Indigenous cannabis entrepreneurs underrepresented in Canada, data suggests

February 24, 2023 · MJ Biz Daily

Entrepreneurs in Indigenous communities are significantly underrepresented within Canada’s cultivation and retail marijuana industry, new data compiled by MJBizDaily suggests.

MJBizDaily research also found that the country’s largest provinces by population – Ontario and Quebec – have not reached any government-to-government deals regarding cannabis regulation with First Nations since 2018, a potential factor for their general absence from the federally legal industry.

Among the 755 unique cannabis corporations licensed by Canada’s federal government as of last year – mostly cultivators and processors – only six were located in an Indigenous community, or 0.8% of all licensees.

And among more than 3,300 provincially authorized recreational marijuana stores across the country, approximately 24 were situated on First Nations reserves at that time, or 0.7% of the retailers in Canada.

The new data gives credence to claims by some Indigenous leaders that First Nations communities in Canada have been excluded from the economic opportunities and public health benefits stemming from the legalization and regulation of recreational marijuana spelled out under Canada’s 2018 federal cannabis law.

“We talk about reconciliation, but it hasn’t happened yet. There was an opportunity with the cannabis legislation,” Darwin Douglas, CEO of All Nations told MJBizDaily.

All Nations is one of the six federally licensed producers operating on a reserve.

Douglas said Indigenous participation is so low in the cannabis industry because meaningful consultation did not take place when the legislation was rolled out.

“The opportunity was to engage Indigenous people and nations, and consult with them on the legalization process, and understand how legalization and the building of this emerging cannabis industry was going to apply to Indigenous people,” he said.

“How the legislation would apply to Indigenous people on their title lands and territories was the opportunity to develop a system that works for everybody – the people of Canada, the federal and provincial governments, and the Indigenous nations and their jurisdictions.”

Delay denied

Before Canada legalized adult-use cannabis in 2018, the Senate’s Committee on Aboriginal Peoples requested the then-proposed bill be amended to address a lack of meaningful consultation with First Nations communities.

That committee’s report ultimately foretold many of the issues stalling First Nations participation in the industry today.

A request was made for a preferential licensing system for Indigenous-owned or -controlled entities, for instance, “to ensure that interested Indigenous communities have the appropriate tools to seize economic opportunities as they arise.”

The committee’s proposals were ultimately not accepted by the federal government.

Isadore Day, regional chief of Ontario for the Assembly of First Nations (AFN), previously told MJBizDaily that the federal government, provinces and territories “have not done anywhere near an effective job in engaging and considering us within the process.”

The AFN has said First Nations have inherent jurisdiction over economic development initiatives, both federally and provincially, and possess the authority to manage production, licensing and distribution of legalized cannabis.

“As it currently stands, (the federal Cannabis Act) makes no room for the inclusion of First Nations governments,” AFN noted before cannabis was legalized.

“The federal and provincial governments must recognize and respect First Nations sovereignty and jurisdiction over their reserves and traditional territories.”

At the time, AFN also called out the federal government for not including First Nations in its deal with provinces to share excise duty collected on the sale of cannabis.

“The lack of First Nations inclusion in the cannabis tax framework is a missed opportunity for the federal government to demonstrate its commitment to a nation-to-nation relationship that incorporates First Nations governments into the federation,” the organization said.

More recently, the Assembly called on the federal government to “recognize First Nations jurisdiction over cannabis and remove regulatory barriers that exclude First Nations from the marketplace.”

Jason Childs, associate professor of economics at the University of Regina, told MJBizDaily that First Nations were excluded from the law, noting that the text of the law mentions “Indigenous” only once – and that’s regarding the four-year review process, which itself started a year late.

“The fact is, they were excluded. They were not mentioned in any meaningful way,” he said.

“It shines a light on the larger issue of Indigenous-federal government relations.”

Huge interest

Douglas, the CEO of All Nations, said there remains a huge amount of interest among other First Nations communities in regulating their own cannabis industries.

He said First Nations should have had a carve-out to regulate their own businesses.

“Any (First Nations communities) we’ve interacted with do want regulation, whether that’s done by their own laws and regulations, or whether they want to harmonize some of their jurisdiction with the federal and provincial governments,” he said.

Some Indigenous communities choose to go down a licensing path with stores on reserves, outside of provincial laws and regulations.

Potentially hundreds of stores have been established in this way, which may be compliant with the laws of their respective First Nations communities, but still fall outside the scope of Canada’s Cannabis Act and provincial control.

Douglas said cannabis producers outside the scope of the Cannabis Act miss out on advantages of being part of a fully regulated and nationally legal market.

Those advantages include access to:

  • Trade opportunities with other First Nations.
  • More traditional banking resources.
  • Sources of financing, including capital markets.
  • Larger markets outside the province and internationally.

“I think it comes down to being able to participate in a larger industry, here within our country and internationally,” the All Nations CEO said.

“Having a federal license allows the business and nation to participate in the greater economics of Canada and the world, so we can export product, we can get a bank account at some of the major banks, and insurance.

“(Being licensed) also allows Indigenous communities to uphold the health and safety standards for the production and distribution of safe (cannabis) products,” he said.

Support needed

Douglas said the federal government offers helpful support to entrepreneurs interested in participating in the fully regulated industry.

One such service is Health Canada’s Navigator program, which provides assistance to “Indigenous affiliated” prospective licensed producers.

“It has given Indigenous businesses some support with the application process to enter the industry,” Douglas said of Navigator.

“I think the Navigator program helped, because it was a definite point of contact that helped navigate the system. It was useful.”

He said government could be doing more.

“I think there’s a lot of room to provide more support for Indigenous entrepreneurs and nations who want to enter this industry,” he said.

