Pot shops sue government to curb the black market
Government has failed to regulate cannabis on Indigenous lands, retailers say
Licensed cannabis retailers this week sued the B.C. government for $40 million over its alleged failure to regulate weed on Indigenous land.
The lawsuit filed in BC Supreme Court lists as plaintiffs 14 different numbered companies that operate cannabis shops in the Okanagan and Shuswap regions.
The named defendants are B.C.’s attorney general and public safety minister, plus the provincial Community Safety Unit, which is responsible for enforcing the Cannabis Control and Licensing Act.
The lawsuit alleges the CSU has failed to enforce the act by allowing the proliferation of unlicensed shop on Indigenous lands, which has had a “deleterious effect on the legal retail industry.”
“Licensed retailers face a significant regulatory burden and compliance costs to obtain and maintain their licenses to sell retail cannabis and operate their retail locations,” notes the lawsuit.
Those burdens include background checks, financial integrity analyses, a plethora of fees, strict guidelines for store layouts and a requirement that licensed retailers purchase their products from the B.C. government at a 15% markup.
“Licensed cannabis retailers accept these costs and regulatory burdens in the interest of protecting the legal cannabis industry, and on the understanding that the defendants have undertaken to safeguard their investment in operating licensed cannabis retail locations by enforcing the Cannabis Control and Licensing Act throughout the
province,” argues the lawsuit.
Unlicensed retailers, on the other hand, don’t have to follow the same rules, particularly around sourcing product, “leading to significant risk to the public.”
Without providing calculations, the lawsuit suggests each licensed retailer that’s a plaintiff in the case is losing $500,000 a year to the black market, resulting in the overall $40-million claim.
It goes on to allege the B.C. government initially “misled” licensed retailers to believe it would go after unlicensed shops, but then failed to do so.
The retailers even went so far as to create an online database of dozens of unlicensed shops in the Okanagan and sent the addresses to the B.C. government, but again saw no action.
At least six of the unlicensed cannabis shops in question are located on Penticton Indian Band lands. The PIB declined comment Friday.
To the north, so many pot shops have popped up on a stretch of Westside Road through the Okanagan Indian Band reserve near Vernon that it’s been dubbed “The Green Mile.” The OKIB also declined comment Friday.
First Nations elsewhere in B.C. have created their own cannabis licensing schemes based on their understanding they aren’t subject to provincial legislation.
A spokesperson for Public Safety Minister Mike Farnworth didn’t respond to a request for comment Friday.
Farnworth admitted in June 2021 that he had directed to Community Safety Unit teams to take a softer approach to illegal shops on First Nations lands to help advance the larger goal of reconciliation with Indigenous people.