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19%: Canada\’s Failing Grade on DTC

Ontario\’s recent delay of DTC reform (Ontario Shuts Down DTC Reform) has illuminated how poorly Canada is doing in respect of removing the interprovincial trade barriers that prevent the shipment of wine to consumers across provincial borders. While the federal government removed its restrictions 8 years ago (in 2012), there are only 3 provinces that are currently open for direct to consumer (DTC) shipments of wine from another province. Those provinces are BC, Manitoba and Nova Scotia (kudos to all of them). Unfortunately, they collectively represent a paltry 19% of the Canadian population (see Wine Growers Canada summary of the situation). As a result, 81% of Canadians live in provinces that still do not allow them to order a bottle of wine (or other alcohol) from another region in the same country.

By global standards, this is astounding and ridiculous. It remains illegal for a consumer in one province to order a bottle of wine from a Canadian winery in a different province. This is analogous to telling a Parisian that it is illegal for them to order wine from Bordeaux … or telling a Roman that it is illegal for them to order wine from Tuscany. In fact, in Europe, it is legal for a customer to order wine from anywhere within the Schengen zone so a Parisian can order wine from a winery in Spain, Italy or Germany without issue (if they want to). While these countries do not have the Post-Prohibition regulatory structures and monopoly liquor boards that Canadians face, the pace of reform on this issue in Canada is embarrassingly slow. The U.S. faced similar problems when its Supreme Court struck down such protectionist policies in 1986 (in the seminal case of Granholm v. Heald). Reform efforts in the U.S. progressed rapidly following the case and have now opened up all but 4 U.S. states … so 96% of U.S. wine consumers now live in states where DTC is permitted (the hold-outs are Utah, Delaware, Alabama and Mississippi).

As a result, Canada now holds the unique and bizarre distinction of being one of the only places in the world where its wine consumers are actively discriminated against by many of the provincial governments that are supposedly representing them. This situation is long past its \”best before\” date. The governments of the other 7 provinces need to move into the modern world and fix this problem once and for all. One would think that in the midst of a pandemic, the politicians would do something to help Canadian business. Here\’s the sad comparative report card:

Country   Score (% of population open for DTC)   Grade
France 100 A
Italy 100 A
United States 96 A
Canada 19 F

I note that in the Canadian provinces that are open, there have been no significant negative effects from DTC. None of those provinces has experienced any significant drop in provincial liquor revenue. There is simply no valid policy reason why this situation should continue. Fingers crossed that the government of Ontario will come to its senses on this issue and act sooner than July 2021 (the date that they postponed the reforms until).

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