, by itself, decide what Mankato customers will pay. The compact’s most-favored-nations clauses even let Prairie Island pull in later, sweeter tax or license terms if another tribe bargains them, which is a reminder that these agreements are still being shopped, not frozen.

On Adams Street, the former clinic is supposed to become a secured adult-use floor with local hires and a Dakota brand on the door. Until the licenses land, Island Peži’s proven shop remains the one on Sturgeon Lake Road, where the 15 percent cannabis gross receipts tax does not apply, the hours run until 10 p.m., and the second store is still a remodel down the river.

Disclaimer: This article is news reporting and analysis of Prairie Island’s cannabis businesses, Minnesota statutes, and the tribal-state compact. It is informational only and is not legal, tax, medical, or cannabis-purchasing advice. Readers who plan to buy, sell, license, or locate a cannabis business should consult a Minnesota-licensed attorney and, for health questions, a licensed clinician, and should confirm current tax treatment with the Minnesota Department of Revenue and the Office of Cannabis Management. License counts, opening targets, hours, and tax rules are those in the cited tribal, company, and state materials and can change.