Agricultural Regulatory Change May Affect BC Wineries

This regulatory update covers a recent policy change that may affect BC wineries. The policy change relates to the permissible uses for alcohol production (i.e. wineries) on property that is contained in the Agricultural Land Reserve (ALR). 

ALR Policy Change. In December 2018, the Agricultural Land Commission posted a new policy that covers the operation of alcohol production facilities (including wineries) that are located on ALR land ("Policy L-03 - Alcohol Production Facilities in the ALR"). This applies to many, if not most, BC wineries. The new policy can be read and downloaded here: ALC Policies and Bylaws. The change that wineries may wish to review is the addition of new criteria relating to the allowable "development area" for a winery on the particular parcel of ALR land upon which the winery facility is located. The new policy permits a maximum of 5% of the parcel to be used for the "development area". The calculation only includes the parcel on which the production facility is located and does not extend to other land owned or leased by the winery. The definition of development area is very broad and includes all buildings, roads, parking areas and landscaping. For example, if a winery is located on a parcel of ALR land that is 10 acres, it would be permitted a development area of 0.5 acres. Many existing wineries may be off-side with this new rule. While I would not expect the ALC to enforce the policy change in respect of existing facilities, this change may affect new winery projects and any proposed changes to existing wineries. 

BCLDB Manufacturer Info. I also note that the BCLDB has now added a section to their web site that provides information and documentation on some of the policies that they administer that relate to BC manufacturing: Info for BC Liquor Manufacturers. Particularly, there is now publicly available information relating to the categorization of wineries in BC as either "commercial" or "land-based". For example, the sales agreements for both types of wineries are now available as well as the land-based winery criteria and direct delivery information (see BC Manufacturers - Sales Agreements). This is a positive step in respect of the availability of this information to industry (although I note that the 2018 BTAP report, which I chaired, recommended that all manufacturer regulation be centralized at the BC LCRB).

 

Canadian Budget Bill Includes Removal of InterProvincial Shipping Restriction

As noted here earlier, the Canadian Government indicated in its Federal Budget 2019 that it would amend the Importation of Intoxicating Liquors Act ("IILA") so as to remove the federal prohibition on the shipment of alcohol between provinces. The actual text of the Budget implementation bill was released last night. As indicated, the Budget Bill carries through on what was promised. Section 3(1) of the current version of the IILA prevents the shipment or transport of any alcohol into Canada or between provinces unless the alcohol is sent to the liquor authority (liquor board) in the destination province. Amendments made to the IILA in 2012 and 2014 created a limited exemption from this prohibition if the alcohol was intended for personal use and if the provincial laws in the destination province permitted it. Few provincial laws were changed to allow for the exemption (see Shipping Laws Article).

The Budget Bill proposes a more substantive change. It changes the IILA such that it only applies to shipments coming into a province from outside Canada. In other words, inter-provincial shipments of alcohol are no longer subject to the IILA prohibition at all. The earlier exemptions are removed because of this change in approach. These reforms would mean that if a winery is making a DTC shipment, then it would no longer be subject to any federal restriction on the shipment itself. The customer in the receiving province might be subject to any relevant provincial laws on the possession of imported alcohol (the constitutionality of such laws was upheld in the recent Comeau case) once the alcohol was received, but the actual shipment between provinces would no longer be prohibited. This is a positive change which will be welcomed by the wine industry if the Budget Bill passes and the changes are brought into effect.

I note on a practical level, that if these changes are to proceed, the federal government will have to pass the Bill before the end of June, when the House of Commons breaks for a summer recess. This is the last scheduled sitting of Parliament before the next federal election. There is also a news release on this issue: Canada Acts to Eliminate Barriers to InterProvincial Trade in Alcohol.

Federal Budget Promises to Remove Wine Shipping Restriction

The Federal Budget 2019 was tabled in Ottawa today. Of note to the wine (and alcohol) industry, the Budget Document promises at p.119 to change the federal law (the Importation of Intoxicating Liquors Act or "IILA") that restricts the shipment of alcohol between provinces. Specifically, it states:

To facilitate internal trade, the Government intends to remove the federal requirement that alcohol moving from one province to another be sold or consigned to a provincial liquor authority. Provinces and territories would continue to be able to regulate the sale and distribution of alcohol within their boundaries.

This promise has the potential to positively impact the regulatory restrictions that currently prevent consumers from purchasing wine or other alcohol from other provinces. The federal restriction is a core part of the regulatory regime that prevents DTC sales and shipment and if the federal restrictions are changed, then DTC could conceivably become easier. The devil is in the details ... and, of course, in whether this promise results in actual legislative changes (particularly given the fact that an election is looming). Don't hold your breath ... but hang tight for the details and cross those fingers.

Symposium on Canadian Wine in Global Markets

The upcoming Vancouver International Wine Festival's trade conference will host a symposium on February 27th dedicated to discussing the place of Canadian wine in global wine markets. This should be a fascinating discussion moderated by WineFest keynote speaker, Jon Bonne, and including panelists Chris Coletta (OK Crush Pad), Nik Darlington (UK importer), Janet Dorozynski (Trade Commission, Global Affairs Canada), Dr. Jamie Goode (UK wine writer and academic), as well as Sebastien LeGoff (well-known sommelier and director of Cactus Club's wine program). There are many other excellent events of interest to the trade all of which are listed on the WineFest's trade conference agenda here.  

BC Wine & Liquor Law Conference Feb 25th

The annual BC Wine & Liquor law conference will be held on Monday February 25th in Vancouver, which is the beginning of the week of the Vancouver International Wine Festival. Great line-up of topics and speakers this year including analysis of this year's liquor policy priorities from government, a report on the work of the Business Technical Advisory Panel, an update on interprovincial shipping, international trade developments, and a summary of the progress being made on geographical indicators in BC. As this will be the 10th anniversary of the conference, there will also be a special closing address from industry pioneer, Harry McWatters. Full details of the conference including registration links are here: BC Wine & Liquor Law Conference. Chris Wilson and myself will be chairing this year's conference.

There is a "50% off" discount for wine industry members: if you use the online registration form, change the Rate on the form (dropdown box) from "regular" to "industry member" and the reduced conference fee will apply.