First Nations and Cannabis Jurisdiction: The Calm Before the Storm?

August 6, 2019 /

The legalization of cannabis for non-medicinal (“recreational”) purposes last year was greatly anticipated by many Canadians throughout the country. Concerns were raised by the Senate’s Indigenous caucus around the lack of consultation and accommodation in the drafting of cannabis laws, and despite their recommendation to delay legalization by a year in order to adequately address these issues, the ship has sailed into very rough waves.

Given the federal government’s “shoot first and ask questions later” attitude towards consultation and accommodation, Indigenous concerns were not adequately addressed, leaving issues around jurisdiction over cannabis-related activities on reserve, sharing of excise tax revenues, and priority for Indigenous businesses in licensing regimes unresolved.

A Perfect Storm

The lack of consultation and accommodation of Indigenous interests before the federal and provincial laws were passed has cast uncertainty around how Indigenous communities fit into these regimes. At the same time, Indigenous businesses (both Nation-owned and member-owned) have rushed to stake their claim in the potential lucrative cannabis industry, both as producers and as retailers of cannabis products. The lack of consideration for the jurisdictional issues and the race to market in the cannabis industry generally have created what I consider to be a “perfect storm” (cue thunder and lightning).

Many First Nation businesses throughout Canada (approximately 80-100) have forged ahead with “unlicensed” cannabis operations, relying instead in some cases on bylaws/laws passed pursuant to the Indian Act and/or their inherent jurisdiction. Others have applied for licenses within the current statutory framework and are lobbying the federal/provincial government for changes to the status quo that would recognize Indigenous jurisdiction and provide accommodations to Indigenous-owned businesses. A few are even operating outside of the law completely – whether federal, provincial or Indigenous!

Bud on the Rez

Provincial laws of general application (such as cannabis licensing laws) apply on reserve unless they conflict with federal laws or First Nation bylaws. Under the Indian Act, councils can pass bylaws for matters on reserve lands and could potentially pass a bylaw to usurp the provincial cannabis laws (solely for sales, but not production of cannabis). The issue is that production is regulated federally, and case law has unfortunately held that the Indian Act bylaws that conflict with other federal laws (such as the Cannabis Act) aren’t effective. Because the sale of cannabis requires federally-licensed production, there may not be a way to sell cannabis on reserve pursuant to an Indian Act bylaw.

Aboriginal peoples in Canada also have inherent rights to self-government, and some First Nations have relied on these rights to pass laws to produce or sell cannabis on reserve outside of the federal/provincial licensing regime. A right to self-government does not necessarily provide a corresponding right to pass laws that contradict federal or provincial laws. Although a First Nation has a right to determine its own governance laws, they may not have a right that flows from this to regulate any matter on reserve (such as criminal law for example). Other Aboriginal rights that would enable the production and sale of cannabis may be extremely difficult to prove and may be easily infringed by federal/provincial legislation.

So, what does this mean?

What we’re left with is a lot of uncertainty around jurisdiction and current practices. The politics involved play an important role in the discussion as well. Possibly because of the bungled consultation and accommodation by federal and provincial governments, there doesn’t seem to be any willingness from law enforcement organizations to actively enforce the federal and provincial cannabis laws on reserve…yet.

However, as the cannabis grey market turns to gold and more licensed producers and sellers begin operations (First Nations and non-First Nations alike), we may see more enforcement of current laws and regulations. On the flip side, we may see court cases and challenges from First Nations on these issues, or potential negotiations and changes that will allow non-licensed First Nations operators to transition into a new regime that respects Indigenous jurisdiction and autonomy. Time will tell on which side of the coin these issues land, but given the rocky position of the current federal government and upcoming election, the coming months may be the calm before the storm.

Want More?

For more information on this subject, or if you’d like to know how we can help your community or business navigate these issues, please contact Yvan Guy Larocque.