An anonymous group of cannabis retailers are suing the British Columbia government. The lawsuit stems from what they say is a failure to enforce cannabis regulations. The plaintiffs are 14 retailers from BC and Alberta. They are seeking $40 million in damages. The lawsuit argues, “As a result of the defendants’ failure to enforce the Cannabis Control and Licensing Act, the plaintiffs have each suffered, and continue to suffer damages in the form of loss of income, and loss.”

The lawsuit is a shock to many, as BC’s legal cannabis sales were up 25% in February and over 118% compared with February 2020. Yet, enforcement on Indigenous lands is lacking, and that’s the crux of the lawsuit. 14 legal retailers are sore about consumers heading off to Indian Reserves for cheaper cannabis.

What Happened?

This is, of course, entirely the fault of the BC government. They have admitted that they’ve been hesitant to enforce cannabis laws on First Nations land.

BC’s Minister of Public Safety, Mike Farnworth, said: “Undertaking enforcement action on First Nations lands without the support of community leadership will likely lead to issues being litigated and strain relationships with First Nations communities. Even more, this approach is unlikely to achieve compliance and Indigenous participation in the legal cannabis industry.”

Many First Nations communities justify their management of cannabis production and sales without the Crown’s authority. But whether justified or not, this issue opens the door to jurisdictional challenges between the two powers. Hence, BC’s Community Safety Unit (CSU, the cannabis enforcement bureaucracy) isn’t prioritizing enforcement on Indigenous lands.

Are Cannabis Retailers Justified in Suing the BC Government?

Retailers have expressed their frustration with unlicensed stores in the past. They argue that it is impossible to compete with unregulated cannabis stores. And one can see their point: legal cannabis retailers have to abide by numerous regulations, most of them unnecessary. And they have to pay exorbitant taxes. With over 100 unlicensed stores estimated to be operating, this issue is more prevalent in the BC interior.

Adding insult to injury, the BC government actively works with First Nations under section 119 of BC’s Cannabis Control and Licensing Act. In agreements like the one with Williams Lake First Nations, the cannabis company can sell products directly from their facility. Known as “farm-gate” sales, this is only available to First Nations at the moment. The BC government funded the First Nations cannabis farm with a $500,000 grant.

Yet, Farnworth argues that “the Community Safety Unit is working to shut down the illicit market and making an impact. More than 170 unlicensed stores have closed because of CSU actions. This includes taking enforcement actions against over 75 unlicensed cannabis retailers, removing over $25 million worth of cannabis products from the illegal market, and issuing 42 administrative monetary penalties.”

BC Government Out to Lunch

Cannabis Retailers Suing Government

Farnworth doesn’t mention that these 170 unlicensed stores were mainly in the lower mainland. In many cases, the stores had been serving their community for years. They were the preferred retailer over the competition.

For example, one unnamed BC town had three unlicensed stores on the eve of legalization. Two were well-known, trusted, and owned by respected community members. The third was the “sketchy” one that was brand new and had – alleged but never proven – connections to organized crime. Can you guess which one the BC government approved? And which two were driven out of business by the CSU?

Regarding the lawsuit, David Milosevic of Milosevic Fisk LLP, the legal team for the plaintiff, had this to say: “Our view of the claim that’s being advanced is that proper enforcement by the government of British Columbia will benefit all of British Columbia’s communities, both on reserve and off reserve.”