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BC Makes Wholesale Pricing for Hospitality Industry Permanent; DTC from Off-Site Storage Returns

Two significant developments in the liquor industry today.

Firstly, the BC Government has made wholesale (i.e. normal) pricing for the hospitality industry permanent. This measure was introduced in July of last year on a temporary basis to assist the struggling industry and was set to expire at the end of next month. However, the change has now been made permanent. This is a very welcome change and has been a policy reform that the restaurant/bar/hotel industry has been requesting for decades. It was a recommendation of the original BTAP Report and was the subject of continued consultation of the BTAP group and Government. It means that BC now has a normal pricing system for liquor in the hospitality business under which the industry can purchase liquor at regular wholesale prices (as happens almost everywhere else in the world). Prior to this, industry had to buy at full retail price which created higher end-consumer prices and lower hospitality profit margins. This is a very welcome change which will be vital for the recovery of the industry following the pandemic. News release here: Permanent wholesale pricing will help hospitality sector recover.

Secondly, Government has also re-introduced the ability of local manufacturers to deliver direct to consumer from secondary storage locations. This measure was also introduced on a temporary basis last year and expired on October 31. It has now been re-introduced with a current expiry date of December 31, 2021. This measure was also the subject of continued consultation between the BTAP group and Government. I note that this also places BC manufacturers on an equal footing to their competitors in neighboring jurisdictions. All of the west coast jurisdictions currently permit this. LCRB Policy change is here: DTC Off-site Storage Permitted.

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Covid Regulatory Rabbit Holes: What is an Event?

A revised BC Public Health Order related to “Gatherings and Events” was issued on February 10th by the Provincial Health Officer. In respect of the hospitality sector, the Gathering and Events Order supplements an earlier Food and Liquor Serving Premises Order which was issued on December 30, 2020. Along with another earlier order on Workplace Safety, these three orders constitute the framework for the operating restrictions which currently apply to restaurants, bars, hotels, liquor retailers and liquor manufacturers (including wineries).

The earlier orders have been described here previously (see 2021 BC Liquor & Hospitality Industry Health Order Update). Generally, the latter two Orders impose either objective standards relating to compliance (e.g. maximum of 6 people at a table) or require that a business create a viable safety plan based on certain guidelines. However, the Events Order imposes additional complications because it is considerably more subjective and imparts significant ambiguity into what is permissible. It prevents any of the businesses covered by the earlier Food & Liquor Serving Premises Order from permitting their premises to be “used for an event, including a private event” and prevents these businesses from organizing or hosting “an event”. As such, hospitality businesses are effectively banned from allowing “events” in their facilities.

Since there are significant fines and other penalties (including possible closure orders) for violating the Order, businesses should be able to determine what constitutes an “event” relatively easily. Unfortunately, it is not clear from the Order or from the accompanying guidance what is a prohibited event and what is not. The Order seeks to define “event” but it does so by stating that an “event” is any gathering of people in any “private or public place”, “inside or outside”, “organized or not” and which is held on a “one time, regular or irregular basis”. This is a very sweeping definition of event – a meeting with a single friend (or even your spouse) for lunch could conceivably be an event under this interpretation. 

The first problem is that this approach fails to recognize that whether or not something is an “event” is likely to be defined by the subjective experience of the participants and, perhaps, the organizer. If you look at the dictionary definition, it includes reference to whether or not the occasion is viewed as being “important”. I may not consider it to be an “event” if I go out for dinner with a few friends … but I might think that the same dinner is an “event” if it is done to celebrate my birthday or graduation.

The second obvious level of uncertainty is that the Order’s definition does not specify a number for a “gathering” that constitutes an “event” … so theoretically, it might include gatherings of small numbers. 

Further uncertainty is created by an extensive example list of “events” which people may agree with or not, depending upon their subjective intentions. For example, “meetings” are listed … but how many people do you need for a meeting to become an “event”? Or how important does the meeting have to be for it to turn into an event? The same problems arise for the inclusion of “party”, “celebration”, a “musical performance” or “a gathering in vacation accommodation”. For nearly every example, it is unclear when, how or why the example occasion would turn into an “event”.

The commentary that was issued along with the Order does not help things appreciably. For example, the commentary says that you can’t meet anyone outside your household in your backyard but it is permissible to go for “a walk or hike” with others so long as the walk or hike does not turn into “a group of people meeting outside” … which makes no sense since it is obvious that a walk or hike with other people is a group of people meeting outside. 

The problems are magnified when you try to read this Order in conjunction with the earlier Food & Liquor Serving Premises Order which contained a clearer set of operating guidelines based on more objective standards such as allowing 6 people per table and imposing certain physical distance requirements. If the business follows these clearer guidelines, is it on-side? Most in the hospitality sector are taking the position (understandably) that they do not have to go beyond the more objective rules. Incidentally, and as mentioned in an earlier post, the Orders do not prevent individuals from different households from eating or drinking together unless that can somehow be determined to be an \”event\”. There may be some situations (e.g. a large party trying to sit in multiple tables of 6) where the business can reasonably determine that there is an impermissible \”event\” … but there may be many other situations where it is not clear.

The introduction of regulation through subjective terms such as “event” will pose significant challenges for hospitality businesses and may end up creating enforcement problems. I am not convinced that these Orders will be enforceable in any situation where there is ambiguity. These issues certainly illustrate the difficulties of trying to regulate public behaviour.

On the positive side, BC’s hospitality businesses have been permitted to remain open during a time when many jurisdictions have either mandated absolute closures, imposed significant capacity restrictions, or permitted only take-out or outdoor dining. As such, and despite the uncertainty, if the choice is between subjective regulation and clearer but more restrictive rules, BC’s hospitality businesses may prefer the more ambiguous approach.

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Mark Hicken

Alca Intelligence Inc.

Vancouver, BC


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2021 Canadian Wine & Liquor Law Conference February 25th

The 2021 Canadian Wine & Liquor Law Conference will be held online on February 25th. This conference is the successor to the annual BC Wine & Liquor Law conference which was originally launched in Vancouver in 2009 and subsequently held in association with the Vancouver International Wine Festival. The conference is now sponsored by AIDV which is the French acronym for the International Wine Law Association.

Each year the conference has always been a must-attend event for anyone interested in or working in the area of wine and liquor law or policy. This year is no different with an impressive line-up of speakers. There is a national regulatory update, sessions on geographic indicators, various panels on international trade and a discussion of counterfeiting and wine fraud (featuring Maureen Downey who appeared in the Sour Grapes movie which dealt with the Kurniawan case!).

The full conference agenda including registration information is here: AIDV Canada Wine & Liquor Law Conference. Membership in AIDV is not required to attend the conference.