Among the natives of coastal and nearby interior British Columbia and far Northwestern US, the potlatch was an important social and economic ritual. The principal events included ceremonial feasting, gifting and displays of wealth including destruction of valuable items. Rich people/tribal leaders demonstrated their affluence by displaying their wealth and feeding and providing gifts to villagers, extended family and visitors from other villages. Many times tribal leaders from other clans, moieties or villages were invited. The ritual often celebrated dates of family life events. Announcements of the naming of children or birthdays were common causes for the potlatch.

In the celebration, the host conspicuously displays wealth (think costly signaling) by providing food, dance, and gifts and in some cases ritually destroying wealth (stories regale about chopping up coppers and throwing them in the ocean). In return, the host gains/maintains prestige as the guests demonstrate loyalty (by attending), and provide public witness to the presentation of family history, lineages, crests, family members, alliances and, really, anything the host chooses to celebrate.

The potlatch varied dramatically among the native people, but among some it was so important and economically influential that anthropologists make reference to a "potlatch economy". This write-up provides an adequate description of the ceremony and leads us to the controversy, which is the ban that the Canadian government placed on the ritual in 1885.

In one instrument of enforced assimilation, Indian Agents prohibited the ritual putatively because it was "barbaric, wasteful and un-Christian". The ban was only effective in part, as the natives continued with ceremonies into the 1900s.

Then the Canadian Government flexed their muscles (from the Simon Fraser entry cited above):

The Canadian government’s ban on potlatching came to a head at Christmas in 1921 when Dan Cranmer held the largest potlatch recorded on the coast of British Columbia at the village of ʼMimkwa̱mlis (Village Island). Federal authorities caught wind of the event and forty-five people were arrested. The participants were given a choice of either surrendering their potlatch regalia— to prevent them from having future potlatches—or going to jail. Twenty-two people went to jail (U'mista 2015). The confiscated collection of masks, rattles, and other treasured regalia and family heirlooms totaled over 600 pieces. The treasures were transported out in the open by boat and were exhibited as trophies on benches in Parish Hall of the Anglican Church in Alert Bay. This was particularly difficult for the Kwakwaka'wakw as the items were considered sacred, and strict tradition required that they be stored away and out of sight when not in use (U'mista 2015).

In a protracted dispute, Natives manipulated the potlatch timing to coincide with the Christian holidays arguing that they were merely celebrating like white folk. Others held the events less conspicuously. However, native people were jailed, important family regalia and wealth items (masks, crests, costumes, etc.) were confiscated permanently, and the very personal and important aspects of a peoples culture were taken from them. The prohibition was in effect until 1951. That's my understanding of it.

Tsimshian Culture: A Light Through the Ages By Jay Miller

Umista Cultural Society 2015 Living Tradition: The Kwakwaka’wakw Potlatch of the Northwest Coast. The Virtual Museum of Canada. http://umistapotlatch.ca/nos_masques_come_home-our_masks_come_home-eng.php

Fighting with Property: A Study of Kwakiutl Potlatching and Warfare, 1792-1930 By Helen Codere, Vincent F. Kotschar, Marian W. Smith

Edit: added references