Ontario’s Bill 36 – the Ford government over-reaches in their attempt to have Provincial Cannabis control on-reserve

On Thursday, September 27, 2018, the Ontario government introduced Bill 36: Cannabis Statute Law Amendment Act, 2018. This Act was brought forward with very little consultation with First Nations, and yet it is a clear threat to First Nations’ jurisdiction on-reserve.

This week, the bill is going through second reading in the Ontario legislature and OKT LLP is watching the matter closely. The following is an overview of some of the important elements of Bill 36. Given the lack of consultation and engagement with First Nation governments and the communities who may be impacted directly by this legislation, there is more than a little concern with the implementation of this licensing regime and the late opportunity for government to government based dialogue.

To be clear, this is not friendly legislation to First Nations’ economic and health and safety jurisdiction. The Act takes an approach that the Province is the regulator and wholesaler on an “exclusive right” basis across Ontario. Of course, most First Nations will strongly disagree.   The law regarding cannabis law across the country changes drastically on October 17, 2018, and both the federal and Ontario governments have done little in order to accommodate the concerns and interests of First Nations, let alone make any room for inherent First Nation jurisdiction.

The pre-cursor to this Bill is legislation passed in 2017 by the former Ontario government, and Bill 36 amends these Acts to move away from a public retail model and to deal with unlicensed retail dispensaries across Ontario. In public statements, Ontario has closed any avenue or discussions about these dispensaries becoming licenced if the dispensary continues to operate “unlicensed” after October 17, 2018. Some First Nation leaders have been advocating for retail stores, as many First Nations have witnessed the economic opportunity these dispensaries have created, but also, many Chief and Councils and communities understand the importance of regulating this activity through First Nation laws and authority.

Consideration will need to be made about whether and how the following section will may apply on-reserve:

False representation as authorized cannabis retailer

8.1 No person other than an authorized cannabis retailer may use the cannabis retail seal prescribed for the purposes of subsection 7 (2) of the Cannabis Licence Act, 2018, or otherwise represent themselves to be an authorized cannabis retailer.

The “retail seal” will be used to evidence that the cannabis purchased for resale by the retail store was purchased “from the Ontario Cannabis Retail Corporation, in the packaging in which it was purchased from the Ontario Cannabis Retail Corporation.”   This exclusive right as a wholesaler of cannabis is found in section 19 of the Cannabis Licence Act in Bill 36.

Will Ontario afford the time and resources to meet on a government to government basis with First Nations who have been working at exercising their inherent jurisdiction and/or bylaw making powers to regulate cannabis on-reserve?

Nation to Nation was Forgotten

Canada’s legalization framework announced in 2016 allowed Ontario a certain jurisdiction in regards to retail stores, but Canada’s legislation does not explicitly authorize Ontario to licence retail stores on-reserve. An important note is that this was all done within a federal-provincial-territorial framework without observing Article 19 of the United Nations Declaration on the Rights of Indigenous Peoples:

States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them.

Canada, should have ensured that within the legalization regime of cannabis across the country, that First Nations’ jurisdiction to protect their communities, create economic opportunities, and to exercise their own right to self-determination would have been given the space to operate effectively. This requires advocacy on the part of the federal government to advance the law-making powers for First Nations within these frameworks. Unfortunately, none of this happened, and now Ontario is taking unfair advantage by attempting to create its own “exclusive rights” through Bill 36 and the Ontario Cannabis Retail Corporation.

Unfair Competition for Jurisdiction

Ontario is aware that First Nations have created their own regulations (laws or bylaws) around the consumption of tobacco and smoking tobacco in public places. Clearly, around the subject of tobacco, a plant of traditional use, First Nations have jurisdiction to govern on-reserve health and safety issues through their inherent jurisdiction and the Indian Act. Ontario’s Smoke-Free Ontario Act, 2017 may not be a law of general application on-reserve if the First Nations regulate such activities on their reserves and within their territories.   Of course, bylaws only apply to the reserve boundaries, but this is a serious consideration for First Nations around cannabis regulatory authority. There is a complex and important jurisdictional issue under the Indian Act in relation to cannabis as an “intoxicant”, that will require detailed legal advice to ensure that First Nations exercise any moratorium or prohibition of cannabis carefully.

