WineLaw.ca

Ontario Wine Store Privatization in the News

Modernization of Ontario's wine distribution and regulatory system has hit the news today as Ontario PC leader, Tim Hudak, has come out publicly in favour of at least some degree of privatization (see: PC Leader Hudak Urges Sale of Alcohol in Ontario Grocery, Convenience Stores). In addition, many Ontario wine producers are mounting a campaign to allow private wine stores within the province in order to increase their distribution and reach new markets. This campaign also received coverage in today's Globe from Beppi Crosariol: Wine Producers Lobby for Private Stores in Ontario. Beppi's article included a good analysis of the government revenue issue ... which usually pops up as soon as anyone mentions privatization. Those who believe that privatization will reduce government revenue simply do not understand the economics of liquor in Canada. For a primer, see my earlier article Canadian Liquor Economics 101 which explains why privatized or partly privatized systems make more money for government than systems with government retail. But for more recent numbers, see Beppi's article where he reinforces the point by noting that Alberta's privatized system makes more money for government than Ontario's state retail system. 

Nova Scotia Introduces Free My Grapes Bill

The Nova Scotia government has followed British Columbia's lead by introducing provincial legislative amendments which will permit direct to consumer wine shipping into that province. The government press release is here: New Amendments Benefit Wine Industry, Consumers. The changes are stated to be similar to British Columbia's in that they only apply to 100% Canadian wine. The press release states that only Manitoba and B.C. already permit direct to consumer shipping. That is a contentious statement: see the FreeMyGrapes site for other views and my earlier post which concludes that BC, Alberta, Manitoba, Ontario (and now Nova Scotia) are open. The link to Nova Scotia's bill is here but note that the details of it will be contained in regulations which have yet to be issued. In addition, I note that Saskatchewan recently made some amendments to its liquor laws which expressly exclude direct to consumer shipping (see s.59 of Alcohol Control Regulation).

BC to Permit Wine Charity Auctions, Problems Remain

After a week of uncertainty stemming from an LCLB directive to Victoria's Belfry theatre (see: LCLB Halts Charity Wine Auction, Others in Jeopardy), the BC government has issued a press release indicating that it will permit charities to fundraise by auctioning off liquor. The quick response on this issue is laudable. However, the press release is confusing because, in terms of immediate application, it only refers to permission for the auction of "gift baskets or similar items that have liquor as one of its components". The issue that was raised by the earlier action against the Belfry and the one that is of central importance to charities is whether or not they may auction privately donated bottles of wine. The auction of privately donated wine for charitable fundraising has been going on in BC for years, and for decades in the case of some charities. In respect of this issue, the press release is unclear. Indeed, there is no mention of privately donated wine in the release at all. Unfortunately the release seems to indicate that charities may not auction off bottles of donated wine until new laws are passed: "Charities that wish to fundraise using only liquor, without other items as a primary component of a basket, will have to wait until new legislation is in place.". It is not clear from the press release what the legal distinction is between the auctioning of a 'gift basket containing liquor' and liquor on its own. I have requested that the LCLB provide clarification on what is intended.

Update: The LCLB has now issued a policy directive on this matter (PDF) which, while clearer than the press release, will likely cause a number of problems for the affected charities:

• The LCLB will permit the auction, without a license, of privately donated wine contained in gift baskets so long as the wine contained in the gift basket is not the “primary component” of the basket. If an auction consists of items which are primarily wine or if the event is primarily a wine auction then the event will need to be licensed. This distinction is impractical and appears to have no basis in law.
• Licensed auctions can include wine donated from manufacturers/agents or purchased from the LDB. Privately donated wine is not permitted. This is perplexing because the LCLB has licensed hundreds, if not thousands, of events in the past that auctioned privately donated wine. Frequently, the privately donated wine is the most valuable (and thus most important) part of the auction.
• The policy fails to take into account the unfairness that will be inflicted on charities who have incorporated charity wine auctions into their annual budgets and who have now had their financial stability up-ended by a sudden change in policy. In addition, the new policy will simply force private wine donors to auction their wine out of province causing a loss of charitable dollars and economic activity within B.C.
• The government is promising to introduce new legislation to permit the auction of privately donated wine in the future but as the legislature is not sitting, it is not clear when this might be accomplished.

LCLB Halts Charity Wine Auction, Others in Jeopardy

A new LCLB policy, preventing the auction of privately donated wine at licensed charity auctions in BC, has caused the cancellation of Crush, an important fundraiser for the Belfry theatre in Victoria (see: Crush, Belfry Wine Auction Cancelled). The new policy was adopted over the summer as part of amendments to the special occasion licensing manual (PDF). This was a shock to many charities who have been holding such fund raising auctions for decades within BC without any problem. The new policy threatens the continuation of many charitable fundraising events and could affect the financial viability of some BC charities which have historically relied on these events to raise a significant amount of funding. The affected charities span the entire scope of charitable activity including arts organizations, hospitals and educational institutions. The policy seems problematic in a time of government financial restraint because a government direction to stop such fundraising will likely cause the affected charities to seek additional direct funding from government in order to continue to operate. 

Update (Oct 25, 2012): The minister responsible for the LCLB, Rich Coleman, was quoted today by CBC radio as indicating that charity auctions of private wine will be permitted and that he is hoping for a temporary fix to this problem either today or tomorrow. Will provide details once there is an official statement or news release.