Indigenous Cannabis: Revitalizing First-Nation Economies Through Legalization

Jonathan Araujo and Jacob Taylor (Photo by John Hryniuk for Leafly)

On a Tuesday afternoon in late August, Jacob Taylor takes a call in his truck. This is not an unusual act. Taylor, who is one half of the Pontiac Group, a First Nations-owned and -operated socioeconomic development firm, has been getting called a lot lately.

“There is an undeniable sense within the First Nation community of not being left behind,” says Jacob Taylor, co-founder of the First Nations socioeconomic development firm the Pontiac Group.

With his partner, Jonathan Araujo, the Pontiac Group supports on-reserve business opportunities, working with both communities and outside corporations. One of those partnerships is the agreement between Northern Ontario’s Wahgoshig First Nation and Delshen Therapeutics, a licensed cannabis producer.

In late 2015, Wahgoshig First Nation became the first Indigenous community in Canada to sign a community benefits agreement with a cannabis company. The community invested $2 million into Delshen in the form of a convertible debenture  (that’s a loan that can be converted to stock).

The deal has advantages for both sides. Delshen received needed capital, while the community received a First Nations seat on Delshen’s Board of Directors, job-specific education and opportunities, and funding for a community drug and alcohol prevention and rehabilitation program.

Since that deal was struck in 2015, the Pontiac Group has worked to bring in 48 additional First Nations investors. “We are building this into an Indigenous-branded company,” Taylor says, describing Pontiac as “an Indigenous voice in the cannabis space.”

RELATED STORY
Phil Fontaine: Fostering First-Nation Reconciliation Through Cannabis

As he speaks, Taylor is driving to a treaty conference in Northern Ontario where hundreds of Indigenous leaders from across Canada will be gathered. There’s still a stigma that surrounds the plant, Taylor says, due to the efforts of colonization and Catholicism. Having a chance to speak with the chiefs about the work the Pontiac Group is doing offers an opportunity to challenge those perceptions. “We explain that Delshen is medically focused and pharmaceutically focused and this helps us to get First Nations on board because they understand that every plant has a healing purpose.”

The chiefs also see the economic potential, Taylor says, and an opportunity to build business capacity into their communities and move away from paternalistic money structures.

“A lot of communities have investment policies that limit their ability to get involved,” Taylor says. “Here in Canada, and in the rest of the world, that’s been one of the ways traditionally that Indigenous people have been kept out, and in a state of oppression.” The Pontiac Group views Canada’s emerging marijuana market as an opportunity to revitalize First Nation economies.

“There is an undeniable sense within the First Nation community of not being left behind,” Taylor says.

A Win-Win Situation

Wahgoshig First Nation, with a population of around 250 people, is located 400 miles north of Toronto, near the western border of Quebec. Local industries are traditional and non-renewable, mostly mining and forestry. Delshen moved into a former pine nursery, a 40,000 square foot facility overhauled in a multi-million dollar renovation. The building now represents a new investment and a new opportunity.

“This will pay dividends in the future for us. It represents one of our best economic development opportunities.”
Mylon Ollila, Executive Director at Wahgoshig First Nation

“This investment in medicinal marijuana definitely did represent a departure from traditional economic development,” says Mylon Ollila, the Executive Director at Wahgoshig First Nation. “Not everyone wants to be a miner or a forester and those are industries that dominate Northern Ontario. This offers excellent careers in another field close to home. We’re looking at whole new skill sets that need to be developed.”

Ollila also saw the opportunity to leverage a good deal for the community. He knew Delshen would be forced to raise capital privately—cannabis producers can’t just roll into the bank and ask for a loan—so the community worked with Delshen to figure out a deal that made sense. The loan is secured by the facility and convertible into shares once Delshen receives their production license. “This will pay dividends in the future for us,” says Ollila. “It represents one of our best economic development opportunities.”

RELATED STORY
How a Visionary Cannabis Producer Became This Canadian Town’s Biggest Employer

Due to their exemplary financial performance, Wahgoshig First Nation is able to access financing through the First Nations Finance Authority at very low rates. Ollila describes it as a “pretty elite club,” with only a handful of borrowing members in Ontario.

“It gives us access to financing that is quite rare among communities. Because of course how does a community borrow money when all the assets are on reserve? How does a bank put a lien against an asset that they can’t use, like a community center? It has no value because it’s on reserve. This was an opportunity for economic development that not many First Nations communities can do.”

Rectifying History

In 1876, the Canadian government passed The Indian Act, a culturally destructive statute which gave the government control of Indigenous status, land, resources, and money. Though it has been amended significantly in the years since, the Indian Act, the Canadian government acknowledges, is still one of the greatest barriers of economic development on reserve lands.

“Now you have industries and businesses that are attracted to First Nations because of the preferential contracting that they have.”
Mylon Ollila, Executive Director at Wahgoshig First Nation

In 2004, in a case between the Haida Nation and British Columbia, the Supreme Court of Canada ruled that the Crown has a duty to consult with and accommodate Aboriginal groups before exploiting lands to which they may have claims. Industry could no longer pillage the land unrepentant. “What that case did,” Ollila says, “was force impactful industry to do business with First Nations.”

“Now you have industries that have relationships with First Nations and businesses that are attracted to those First Nations because of the preferential contracting that they have,” he says. “That creates joint venture partnerships and First Nations are able to build on that by further investing their own equity into these partnerships, not just to create more revenues but to create more business capacity, as well. Like us, they are able to diversify and create their own companies and run their own businesses.”

RELATED STORY
What Can Canada Learn from US Legalization?

NK’Mip Cellars, the first aboriginally owned winery in North America, is run by the Osoyoos First Nation in B.C. The Vuntut Gwitchin First Nation in the Yukon owns 49% of the Air North airline. Membertou First Nation in Nova Scotia has diversified its economy by building local businesses, including a convention and business center. Despite an oppressive system operating against them, entrepreneurs like the Pontiac Group have found a way to flourish.

The emergence of a new industry, Ollila says, offers a chance to generate new partnerships. “If there’s any role for government in First Nations economic development, it’s in facilitating industry relationships,” he says. “[The Canadian government’s] overseeing this emerging market so why not use this opportunity to further First Nation economic development?”

Diversifying the Cannabis Landscape

Canada’s cannabis industry is almost exclusively white. With 49 First Nation communities signed on, due to the work of the Pontiac Group, Delshen is an outlier—and likely Canada’s most diverse cannabis company.

The Pontiac Group is currently building five facilities across the country with First Nations partnerships.

More diversity is on the way. The Pontiac Group is currently building five facilities across the country with First Nations partnerships.

The aim of the Pontiac Group, Taylor says, is to bring First Nations together for nation development, and to create revenue streams that can go back into the community. The deal between Wahgoshig First Nation and Delshen, Taylor says, “is an economic engine for community well-being.”

Ollila agrees. “We looked at Delshen because we understood that the market for medicinal marijuana is only going to grow. Our investment in this industry is, I think, a real model for other First Nations. It’s something I see really paying off for the long term in Wahgoshig.”