- Tuesday, 23 August 2011 10:00
This is a short guide to the unconventional approach to licensing wineries that BC has adopted. In most jurisdictions, it is possible to read through the winery licensing requirements within the applicable laws ... in other words, it is fairly easy to discover what the requirements are for obtaining a license. However, in BC, this is not the case. There are some requirements listed in the Liquor Control and Licensing Act. However, the most onerous requirements are imposed by the Liquor Distribution Branch, which (in my view at least) does not even have the statutory jurisdiction to regulate the manufacture of wine. Read More to see how the system works.
The branch of government that issues licenses for wineries is the Liquor Control and Licensing Branch (LCLB). The LCLB does this under the Liquor Control and Licensing Act. The conditions in the Act for issuing a license are relatively short and are contained in s.16 of the Liquor Control and Licensing Regulation. In summary, those requirements are:
- Applicant must own or lease the facility being licensed.
- Must have winery equipment (fermentation tanks/barrels, filtering equipment, secure storage area) adequate for production of at least 4500 litres of wine per year.
- For new applicants, must intend to ferment at least 4500 litres of wine per year. For renewals, must have actually done so each year. Although there is some latitude on this for things such as crop failure.
While those are the statutory requirements, there is more detail on the LCLB's policies in their winery licensee guide.
One would think that once your winery is licensed, you are in business. However, in BC that is not the case. In order to actually operate your winery business in BC, you are also required to enter into a contractual agreement with the Liquor Distribution Branch (LDB). This is not straightforward. The LDB categorizes all wineries in BC as either "Land Based Wineries" or "Commercial Wineries". Commercial wineries basically operate as agents of the LDB. For example, in policy reminiscent of the prohibition era, at the end of each business day they are required to deposit all of their sales revenue directly into an LDB bank account. Later, the LDB pays the winery a commission on their sales. The paperwork required to operate as a Commercial winery is horrendous.
The other category of winery in BC is "Land Based". LB wineries operate more normally as independent businesses although there are still listing and reporting requirements with the LDB. However, the LDB will only categorize your winery as land based if you satisfy certain conditions (the type of which you would normally expect to see in a statute or regulation). For example, land-based grape wineries have to satisfy the following (there are similar requirements for fruit wineries):
- Your wine must be made from 100% BC grown grapes. In other words, you can't use grapes imported from Washington, California or elsewhere.
- You must have at least 2 acres of vineyards at your licensed winery site and use those to produce wine.
- At least 25% of the grapes that you use must come from land owned or leased by you.
- You must use "traditional" wine-making techniques.
- You may buy wine or juice from other LB wineries but not from Commercial wineries.
- No common ownership with a Commercial winery.
You will see from the above that these conditions basically create a regulatory scheme for the production of wine in BC which would normally be contained within a statute or regulations. While the objectives behind these policies may be sound, it is my view that such conditions should be imposed using proper legal methods (such as statute or regulation) and should not be contained within contracts imposed by a monopoly.