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Comeau & Steam Whistle: Update + Implications

This is an “early fall” update on the legal issues arising from the Supreme Court of Canada decision in R. v. Comeau which was handed down in April of this year.

The full decision is located here: R. v. Comeau (2018 SCC 15). As is widely known, the case dealt with an individual (Gerard Comeau) who drove to Quebec from New Brunswick, purchased some beer and spirits, and then brought them back to New Brunswick. After being stopped by the RCMP, he was charged with a provincial offence since the amount of liquor that he ‘imported’ from Quebec exceeded the amounts permissible under the applicable provincial law. Mr. Comeau’s lawyers argued that the provincial laws were unconstitutional because they violated a section of the Constitution that relates to free trade between the provinces. The Court rejected this argument and upheld the ability of a provincial government to place legal restrictions on the inter-provincial trade in alcohol (which could also include DTC shipments) so long as the primary purpose of the law is not to restrict trade. Nevertheless, the Court also stated that such restrictions may not be permissible if they discriminate as between “in-province” producers and “out of province” producers.

This latter issue could end up being important in respect of provincial policies or laws that treat wineries (or other liquor manufacturers) from one province differently than those from other provinces. A summer decision (Steam Whistle Brewing Inc v Alberta Gaming and Liquor Commission, 2018 ABQB 476) in Alberta applied the reasoning in Comeau and found that preferential markups and grant programs for beer in Alberta were unconstitutional since they provided beneficial treatment to local in-province producers over those from out-of-province producers (i.e. an impermissible ‘trade restriction’). This decision, if upheld, means that the Alberta government cannot impose a different markup regime on producers from another province if it provides better treatment for its local producers. The Alberta government has indicated that it will appeal this decision. 

If the trial level decision is found to be correct then the end effect could be that a provincial government would have to “level up or level down” in regards to markup treatment. In other words, if a government provides lower markups, exemptions or grants to local producers, then it would have to either extend those benefits to all Canadian producers (regardless of provincial origin) or eliminate them entirely. Such a result would have the potential to affect markup policies in a number of provinces.