Another Perspective on Liquor Law Reform and Alcohol-Related Problems

The BC Government is currently conducting a Liquor Policy Review whose consultation phase is slated to end on October 31st, following which the Parliamentary Secretary responsible, John Yap, will prepare a report to the responsible Minister (Hon. Suzanne Anton) with recommendations for change. 

The review panel has received a wide range of submissions dealing with many different issuesAs would be expected in any review process such as this, there are many different viewpoints including a number of groups that are advocating for very limited changes to BC\’s current system of \”government control\” over liquor distribution. Indeed, some groups are advocating for stricter controls over liquor such as raising the drinking age to 21, increasing prices, and either limiting or reversing the expansion of private sector involvement in the liquor business. The general rationale for such positions is that alcohol creates a significant number of social and health problems … and that increased or continued government control over the liquor business is the best way to limit the incidence of such problems.

Of course, it is true that alcohol can cause problems when used to excess and that government should try, wherever possible, to reduce or eliminate those problems. However, the mandate of government must be to ensure that any adopted measures will actually be effective in reducing problem behaviour. Since Prohibition, the approach in BC (and Canada generally) has been to adopt strict rules which apply to everyone, regardless of how they consume alcohol, in the belief that this will limit problems. This way of thinking is a carry-over from Prohibition since it is based upon the belief that all alcohol consumption is \”bad\” and that any regulatory attack on consumption is necessarily \”good\”.

Certain studies are often cited as providing proof that stricter government control results in a lower incidence of alcohol related problems. However, statistical studies of social science issues can sometimes produce erroneous conclusions, particularly if they are based on smaller data sets or include assumptions that are not verifiable. Indeed, the best way to verify conclusions is often to compare them to much broader data and to see if the conclusions still hold true. In this respect, it may be wise to cast a cautious eye on the smaller alcohol control studies because the latest broad-based data and experience shows that the \”strict government control reasoning\” is probably simplistic and may actually be harmful.

British Columbia\’s current regulatory system provides a good example of this when compared to our immediate southern neighbours, Washington, Oregon and California. BC has extremely high prices for beer and wine compared to all of our southern neighbours, often double or triple at retail. BC\’s and Washington\’s prices on spirits (hard liquor) are not that far apart … but BC is more expensive than Oregon and much more expensive than California. Washington and California have liquor distribution systems that are entirely privatized. Oregon has a mixed system, with beer and wine privatized and spirits still sold in government stores. In terms of licensing (e.g. ease of getting a license) and related regulation (such as happy hours and the service of alcohol at festivals), all of the west coast states are much less restrictive than BC. In California, you can wander around a farmers\’ market with a glass of wine in your hand. In Oregon, it is quick and easy to get a license to open a craft brewery. In Washington, consumers can now buy beer, wine and spirits at Costco and other big box stores.

According to the \”strict regulation\” advocates, BC should have a much lower incidence of alcohol related social problems than any of the west coast states since we have much more government control and regulation. Indeed, those states should be awash in problems since their \”government control\” systems have either been scrapped (WA, CA) or scaled back dramatically (OR). In fact, if one looks at the statistics, the opposite is true. BC\’s incidence of alcohol related social problems is either the same, or sometimes worse than our neighbours.

The alcohol related death rate is a measure of health problems caused by problem alcohol consumption. In the past decade, BC\’s department of Vital Statistics tells us that BC had just over 1800 alcohol related deaths each year.  For every 100,000 residents, that translates to about 39 annual deaths. By contrast, the U.S. Center for Disease Control and Prevention indicates that Washington had an equivalent rate of 31, Oregon had a rate of 36.7, and California\’s rate was 31.3. As a result, BC\’s rate is the poorest of all of the west coast jurisdictions.

Another important statistic is the rate of alcohol related traffic fatalities, which MADD keeps track of for all North American jurisdictions. BC\’s rate has been getting better due to our targeted new laws on drinking and driving but in 2009/2010 (prior to the introduction of the new laws but with our government control system), MADD\’s data says that the rate was 3.6 annual fatalities per 100,000 residents with 38.6% of all total crash deaths being alcohol related. In contrast, Washington\’s rate was 2.5 per 100,000 residents with 37% of crash deaths being alcohol related. In Oregon, the rate was 1.8 with 22% of crashes being alcohol related. In California, the rate was 2.0 with 29% of crash deaths being alcohol related. Again, BC\’s rates are poorer than our neighbours who have less government control.

Similar results to the above were found in the U.S. by this study (Social Impacts of Liquor Privatization) which compared the same statistics amongst U.S. jurisdictions and found that the \”government control\” state of Pennsylvania either fared no better or worse on the statistics than states with no government control.  

Recent experience with liquor distribution reform in Washington state points to a conclusion that privatization may actually reduce problems! In 2012, Washington finally scrapped all remnants of government control from its distribution system by closing all remaining government liquor stores and allowing spirits to be sold in private retailers (beer and wine had been privatized earlier). More than a year later, the statistics show that Washington is actually a safer place after privatization. Washington\’s annual alcohol related collision rate in 2008-2009 (before privatization) was 2,861 and the number of DUI arrests was 21,941. In the past year (after privatization), the rates have dropped to 2,347 and 19,703 respectively. In addition, the arrest rates for \”minors in possession of alcohol\” have also dropped considerably from 1,483 to only 777. Finally, the compliance rates for selling to minors from private stores are almost the same as they were before with government stores.

