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Lessons From TDM\’s Shipping Law Stunt

Terry David Mulligan\’s call to reform Canada\’s antiquated wine shipping laws has garnered more media attention than I predicted (and I think more than Terry expected). Thanks are due to Terry from everyone in the wine industry for bringing the issue to the attention of both the public and the politicians. Here are a few thoughts in terms of \”lessons learned\” from all of this.

Individual Transport of Liquor for Personal Consumption is OK? As a result of the publicity surrounding Terry\’s action, both the AGLC (Alberta liquor board) and the head of CALJ (Canada\’s Liquor Board Association) were quoted in the media as stating that it was not illegal for individuals to transport wine into Alberta from BC so long as they did so in amounts for personal consumption and so long as they personally transported the wine themselves (presumably this concession was based on parts of Alberta\’s own laws which pretty clearly state that you can do so – see here for discussion). I suppose this is progress … but why must the individual transport the wine themselves? That requirement is nowhere to be found in either the relevant federal or provincial laws. In my opinion, this is an incorrect interpretation of Alberta law … if it is OK for an individual to personally import wine then it is equally OK for that individual to import wine by having it shipped to them.

Consumers Realize the Law is Archaic … They Want Change. It\’s obvious that the law needs to be changed. The shipping law is, frankly, an embarrassment for Canada and for the development of a serious wine and food culture. If you had a law like this in France, it would be illegal to ship wine from Bordeaux to Paris. The liquor boards and provincial governments need to wake up to the fact that we are living in an internet enabled 21st century. In most places in the world today, it is possible to order almost anything online and get it delivered to your house within a few days. But in Canada, the liquor boards think it is acceptable to force consumers to use \”special order\” programs at their government store which typically result in waits of many weeks or even months before you obtain your wine. This is not OK.

Markups vs. Taxes. The real reason that liquor boards don\’t want change is that they want to charge hefty \”liquor board markups\” on wine. Liquor board markup is big business: in BC, it generates about $900 million annually for the province and on wine, it is imposed at a rate of 123%! But aside from the amounts, another real benefit for the province is that they can collect liquor board markup WITHOUT ANY ACCOUNTABILITY. This is because liquor board markup is imposed on wine as a fee at the wholesale level by the liquor monopoly. It is not a tax which would have to be passed by the legislature and subject to public scrutiny. Instead, it can be charged, increased, and adjusted, all without any scrutiny, by the bureaucrats who run the liquor board (usually on orders from the provincial government). The provinces could raise just as much money by placing an equivalent amount of tax on wine and alcohol … but then they would have to do it openly.

One Per Cent Solution? As most readers will know, a national personal use exemption has been proposed to fix the shipping law mess. This solution would make it legal for wineries to ship specified amounts of wine to consumers in other provinces (e.g. 1 case per person per month). If this solution was passed, it is unlikely to have any significant effect on liquor board revenue because direct shipping excludes most retail purchases due to the delivery delay and the cost of shipping. For example, in the United States, wineries can direct ship to about 85% of the market but that segment is only 1% of the total U.S. retail market. Canadian experience would likely be similar … and liquor board revenue would remain largely unchanged. Even if there was a detrimental effect, it would not be difficult to impose tax collection requirements on wineries who were direct shipping (this is done all over the U.S., ironically one of the companies assisting with this is Canadian). 

As a result, it\’s not that difficult to fix this problem. Canadians just need their federal government to act. Let\’s keep our fingers crossed. 

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