Month: May 2009

Interesting article this morning out of Washington, D.C. indicating that the U.S. federal government is proposing to dramatically increase federal taxes on all forms of liquor (as well as on soft drinks made with sugar) in order to pay for health care for about 50 million uninsured Americans. The proposed taxes would add 49 cents to a bottle of wine and 48 cents to a six pack of beer.

One of British Columbia\’s neighbours, Washington State, is reforming many aspects of its winery and wine distribution laws in Bill 2040 which resulted from hearings of a Joint Select Committee from both the state senate and house. The Bill has now been signed into law by the Governor. The bill is multi-faceted: it removes \”tied house\” restrictions so that the owners of a retail establishment serving liquor such as a hotel or restaurant could also invest in a winery (previously prohibited). It also reforms many, but not all, aspects of state distribution laws which were the subject of a long running legal battle between Costco and the state. These include elimination of both the required 10% markup by distributors and the \”post and hold\” requirement which restricted changes to the prices of beer and wine. Costco, however, has indicated that it will seek further changes \”to bring the beer and wine regulations into the 21st century\”.

Maybe it\’s time for similar reform here in B.C.? After all, our laws are even more archaic than Washington state\’s. If you agree, please contact your MLA and express your support for wine law reform.

Washington state originally had a state control liquor system similar to BC. Washington stands as an interesting contrast to BC because at one point, Washington\’s state control system was similar to BC\’s current one in that all imported product was marked up substantially and had to be sold through government stores. Washington wineries, however, escaped the markups and could sell through other channels. Consumers were supposed to only purchase through the government system and were required to pay markup on any imported wine brought back into the state (much like BC\’s current laws). Of course, in the U.S., it was not that difficult to circumvent the system by ordering or purchasing wine in another state at a lower cost and then bringing it back to Washington.

Eventually, after some prosecutorial blunders by the liquor board, public pressure forced the Washington state government to reform the system. Reform has resulted in nearly all wine and beer now being sold through private retailers. A network of state liquor stores has been maintained with a continued monopoly over the sale of spirits and a small portion of annual wine sales. Taxes are, of course, much lower in Washington than in BC so prices are also lower.

Following up on an item in my most recent newsletter, there is an excellent article on the current state of Canadian wine shipping laws in today\’s Globe and Mail. Beppi Crosariol provides an update on efforts to reform our archaic prohibition era laws. At the present time, the Canadian Vintners Association is attempting to convince CALJ (the Canadian Association of Liquor Jurisdictions – i.e. the provincial liquor boards) that reform is in everyone\’s best interest. In my view, reform is imperative at this time. The current Canadian laws are susceptible to challenge on numerous legal grounds and it is in both the industry\’s best interest and consumers\’ best interests for the system to be reformed.