Cannabis has been legal in Canada for the past year, and the success of the retail store roll-out varied significantly between the provinces. In Ontario, the roll-out has been rocky, and had entirely excluded First Nation communities for its first nine months. Even now, the inclusion of First Nations is limited to eight stores in arbitrarily chosen communities, which is perhaps part of the reason why many nations are choosing to exercise their inherent jurisdiction and create their own laws in this evolving field.
Canada’s Cannabis Act creates what was planned to be a watertight system for cannabis: if you are not sanctioned by Canada to participate in the cannabis industry, your business remains illegal under Canadian law. While Canada retains authority for licensing most cannabis businesses, including cultivators and processors, they have delegated the authority for licensing the distribution of cannabis and cannabis retail stores to the provinces under section 69 of the Cannabis Act . The Act makes no mention or acknowledgment of, nor provides any accommodation for, First Nations, their inherent rights and authority on their land, or the unique needs and perspectives of First Nation communities. This is especially frustrating as most provinces and First Nations do not have strong government-to-government relationships due to years of legal challenges to provincial jurisdiction over gaming, alcohol licencing, and general taxing authority on First Nation lands.
Ontario’s Cannabis Licensing Act at least leaves a bit more room for First Nations to control their own participation in this industry; section 44 provides the Minister the discretion to enter into agreements with First Nations “with respect to the regulation of cannabis retail stores on a reserve, the licensing or authorization of persons to operate cannabis retail stores on a reserve or the enforcement of this Act and the regulations on a reserve.” The kinds of agreements that will come out of this discretion remains to be seen.
All that said, under Canadian law, First Nations communities that wish to have an Ontario- licensed store have to apply through Ontario’s Alcohol and Gaming Commission (AGCO). Although Ontario’s stated intention is to have an open market system where anyone can apply for and obtain a licence for a cannabis store, this has not been the case thus far due to shortages at the Ontario Cannabis Store (OCS), Ontario’s sole wholesale distributor of cannabis (if you want to buy (legal) cannabis in Ontario, it comes from OCS). So, Ontario held two lotteries, the first in January 2019 and the second in August 2019. No stores were allowed in First Nations communities in the first round of the lottery, which was exclusively for communities of over 50,000 people. In the second round of store allocations, First Nations were finally allowed to participate: in July 2019, the AGCO allotted eight stores that would be situated on First Nations reserves. Unlike the lottery process for the rest of the licences, the opportunity to apply for these licenses was given out on a first come, first serve basis, starting at 9:00 a.m. on July 31. It is my understanding that all of the licenses were spoken for in less than 15 minutes—meaning the fastest typists got their stores. Also unlike the lottery process, readiness and ability to open a store in short order were not taken into account, nor was any effort made to have the stores evenly spread between communities across the province. As a result, some neighbouring communities will be opening competing stores, while parts of the province remain without access to an Ontario-licensed cannabis store at all.
This doesn’t mean that Ontario’s First Nations are not participating in the cannabis industry. To the contrary, many have decided that the best way to ensure their community’s safety concerns are appropriately addressed while participating in the industry is through exercising their inherent jurisdiction and creating their own laws and commissions, and licensing their own cannabis businesses. Many of these cannabis regulatory frameworks are still in the early stages of operating. It remains to be seen how Canada and Ontario will interact with these cannabis industries created and run by First Nations, and what impact they will have on the unlicensed cannabis dispensaries that continue to operate in many parts of the province.
Several dialogues are underway between First Nations, Ontario, and Canada. Most of the discussion is about jurisdiction as it relates to taxation—as many First Nations see their reserve territories as “tax-free” zones—as well as jurisdiction to licence businesses on-reserve generally. With the threat of unlicensed activity and grey markets, proactive First Nations are socializing their jurisdiction to other governments as the only legitimate authority to balance the need for licencing with the need for more accommodations to allow their members access to this much-hyped industry.
What we do know is that this is a new and quickly evolving regulatory field, and it will be exciting to see where it goes in the coming months and years.