WLFN Agreement

On September 21, 2020 the Williams Lake First Nation (“WLFN”) and the BC government entered into a landmark cannabis agreement (the “WLFN Agreement”) under Section 119 of the Cannabis Control and Licensing Act, SBC 2018, c. 29 (the “Act”).

Section 119 of the Act grants the Minister the discretion to enter into agreements with Indigenous nations with respect to cannabis regulation. The government-to-government WLFN Agreement is the first of its kind, and exempts WLFN from certain provisions of the Act, including by permitting WLFN to offer “farm-gate” sales of its own craft cannabis products. Farm-gate sales are not otherwise allowed under BC’s Cannabis Distribution Act, SBC 2018, c. 28, which requires licensed producers to sell their cannabis products in BC through the Province’s Liquor Distribution Branch.  The Agreement also provides that WLFN will be exempt from the “tied-house” rules of the Act, which prohibit persons from having a significant ownership interest in both retail cannabis stores and cannabis production facilities.  The WLFN will operate retail cannabis stores that offer a range of cannabis products from licensed producers across Canada as well as from their own production facility. The WLFN Agreement is an important development for First Nations in BC, many of whom have asserted their inherent rights to regulate and participate in the production and sale of cannabis in the province.

First, but certainly not the last

Although the WLFN Agreement is the first of its kind, many other First Nations in BC will surely pursue similar agreements with the Province, leading to a vibrant Indigenous cannabis market throughout the province unlike any other in Canada. It remains to be seen whether First Nations’ jurisdiction over cannabis regulation within their territories may be further expanded beyond the provisions of the WLFN Agreement or whether the Province will rest on its laurels by attempting to hold other First Nations seeking to enter into such agreements to similar terms.

Many First Nations in the province continue to operate and facilitate cannabis retail and production facilities within their territories and pursuant to their own laws, outside of the provincial and federal licensing regime (which was the case for WLFN prior to the WLFN Agreement). The Province may be hoping that further Section 119 agreements with First Nations will lead to a reduction in the cannabis grey market and a harmonization of Provincial and First Nation laws in relation to cannabis. However, other First Nations in similar circumstances may not wish to be held to the provisions or standards created by the WLFN Agreement, or to cede any jurisdiction they have asserted within their territories to the provincial or federal governments.

First Nation Cannabis Jurisdiction

Since the legalization of cannabis in 2018, there has been a great deal of uncertainty around how Indigenous communities fit into the federal and provincial regimes for the production and sale of non-medicinal (“recreational”) cannabis. As we discussed in our August 6, 2019 blog post: First Nations and Cannabis Jurisdiction: The Calm before the Storm?, the lack of consultation and accommodation of Indigenous interests prior to the enactment of federal and provincial cannabis laws has created issues around jurisdiction over cannabis-related activities on reserve, sharing of excise tax revenues, and priority for Indigenous business in licensing regimes. As a result, Indigenous communities across Canada have entered a grey area of the law in order to participate in the cannabis industry.

Many Indigenous communities are operating cannabis businesses that produce and/or sell cannabis products pursuant to their own laws; however, the conflict of these laws with provincial and federal laws, and jurisdictional issues related to Indigenous lands, places such businesses in uncertain legal waters in many instances. While some Indigenous businesses have applied for, and received, licenses within the current statutory framework and are lobbying for changes to the status quo, many Indigenous businesses are running “unlicensed” cannabis operations, relying instead in some cases on bylaws/laws passed pursuant to the Indian Act and/or their inherent jurisdiction. The fact remains that the potentially lucrative cannabis industry is too great an opportunity for Indigenous communities to ignore, and many communities have chosen to act in the absence of clearly stated jurisdiction and practices. The WLFN Agreement is the most recent development in this evolving area of law and provides certainty for WLFN that they are, in fact, operating lawfully.

Certainty to WLFN – What Now?

The WLFN Agreement is a positive development as it provides much needed clarity for WLFN and illustrates that the Province is interested in negotiating Section 119 agreements. That being said, WLFN and the Province negotiated the WLFN Agreement over the course of more than a year, and it may take other First Nations considerable time to settle similar agreements (especially if they wish to negotiate differing terms than those secured by WLFN). Plus, with the number of First Nations in BC looking to capitalize on the growing cannabis industry, it is likely an overwhelming task for the Province and its Cannabis Legalization and Regulation Secretariat to negotiate Section 119 agreements with each First Nation that wishes to enter into similar agreements as the WLFN Agreement.

Beyond the WLFN Agreement, the Province announced on September 20, 2020 that it will be establishing a cannabis sales program to assist licensed small-scale producers and Indigenous producers. The program is expected to be delivered in 2022; however, as the name suggests, the program is intended for “licensed” producers, and, again, those Indigenous businesses operating outside of the purview of the federal licensing scheme may not be captured by this definition. Potentially, this sales program could be a good platform for Indigenous engagement on existing issues within the federal and provincial cannabis regulation regimes.

It is unclear how the Province will proceed from here. We may see more Section 119 agreements in the future; we may see more enforcement of current laws and regulations; we may even see changes to current laws that come through court cases and challenges from First Nations, or through consultation with the federal, provincial and territorial governments. Currently, there remains a lot of uncertainty around jurisdiction and current practices. Only time will tell how these issues will be resolved. The WLFN Agreement will surely usher in new and exciting opportunities for First Nations in the province engaged in the cannabis industry.

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.