It is telling in the structure of the bill that the Province of Ontario considers First Nations to be subordinate to municipal governments. Sections about municipal powers in relation to cannabis proceed the sections (43 and 44) about Indian reserves in Ontario.

Section 43 states: a “council of the band may in relation to a reserve request that the Registrar not issue retail store authorizations for cannabis retail stores to be located on the reserve.”

Most First Nations take the position that Ontario cannot control cannabis on-reserve. Section 43 partially recognizes First Nation jurisdiction to deal with the health and safety concerns of dispensaries on reserve.

The Act does not however recognize First Nations’ economic jurisdiction regarding cannabis on reserve. Section 44 allows for “arrangements or agreements” between Ontario and a “council of the band with respect to the regulation of cannabis retail stores on a reserve, the licensing or authorization of persons to operate the stores or the enforcement of the licensing scheme on a reserve. “

This section appears to presume that Ontario has the power to constrain the ability of the many First Nations who are enacting their own bylaws or cannabis control regulations on their own because Ontario is responsible for making regulations about cannabis retail stores in the province. This is an over-reach that is inconsistent with First Nations’ jurisdiction.

Further, these provisions and the failure to address First Nations’ economic jurisdiction regarding cannabis will effectively bar First Nations from sharing in any wealth creation and economic development around cannabis within the existing regime.

The new Cannabis Regime must be Co-Governed

The Cannabis Control Act, 2017 should not act as a law of general application in the many First Nations that enact their own bylaws and “Cannabis Control Laws” themselves. This is the strong assertion made by many of our clients and we at OKT LLP are working hard to support this commitment to First Nation jurisdiction.

First Nations would be well-served by a special meeting on cannabis with Ontario. Bill 36 needs to be refined and clarified on a government to government basis. This new regime utilizes machinery of government that has not served First Nations well. The new Corporation could have an Indigenous representative appointed to the Board.

Ontario’s new legislation defines “authorized cannabis retailer” to include only the Ontario Cannabis Retail Corporation or a holder of a retail store authorization under the legislation. First Nations who do not enact their own bylaw or Cannabis Control Law may decide to encourage business and individuals to become licensed under the Ontario legislation. The issue that must be resolved: how First Nations’ cannabis control laws and cannabis-related bylaws will be respected within Bill 36. In the decade where we should be considering the revitalization of Indigenous Law, this type of over-reach into First Nations’ jurisdiction is more than troubling.  

Other enforcement issues that must be resolved with First Nations include:

• the authority of the police to close the premises where there was a contravention of the Act(s).
• upon conviction a fine of “not more than $250,000” for corporations and a fine of “not more than $100,000 or to imprisonment for a term of not more than one year, or both” for individuals.

Most offences are in regard to operating within a licence as: retail operator, retail manager, or as an authorized retail store. The licensing powers involve application approvals/renewals, inspections and investigations which certainly should involve some form of coordinating with First Nation governments in order to work on-reserve. The Cannabis Control Act, 2017 should not act as a law of general application in the many First Nations that enact their own bylaws and “Cannabis Control Laws” themselves. A number of First Nations will resist provincial authority and control within their territories, especially if provincial law takes on a quasi-criminal law power. A “government to government” relationship requires much more work between “partners” to ensure that Bill 36 is recognized as legitimate law in First Nations.

It is frustrating that the governments of Canada and Ontario have not prioritized the protection of First Nation jurisdiction in this new legalization regime. The frustration will be shared across Ontario if there is not a renewed commitment for government to government discussions between First Nations who are exercising their jurisdiction under the Indian Act, their inherent jurisdiction, or both sources of jurisdiction to control and license cannabis within their territories.

– Sara Mainville

This blog is provided for informational purposes only and should not be considered legal advice. Get in touch at www.oktlaw.com for further information.