Is it possible that stricter government control actually makes things worse? That is the point of this recent article: \”Alcohol Crimes Decline in Washington After Liquor Privatization\” which references a study in the U.S., that hypothesized: \”more stores nearby mean that people have to travel shorter distances to buy their alcohol and may not have to drive at all—decreasing the likelihood of these consumers driving while intoxicated.\” Another article argues the same thing: Liquor Privatization Saves Lives? And there is also this interesting study from the American Association of Wine Economists which speculates that shifting consumption to wine through better availability may reduce traffic fatality rates: \”Notably, states with higher consumption shares of beer and spirits have higher traffic fatality rates, and therefore states with a higher consumption share of wine have lower traffic fatality rates. Our results suggest that arguments against legislation that proposes to introduce wine into grocery stores for reasons related to traffic fatalities may be misguided.\”

In respect of the Canadian experience, it is also worth noting that the province with consistently the worst impaired driving statistics is Saskatchewan, a jurisdiction which has maintained its \”government control\” approach very stringently. It seems likely that alcohol related social problems have more to do with socio-economic factors and culture than with \”government control\”. What is apparent, though, is that there is no reliable correlation between ultra-restrictive liquor regulatory policies that apply to everyone and alcohol related harms. Sound public policy should treat different kinds of consumption differently. Responsible consumption should not be punished. Rather, problem consumption should be targeted because it is the actual cause of the harms.

Finally, it should be noted that whenever liquor policy reform is suggested, and regardless of jurisdiction, there will always be opponents of reform. Many of those opponents may genuinely believe that \”liberalization\” or \”modernization\” of laws will be harmful. However, such beliefs are often proven to be incorrect. Prior to Washington\’s recent modernization, many claims were made that the privatization initiative would lead to greater social harms and problems. In reality, the opposite actually occurred. Yes, some kinds of alcohol consumption are problematic. But for the vast majority of British Columbians, a glass of wine or a beer will simply bring a small amount of pleasure … and will not cause any social harms at all.

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EU-Canada Trade Deal Unlikely to Affect BC Wine Industry

As has been widely reported in the mainstream media, Canada and the EU have reached agreement in principle for a free trade deal known as the Comprehensive Economic & Trade Agreement (more commonly referred to as CETA). Various stories have speculated on the effects of CETA upon the Canadian wine industry. It is not possible to comment with certainty upon any effects until such time as the actual text of the agreement is publicly available. However, it has become apparent from briefing notes, that it is unlikely that CETA will have any significant effect upon the BC wine industry. As has been previously reported, CETA does away with all tariffs on wine between Canada and the EU (in both directions). In practice and for the Canadian market, this means the removal of a very small (and basically insignificant) tariff that is currently applied to European wines entering Canada. It also requires some changes to the way that the LCBO (Ontario\’s liquor board) applies \”cost of service\” fees to wine sold in that province. However, it preserves the existing exclusive distribution channels for domestic wine in certain private retail stores (in BC, these are the VQA stores) and it preserves the ability of wineries to sell from their own tasting rooms (direct delivery). As a result, there appear to be very few effects on the BC wine industry. CETA may, in fact, provide benefits to BC wineries that use European products in their manufacturing processes as any Canadian tariffs on those products will be removed. 

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Canadian Fed Govt to Amend Shipping Law for Beer, Spirits

Today\’s Throne Speech of Canada\’s federal government indicates that the federal law which restricts the interprovincial shipment of alcohol will be amended to permit the interprovincial shipment of beer and spirits. This move would extend the previous amendments of Bill C-311, which only applied to wine, so that all alcohol is covered. The text of throne speech simply says this: \”our Government will amend the Importation of Intoxicating Liquors Act to allow Canadians to take beer and spirits across provincial boundaries for their own use\”.

Unfortunately, the previous amendments which related to wine only have had limited effectiveness due to various provincial government moves which have blocked the spirit of the amendments: see Shipping Law Update for details. It is not clear whether or not the federal government would also consider introducing a \”national personal exemption\” as part of the new amendments – which would have the effect of completely opening up the country to interprovincial shipment. 

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BC Liquor Policy Review: Some Great Submissions

The BC Government\’s Liquor Policy Review is nearing the end of its initial consultation stage (only 3 weeks left), following which the Parliamentary Secretary responsible, John Yap, will prepare a report to the responsible Minister (Suzanne Anton) with recommendations for change. Thus far, the review panel has met with many stakeholder groups (see stakeholder meeting list here), received many submissions (see submissions list here) and received a huge amount of public input and comment via blog post, email and social media. Anyone intending to provide additional input should do so right away!

As would be expected in any review process such as this, the review panel has received a wide range of submissions covering off many different viewpoints and dealing with many different issues. The full list of submissions can be reviewed using the link above. However, I would like to highlight a few submissions which I think are particularly useful: Canadian Restaurant and Foodservices Association (this well researched submission deals with reform of BC\’s wholesale pricing structure and with important distribution issues), BC Restaurant and Foodservices Association (deals with many licensing issues), Herb LeRoy Honourary Wine Envoy (deals with many issues of wineries), Liquor Policy Consultants – Dennis Coates and Bert Hick (deals with many issues from the perspective of two very knowledgeable consultants), and Victoria Police Department (deals with the problematic special occasion licensing system).

Finally, I must also recommend the submissions of Modernize Wine Association of BC (of which I am President) which deal with a wide range of issues including some of those covered by other groups above. If you would like a short summary of the Modernize Wine position, you can also read this op-ed piece from the Vancouver Sun written by John Skinner of Painted Rock Winery and myself: 5 Ways to Reform BC\’s Antiquated Liquor Laws