Bill C-311, an Act to Amend the Importation of Intoxicating Liquors Act, has now passed second reading in the House of Commons and has been referred to the House Finance Committee (you can read the Hansard debate here). This Act, if eventually passed at third reading, will amend the IILA to introduce a national personal use exemption to permit direct to consumer shipment of limited quantities of wine between provinces for personal use. The Act has gained support from all federal parties and continues to receive very positive media coverage and public support.
Month: December 2011
British Columbia\’s neighbouring jurisdictions, Alberta and Washington state, have both modernized their liquor and wine regulatory regimes to move away from the post-prohibition \”government control\” model. This leaves British Columbia seriously out of line with its neighbours in terms of the promotion of economic growth/jobs in the wine industry and within the broader hospitality and tourism sectors. See this article on FreeTheWine.ca for more detail: BC Falls Behind Neighbours On Wine Law Reform and this chart which compares major differences on liquor regulation between BC, AB and WA.
This article from the Economist (Behind the Zion curtain) also shows how out of date the BC system is. The Economist lauds Washington state for moving to a modern regulatory and distribution system while criticizing other \”control states\” for failing to update their post-prohibition mentality. Particularly, the Economist singles out Utah for its backward system. While Utah\’s system is worse than BC\’s in many respects, the Economist identifies an alarmingly high number of problems that are common to both jurisdictions: restricting the sale of alcohol to publicly owned stores (we have private stores as well but the prices are fixed by the government ones), a \”restrictive distribution system\”, enforcement of revenue splits between alcohol and food in restaurants, banning happy hours, imposing restrictions on the number of licenses (BC does that for retailers), and forcing restaurants and bars to pay the same \”markup for their booze as consumers do in state-run stores\” (BC\’s system is even worse than Utah\’s on taxation). To paraphrase the ending of the article, \”Eat, drink and be merry – tomorrow you may be in British Columbia\”.
Wineries and other licensees should be aware that the BC LCLB issued a statement on internet marketing in the October 2011 issue of their “Liquor Line” newsletter which is available on the LCLB website here. The statement warns licensees that the sale or advertising of any liquor product without a license is not legal in BC. It then continues by saying “[t]herefore companies like Groupon or ethicalDeal.com cannot legally include liquor as part of a promotion. Given this, it is not permitted for licensees to enter into and offer these sorts of promotions. (emphasis added)” This wording could be interpreted as prohibiting many third-party marketing companies from including liquor as part of their marketing services or promotions when they are working with a licensee such as a winery or retailer.
The question then arises: is it legal for third party marketing companies to work with licensees at all and, if so, what can they do? It is my view that it is legal for third party marketing companies to work with licensees so long as all parties pay careful attention to structuring their relationships correctly. The issues are basically the same as those faced by the California ABC which recently issued a detailed advisory on these issues (Third Party Providers – PDF) which was created after extensive industry consultation and legal advice. It’s my opinion that the analysis in the California advisory is well done and should also be applicable to British Columbia.
I have confirmed with the BC LCLB that their statement was based on an analysis of the ‘default’ method of Groupon promotion under which the marketing company processes and is an integral part of the sale. However, there are, in fact, many other methods of structuring internet promotions (some of which may be legal and some of which may not) and the LCLB has also confirmed that “each case must be considered on its own merits”. However, the LCLB has not confirmed that they will follow the same principles as have been established in California and there may well now be confusion within the BC industry as to what is permissible and what is not (as there was in California prior to the ABC issuing its ruling). In the interim, licensees should be cautious about internet marking and should obtain legal advice if they are entering into these types of marketing arrangements.
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Wine and Liquor News Update
I\’m working on some longer articles about Washington\’s successful privatization initiative and LCLB policy on internet marketing but in the interim … here\’s a grab bag of news:
BC Government Liquor Policy At Work: This Vancouver magazine article shows the absurdity of BC\’s current liquor policies which deny wholesale discounts on wine to restaurants: The Joie-O-Meter. The survey looked at the restaurant price for a bottle of Joie Rose, one of BC\’s nicer wines. It found that to get the best price, you would have to go to Chez Panisse, a restaurant in … Berkeley, California.
No Problems With Farmers\’ Market Tasting in Washington: This Seattle Times story once again shows that BC needs to put its post-prohibition approach to liquor regulation into the trash can. Washington state started a pilot program to permit tasting of wine and beer at farmers\’ markets and reports that there have been zero complaints so far and that the entire program is \”running smoothly\”.
Festivals and Conferences: The Vancouver Playhouse Wine Festival is set for the last week of February, 2012 with its theme country as Chile and varietal focus of Cabernets. Some tickets have already gone on sale with more in the coming weeks. A third annual wine law conference will also precede the festival on February 27th. Wineries should also consider attending the Direct to Consumer Wine Symposium in San Francisco, which will be held on January 19th.