Shipping Law Update: 2011-08-15 (and 2011-09-16 and 2011-10-04)

IMPORTANT: THIS ARTICLE IS NOW OUTDATED AS BILL C-311 BECAME LAW IN CANADA AS OF JUNE 28, 2012. INTER-PROVINCIAL SHIPPING OF WINE IS NOW LEGAL IN CANADA WITH RESPECT TO SOME PROVINCES. THIS ARTICLE WILL BE UPDATED SHORTLY.

Recent developments at some of Canada’s liquor boards (likely prompted by the publicity surrounding Terry David Mulligan’s “cross-border” wine action back in May) have prompted me to prepare this update on the legality of transporting and shipping wine across provincial borders (within Canada).

So what has changed? During TDM’s action, both the Alberta Gaming and Liquor Commission (AGLC) and the head of the Canadian Association of Liquor Jurisdictions (CALJ) indicated either that they were not interested in charging individuals for transporting wine across provincial borders or, more dramatically, that it was not illegal for an individual to personally import wine into Alberta.  Even more recently, the Liquor Control Board of Ontario (LCBO) has changed its internal policies to state that individuals can legally import alcohol into Ontario in limited quantities (for wine, up to 9 litres per person) so long as it is for personal consumption and it is transported by the individual across the border (i.e. not shipped). It is thought that other liquor boards will adopt similar changes shortly.

As a result of the above, there is a developing “trend” in the liquor boards to permit the personal transport of wine across provincial borders in quantities for personal consumption while still preventing individuals from being able to order direct from wineries or retailers in other provinces. This “softening” of the rules appears to be premised on a desire to lessen the absurdity of the current laws while still preserving the absolute monopoly power of each liquor board over all liquor purchases made by a province’s consumers. In light of this trend, it is useful to review the legality of this distinction. In other words, is there a valid legal basis for a liquor board to say that it is ok for a person to bring wine back as part of a trip to another province but it is not legal for that same person to order the same wine direct from the winery and have it shipped?

The starting point for analysis is the 1928 federal law that prohibits interprovincial wine shipments. This law makes it illegal for anyone to “import, send, take or transport, or cause to be imported, sent, taken or transported” any wine (or other liquor) across a provincial border unless the wine (or other liquor) is “purchased by or on behalf of, and that is consigned to” one of the following entities: Her Majesty (the Crown), the executive government of the destination province or “any board, commission, officer or other governmental agency that, by the law of the province, is vested with the right of selling intoxicating liquor”.

The above provision seems pretty clear on its face: no one can transport any liquor across a provincial border unless it has been “purchased by or on behalf of” and “is consigned to” the provincial government in the destination province or the government agency or office that has the power to sell liquor. As a result, federal law equally prohibits both the personal transport of wine across provincial borders by individuals and direct to consumer shipments. Despite this, it is my view that provincial laws are also relevant, and depending upon what they say, they can change the conclusions regarding the legality of wine transport and shipment. Here’s a quick rundown of my conclusions on this for provinces that have responded to inquiries on this issue from the FreeMyGrapes campaign.

Alberta. The CEO of AGLC has now stated that "Albertans are permitted to bring with them, across provincial borders, wines for their own personal consumption. There are no limits on quantity or frequency, so long as the liquor accompanies the individual and is for the individual's own personal use." As I have explained previously (and as I have advised a number of wineries), the provisions of the Alberta Gaming and Liquor Act and its Regulation explicitly state that it is legal for individuals in Alberta to import wine (and other liquor) from other provinces so long as the amounts are for personal consumption. Contrary to the AGLC statement, the Alberta laws make absolutely no distinction between the personal transport of wine and direct to consumer shipments. As a result, and under the current laws, it is my view that it is not possible for the AGLC to argue in Alberta that the personal transport of wine is permissible but that direct to consumer shipments are not. If one is permissible, then both of them should be permissible. Indeed, in the past, I have argued that, because the federal law was passed in 1928 in order to support provincial choices on liquor regulation, it is unlikely that a court would interpret an ancient federal law to contradict Alberta’s more modern laws – as a result, I think there is a good argument that it is legal for individuals to import wine into Alberta, either via personal transport or direct to consumer shipment.

Ontario. As noted above, the LCBO recently announced that they were using their powers under the Liquor Control Act and creating a new “policy” that it is ok for individuals to import liquor from other provinces in limited amounts so long as they personally transport the liquor into the province and so long as the liquor is for personal consumption. The Liquor Control Act in Ontario does not contain specific provisions dealing with importation as Alberta law does. Rather, it appears that the LCBO is purporting to create this policy using its general statutory powers, perhaps one that refers to  “authorizations granted by the Board with respect to the importation of liquor on the Board’s behalf”. However, it is difficult to see how the LCBO, which has no power outside Ontario or over interprovincial trade, could properly create an exemption for “personal transport” using “policy” rather than an actual amendment to the applicable laws when both the applicable federal and provincial statutes clearly state that all liquor imported into Ontario must be destined for the LCBO and when the relevant LCBO power refers only to liquor imported "on the Board's behalf".

BC. Despite the fact that the BC government supports reform of the interprovincial wine shipping laws, current BC provincial law does not permit the importation of wine from other provinces by individuals. The government previously indicated that the relevant sections of the current laws would be amended. However, the amendments have not come into force and the necessary regulations have not been published. As a result, individuals moving wine into BC are currently still caught by the statutory requirement to report liquor obtained from "unauthorized" sources and pay the taxes and markups (see s.65 of B.C.'s Liquor Control & Licensing Act which is supposed to be amended). However, in B.C. it is, in fact, impossible to comply with this requirement because the "prescribed form" necessary for reporting under s.65 has actually never been prescribed.

PEI. The PEI Liquor Control Commission, in response to FreeMyGrapes, has stated: "Section 33.(2)(b.1) of PEI's Liquor Control Act stipulates the maximum quantities that an individual may take into our province for personal consumption which are 1.14 litres of spirits, 2 litres of wine or twenty-four 341 millilitre bottles of beer per person. No on line orders. Must be on person." This response is misleading because, like Alberta, the PEI law makes no distinction between the import of wine "on your person" and direct to consumer shipments. The actual section of the law does not state that an individual may "take into" the province the indicated amounts, rather it states that the individual may "import" into the province and keep the stated amounts. A plain meaning of the word "import" would permit either transport "on your person" or "direct to consumer shipment". As a result, like Alberta, it is my view that it is not possible for the PEILCC to to argue in PEI that the personal transport of wine is permissible but that direct to consumer shipments are not. However, to illustrate an additional level of absurdity, I should point out that, on a plain reading of the law, the exempted quantities referred to for PEI are cumulative maximums that a person may keep or hold ... in other words, the maximum amount of imported wine that an individual may hold at any time in PEI is 2 litres. This is not a "per trip" allowance. So say goodbye to your imported wine cellar in this province.

Generally. There are also good arguments (which I have previously reviewed) that the retention of a prohibition on direct to consumer shipments is unconstitutional, particularly in respect of Canadian wine.

In conclusion, while consumers may be pleased that the liquor boards are softening the rules in respect of personal importations, both the industry and consumers should be aware that, in my view, it is difficult under the current laws, at least in some provinces, to legally justify a distinction between personal importations and direct to consumer shipments.

ALSO PLEASE BE AWARE: As of October 3, 2011, a Bill (C-311) has been introduced in the House of Commons, which if passed, will amend the IILA to create a national personal use exemption.

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