The recent BC Budget projects a deficit of $13.3 billion for the coming year. As part of the Budget process, most branches of government, including the BC Liquor Distribution Branch (LDB), provide updated fiscal plans for the coming years. The LDB has posted its Service Plan for 2026-2028 here.
The Service Plan predicts a challenging environment for liquor sales in BC over the next few years with flat revenue and increased operating costs. This will have significant consequences for the government revenue that derives from liquor sales. Indeed, the annual LDB contribution to government revenue is projected to decline significantly in the coming years, down substantially from a pandemic era high of $1.193 billion in the 2021/22 fiscal year to just $847.3 million in the year ending in 2029.
The table below shows comparisons for the 2021/22 fiscal year, projected numbers for the current 2025/26 fiscal year, and for the 2028/2029 fiscal year. It also adds per capita amounts of liquor revenue for each year based on government population projections.
BC
2021/22
2025/26
2028/29
Change 2022-2029
Revenue
3.751b
3.620b
3.742b
0%
Net Income
1.193b
950m
847.3m
-29%
Per Capita Amount
222.69
168.41
151.38
-32%
For British Columbia, and if the projections are correct, the table shows fairly flat gross sales over a 7 year period (which would mean a decline in volume), with a decline in net income of -29% in absolute dollars and -32% in per capita revenue. During the same time period, operating expenses rose by 34% from $508m to $680m. For comparison, and for the 6 year period ending in 2028, Alberta is projecting smaller declines of -6.7% (absolute dollars) and -19% (per capita).
The Service Plan indicates that some of the contributing causes to these declines are:
BCGEU strike action in the 2025/26 fiscal year
Removal of U.S. liquor products from the LDB system
Reduced consumer demand for alcohol including health and lifestyle concerns
General economic conditions
Decline in immigration levels
Increased expenses including those related to collective agreements
Yesterday, the Conservatives put forward a private member’s bill (Bill C-262) that was described as being a solution to Canada’s national problems with interprovincial alcohol shipment (DTC). The proposal is described more fully here: Conservatives Want To Make It Easier to Mail Alcohol Between Provinces. You can also read the actual text of Bill C-262 here. Internal Trade Minister Dominic LeBlanc even said that he thought the idea was a “good one”.
While I support both the spirit of this effort and the ability of Canada Post to deliver alcohol between provinces, it seems to me that this Bill is not an adequate solution … and could create additional problems for affected wineries. My thoughts on this are as follows.
Firstly, as far as I can tell, there is nothing in the current legislation that governs Canada Post that prevents it from delivering alcohol between provinces. Indeed, Canada Post has a policy on the delivery of intoxicating beverages that states that they will currently make interprovincial shipments so long as the shipper complies with the relevant provincial laws. It is the combination of the relevant federal (Importation of Intoxicating Liquors Act) and provincial laws that creates the legal DTC problem … not the Canada Post Corporation Act.
The real problem is that there are still a number of provincial laws that make it either illegal for the customer to receive the interprovincial shipment or which impose such onerous obligations on the customer and/or winery as to make it impractical.
Bill C-262 doesn’t make any substantive changes to this legal structure … other than to explicitly state that Canada Post must provide an alcohol delivery service … and gives them an initial monopoly on doing so. In other words, it addresses the choice of ‘transport’ of the shipment rather than the overall legality of the entire transaction. It’s the latter issue that needs to be addressed to fix the problem.
At a recent AIDV webinar, a panel of experts brainstormed this issue. One of the ideas was for the federal government to proactively create a national exemption for personal shipments of alcohol between provinces. This should be done under the Importation of Intoxicating Liquors Act … which is the federal legislation that governs the trade in interprovincial and international alcohol (rather than the Canada Post Corporation Act). While there could be legal challenges, this would arguably (and practically) have the effect of over-riding provincial restrictions since the federal government has the exclusive jurisdiction under our Constitution to make laws regarding interprovincial trade.
