CETA Not Likely to Affect BC Wine Industry

Some recent media reports have speculated, based on leaked text, that the trade agreement between Canada and the EU (the Comprehensive Economic & Trade Agreement, more commonly referred to as CETA) may affect or restrict the BC wine industry (see: Canada's Wine Industry May Face Restrictions). It is not possible to comment with certainty until such time as the official text of the agreement is made public. However, based on my reading of the leaked text, it is unlikely that CETA will have any significant effect upon the BC wine industry. The media reports focused on the fact that CETA may limit the number of private outlets that sell wine. In respect of BC, the supposed limit is set at 60 of such stores. However, this restriction only applies to stores that sell exclusively Canadian wine (in BC, these are the VQA stores and a smaller number of tourist wine stores). The limit does not apply to the vast majority of BC's private liquor stores which sell a range of products from various countries. The limit of 60 is, in fact, considerably greater than the number of such stores that are currently operating (which is about 20). As such, CETA preserves the existing exclusive distribution channels for domestic wine in these private retail stores and it also preserves the ability of wineries to sell from their own tasting rooms (direct delivery). As a result, there appear to be very few effects on the BC wine industry. CETA may, in fact, provide benefits to BC wineries that use European products in their manufacturing processes as any Canadian tariffs on those products will be removed. Some media outlets correctly reported that there will likely be little effect: see Leaked Document of Canada EU Trade Deal. And see this previous article on the trade agreement.

Quebec Rejects Direct Wine Shipment

The Quebec government issued a new regulation today that governs the interprovincial transport of alcohol to Quebec consumers. The regulation permits the importation of up to 9 litres of wine per trip but restricts this to 'in person' transport of the wine (i.e. the regulation does not allow direct to consumer shipment of the wine). As a result, Quebec consumers will remain unable to import wine from other provinces unless they are actually travelling to another province to fetch the wine. To date, only two provinces have embraced the spirit of a free trade in Canadian wine: BC and Manitoba. Please check this page for updates: Shipping Law Update.

Federal Canadian Shipping Law Amended for Beer, Spirits

The federal Canadian law that restricts the interprovincial shipment of alcohol has been further amended, effective last Thursday. The Importation of Intoxicating Liquors Act (the "IILA") previously contained an absolute prohibition on the interprovincial direct to consumer shipment of all alcohol products. The IILA was amended in 2012 by Bill C-311 which created an exemption for the shipment of wine between provinces for personal use, subject to provincial laws. The IILA has now been amended again so as to extend the exemption for wine to also include beer and spirits. The new amendment was contained in the omnibus federal budget Bill which received royal assent on June 19th. The provisions related to IILA can be viewed here: IILA Amendment. Of course, it remains to be seen how effective these changes will be as the provinces have, for the most part, created numerous restrictions to try to prevent Canadians from ordering alcohol from other provinces: see Shipping Law Update here

How Will BC Liquor Law Changes Affect Wineries?

The BC Government is moving quickly on the implementation of a large number of changes to BC's liquor laws and policies (see: BC Liquor Law Reforms: Further Details and Timeline). How will the changes affect BC's wineries and vineyards? Sign up for MNP's annual wine industry workshop to find out. The workshop is complimentary for wine industry attendees and features a great line-up of speakers including Geoff McIntyre (of MNP), Bert Hick (of Rising Tide Consultants) and myself, Mark Hicken. Hope to see you June 18th at the Penticton Lakeside Resort: Sign up here.

Canadian Wineries Need a Resolution for Shipping Law Mess

Recent developments have made it clear that Canadian wineries, and Canadian wine consumers, need a resolution for the country's wine shipping law mess. Back in June 2012, there was great optimism in the wine industry because the federal government had amended the Importation of Intoxicating Liquors Act (using Bill C-311) to create a national personal use exemption for direct to consumer wine shipments between the provinces. These changes were passed unanimously (!) by both the House of Commons and Senate. At the time, it was hoped that the federal changes would herald the start of a new era under which all Canadian consumers would be able to direct order wine from other parts of their own country, just like they can in nearly all other places in the world. Unfortunately, the changes to the federal law allowed the provinces to impose their own restrictions on to the national exemption. Almost immediately after the federal change, both BC and Manitoba opened their borders to allow interprovincial shipments. Regrettably, each of the other provinces dragged their feet in various ways, most frequently by issuing "policy statements" that disavowed the permissibility of inter-provincial shipments.  

The situation has sadly gone from bad to worse recently. At the end of February of this year, the Alberta government quietly passed changes to its relevant regulations and issued another policy statement indicating that they would not allow direct to consumer shipments despite the fact that Alberta law clearly allowed such shipments previously (see: Alberta Attempts to Reverse Shipping Law Progress). These changes attracted little attention in Alberta but my guess is that they will prove to be very unpopular amongst Alberta consumers (and voters) who historically have embraced a "hands-off" approach to government regulation. More recently, in a somewhat astounding move, the Newfoundland government has charged FedEx with the offence of shipping "contraband" wine from BC into Newfoundland, presumably as part of a direct to consumer shipment: see FedEx Charged in Nfld for Shipping BC Wine. Both of these developments are unsettling because they show that provincial governments continue to exhibit both: 1) a Prohibition era mentality under which they treat wine as an illicit product from which local citizens need protection, and 2) a protectionist approach to free trade within Canada by treating wine from another province as if it is a "foreign product". On a global scale, these problems are embarrassing. Can you imagine telling a winemaker in Bordeaux that he cannot ship wine to Paris? Or telling a Tuscan vintner that she cannot ship wine to Milan? Canada has now signed free trade agreements with the U.S. and the EU ... but provinces like Alberta and Newfoundland continue to prevent free trade within the country! Under Alberta law, it is now easier to have wine direct shipped from the U.S. than it is from B.C.: unbelievable!

Canada badly needs to dismantle these short-sighted and parochial attitudes by forcing the provinces to enter the modern era. In the United States, the individual states were forced to do just that by a Supreme Court decision (Granholm v. Heald) which declared inter-state barriers to direct shipments as unconstitutional. In my view, it is likely that a similar result would be reached in Canada should the constitutional issue ever go to court. Perhaps FedEx will fight the Newfoundland government and get that victory? Or perhaps a group of wineries will bring such a legal challenge? In the absence of a court case, the federal government could also act. The simple solution would be for the feds to exercise their exclusive power over inter-provincial trade and to further amend the Importation of Intoxicating Liquors Act. Instead of allowing the provinces to circumvent the spirit of the changes, a fixed national personal exemption should be created at the federal level such that all Canadians would be free to order reasonable amounts of wine for personal consumption from other provinces without provincial interference. The sky would not fall (as it has not in nearly all other countries in the world which allow this). Indeed, both BC and Manitoba have now had open borders for almost 2 years. Neither of those provinces has experienced an apocalypse nor, for that matter, any decrease in provincial liquor revenues.