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.

BC Liquor Changes: Off Site Storage Now Permitted

BC's Liquor Control & Licensing Branch has issued a status report on changes that are coming as a result of the liquor policy review: see policy changes summary here. Also, a new policy directive permits off-site storage effective immediately. This is great news for BC's liquor retailers and licensees who will no longer be required to keep all liquor inventory within the licensed area. The policy (PDF here) is straightforward and simply requires that the retailer or licensee register the storage location with the LCLB. 

FedEx Charged in Nfld for Shipping BC Wine

While there are scant details in the media report, it appears that FedEx has been charged in Newfoundland for shipping wine from BC to that province. See the story: "Courier Charged with Bringing Contraband Liquor to NL". If the case proceeds, there are a number of obvious defences including a possible constitutional challenge based on the fact that s.121 of the Constitution Act guarantees a free trade zone within Canada for Canadian products.

Alberta Attempts to Reverse Shipping Law Progress

The Alberta government has moved to reverse the recent progress on direct to consumer wine shipping laws in Canada by quietly amending s.89 of its Gaming and Liquor Regulation so as to create a distinction between wine shipped into Alberta from another province and wine that is personally transported back to Alberta with a traveller after a trip. Prior to the amendments, Alberta law quite clearly stated that Alberta residents could have wine shipped from other provinces in amounts for personal consumption. The Gaming and Liquor Act and Regulation specifically allowed shipment through the combined effect of section 86(3) of the Act and section 89 of the Regulation, both of which read as follows:

Act s.86(3): An adult may import into Alberta liquor of a kind and up to a quantity that is permitted under the regulations.

Regulation s.89: For the purposes of section 86(3) of the [Gaming and Liquor Act], an adult may import from another province liquor for the adult's personal use and consumption.

The new version of section 89 of the regulation changes the wording from the earlier version and makes the importation "subject to the policies of the Board". Here is the new section:

89. For the purposes of section 86(3) and (4) of the Act, an adult may import liquor purchased in a province or territory other than Alberta for personal use or consumption in Alberta subject to the policies of the Board respecting the importation of liquor.

The Alberta liquor board (AGLC) has now also issued an information sheet "Personal Importation of Liquor from Other Provinces", which while not explicitly stating that they do not permit shipment, indicates that they only permit liquor to be brought from another province if the liquor "accompanies the individual". It is not clear whether the above changes are legally effective because s.86 of the statute refers only to the "kind" and "quantity" of imported liquor being set by regulation. It does not empower the Board to make these decisions or to distinguish between types of imported liquor. In addition, there is likely a good argument that such an action would be unconstitutional in any event as it would both violate s.121 of the Constitution Act (which establishes a free trade zone for Canadian produced product as between the provinces) and infringe upon the federal government's exclusive jurisdiction over interprovincial trade. As a result, there are now some complicated legal issues as to whether the AGLC can effectively reverse the language in the Act and Regulation through the use of a policy statement. In addition, it is now theoretically easier for Alberta consumers to purchase wine and have it shipped to them from the United States than from British Columbia.

I have updated the Shipping Laws information page to reflect this unfortunate development. In my view, and regrettably, Alberta continues to act against the will of Albertans and other Canadians on this issue (see earlier article: "Alberta's bizarre position on wine shipping law reform").

BC's Tinhorn Creek Ships to 34 U.S. States

Tinhorn Creek Winery in BC's Okanagan Valley has come up with a solution that enables it to ship to 34 U.S. states in compliance with relevant state laws, using a California company, Ship at Home. See the story here: Tinhorn Creek finds way to ship to U.S. customers. Meanwhile, it is almost the second anniversary of Bill C-311, and it remains challenging for BC wineries to ship to Canadian customers because most provincial liquor boards have put up barriers to interprovincial shipping either through legislation or policy statements (see the latest analysis here: Shipping Law Update).