In Canada, the federal government regulates cannabis production while provinces manage retail distribution.

MJBizDaily reached out to the provincial governments to find out what they’re doing to include First Nations in the public health benefits and economic opportunities of cannabis regulation.

British Columbia

British Columbia’s cannabis law gives the province legal footing to enter into agreements with Indigenous nations with respect to cannabis regulation.

The province has entered into six government-to-government cannabis agreements, including with Shxwhá:y Village near the city of Chilliwack – where Douglas’ All Nations company is located – and Williams Lake First Nation, 250 kilometers (155 miles) south of Prince George.

Among almost 500 provincially approved legal cannabis stores in British Columbia, only about a dozen are on reserve land.

However, the fact that the province has Section 119 in its law and has entered into agreements with First Nations puts B.C. near the forefront in facilitating Indigenous economic participation in the burgeoning industry.

“B.C. is actively working with the First Nations Leadership Council and First Nation governments to address their cannabis interests and support the development of a strong, diverse and safe legal cannabis sector that is inclusive of Indigenous peoples,” a provincial spokesperson told MJBizDaily.

“These (government-to-government) agreements reflect B.C.’s commitment to reconciliation, economic self-determination for Indigenous peoples and their full participation in the cannabis sector.”

B.C. also amended licensing regulations to allow licensed retail stores to ship products across the province, which could “increase access to regulated cannabis in remote communities, including First Nations communities.”

The province also operates the Indigenous Shelf Space Program, which highlights products in stores from Indigenous producers.

Saskatchewan

Saskatchewan has also made efforts to include First Nations in the public health benefits and economic opportunities of cannabis legalization.

In December, the province proposed amendments to the Cannabis Control Act to allow First Nations to enter into an agreement with the Saskatchewan Liquor and Gaming Authority to establish their own marijuana regulatory authority that could grant retail permits on reserve.

Once established, businesses would be able to apply for a cannabis permit directly from the First Nation regulatory authority, rather than the authority run by the province.

Currently, there are no fully legal cannabis stores on any reserves in Saskatchewan, as the amendment is not yet in effect,

“The government of Saskatchewan shares with First Nations the goals of ensuring that cannabis is supplied safely and legally and of protecting minors and other vulnerable individuals in our communities,” a provincial spokesperson told MJBizDaily.

The province says the regulatory change will:

  • Serve to further undermine the illicit market.
  • Ensure that all Saskatchewan residents will have access to safe and legal cannabis products “by giving businesses operating under recognized First Nations regulatory frameworks access to federally regulated cannabis products.”

Quebec

Quebec operates a government monopoly on regulated cannabis stores, meaning only the province has the ability to open a “legal” store.

Quebec has opened no stores in Indigenous communities.

“As with any type of retail business, members of First Nations communities always have the option of shopping (online) at the SQDC (Société québécoise du cannabis) if they so desire,” a spokesperson for the province told MJBizDaily via email.

Like British Columbia’s cannabis law, Quebec’s law grants it the ability to enter into an agreement with First Nations communities whereby different regulatory provisions would apply to the community’s territory.

Quebec has entered into no such agreements.

Ontario

Ontario regulators have authorized only seven cannabis stores on First Nations reserves out of more than 1,700 stores in the province.

About 15 more are in the licensing pipeline.

The low level of access to a regulated supply of cannabis might be, in part, because the province has achieved no government-to-government deals with First Nations regarding marijuana regulation.

Nonetheless, a spokesperson for the province’s Ministry of the Attorney General said that “the provincial government remains committed to continued engagement with First Nations interested in developing their own approaches to cannabis to identify how the government can best support efforts to promote public safety and legal access to cannabis on First Nation reserves.”

The spokesperson added that Ontario has waived and, in some cases, reimbursed on-reserve cannabis licensing fees charged by the Alcohol and Gaming Commission of Ontario (AGCO) “to support collaboration between the province and First Nations governments with respect to the regulation of cannabis on reserve.”

“Ontario has and will continue to engage with First Nations communities and organizations to discuss interests, perspectives and concerns, and to consider opportunities for collaboration with respect to cannabis regulation.”

In 2019, Ontario amended Ontario Regulation 468/18 to allow for the authorization of up to 26 stores on First Nations reserves.

It’s unclear why only seven stores have been opened.

Eastern Canada

In the Eastern Canadian provinces of New Brunswick, Newfoundland, Nova Scotia and Prince Edward Island, there are only two fully “legal” cannabis stores in First Nations communities.

Nova Scotia has 45 stores across the province, and one of those in the First Nations community of Eskasoni.

A spokesperson for the Nova Scotia government said the “expansion of our (store) network supports improved access to legal cannabis in all communities across Nova Scotia, including First Nations communities due to the proximity of our stores.

“We also provide home delivery of cannabis across the entire province, including First Nations communities.”

Nova Scotia doesn’t appear to have entered into any government-to-government deals with Indigenous communities regarding cannabis.

Newfoundland and Labrador is the only other province east of Ontario that has any fully “legal” cannabis stores on a reserve.

The province would not say what it’s doing to facilitate access to safe, legal recreational cannabis in Indigenous communities.

The provinces of PEI and Manitoba did not reply to MJBizDaily queries regarding the regulation of cannabis on First Nations lands and any economic opportunities and public health benefits afforded to their respective communities.

A spokesperson for the Alberta government said that, among the province’s 750 stores, just three are in First Nations communities.

The province would not answer questions about expanding legal access to a regulated supply of recreational cannabis products in Indigenous communities, nor were questions answered about economic opportunities.

Alberta directed MJBizDaily’s queries to the federal government, even though the federal government does not oversee cannabis retail regulation. (Full Story)

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