Essentially, this would create an “internal duty-free exemption” similar to the one that is in effect at our international border for returning travellers. Canadians would be able to order and receive specified quantities of alcohol from other provinces without worrying about interference from their local liquor monopoly … a concept that works well nearly everywhere else in the world.
Indeed, this model has been working splendidly since 2012 in Manitoba where its residents have enjoyed the freedom to order alcohol from other provinces for years … without any apparent significant issues … and without any noticeable effect on provincial liquor revenues.
A national personal exemption would accomplish this and fix the problem properly. Here is my first draft of an amendment to the Importation of Intoxicating Liquors Act that could potentially fix this.
Personal Exemption
9. Notwithstanding any other Act or law, a person is permitted to import, or cause to be imported, into a province from another province an amount and type of intoxicating liquor for personal consumption that is specified by regulation and in a frequency and manner specified by regulation.
Personal Exemption Regulation
1. For the purposes of s.9 of the Act, the amounts and types of intoxicating liquor for personal consumption that are permitted are, for each person:
a) x litres of wine;
b) x litres of beer; and
c) x litres of spirits.
2. The amounts and types of intoxicating liquor specified in section 1 may be imported by each person in any 30 day period and either by in-person importation or by delivery by any common carrier from the other province.
Secondly, I do not understand why Bill C-262 proposes to give Canada Post an initial monopoly on interprovincial shipments of alcohol. Most wineries in BC do not currently use Canada Post as their preferred shipper. There are many reasons for not doing so … one of the most important of which is that they do not use temperature controlled trucks.
The Bill contemplates adding “trusted” carriers eventually … but why should those carriers have to go through a bureaucratic approval process to get the ability to do something that they are already doing well right now? If passed, the Bill would effectively prevent existing carriers from delivering alcohol until they got approval as a “trusted carrier” through some yet to be created bureaucracy. The last thing Canadian wineries need right now is to grant another ‘monopoly’ on anything liquor related to a branch of government.
So to conclude, while any discussion of these issues at the national level is helpful, I do not think that Bill C-262 solves the problem. Instead, let’s consider a national personal use exemption … and let any current common carrier make those deliveries.
On March 2, Ontario and Nova Scotia announced a deal that would enable wineries in each province to ship and sell direct to consumers in the other province. In other words, a ‘reciprocal’ deal to permit DTC … almost 2 months in advance of the target date of May 1st to resolve these issues that the federal government had previously announced.
The details of the arrangement were not provided in the news releases that each government issued. However, additional information is now available on the web sites for these provinces: LCBO (Ontario) and NSLC (Nova Scotia).
In each province, wineries will need to apply for and receive an authorization from the relevant liquor authority. They will also need to remit markup and sales taxes on a quarterly basis.
For Ontario wineries wishing to ship and sell to Nova Scotia customers, the NSLC site indicates that a “5% fee on total retail sales” will be charged (presumably plus sales tax). See this page on the NSLC site.
For Nova Scotia wineries wishing to ship and sell to Ontario customers, the LCBO site does not clearly state the relevant markup level … but these are contained in the sample templates which can be downloaded on this page.
Apparent Typo of 1.6% Markup for DTC (also LCBO spelled wrong!)
Templates are provided for wineries, distilleries, and breweries. The winery template states that the LCBO markup is 1.6% for Canadian wine … which appears to be a typo … because the current LCBO markup for Ontario wineries is 6.1%. It would appear that the intention is to treat out of province wineries the same as in-province wineries (which would be compliant with the reasoning in the SCC Comeau decision).
Various other markup amounts are indicated for other products: e.g. 20% for “wine coolers and other wine” … and 32.5% for spirits.
These initial indications show some potential for national DTC because, while there is an additional administrative burden, they appear to be indicating that the liquor boards are prepared to reduce their ‘normal’ markups to much more reasonable levels for out-of-province producers … treating them the same as an in-province winery. For example, a 6.1% markup on a $40 bottle of wine would be $2.44. Regrettably, they are still focused on percentage based markups rather than volume-based ones (like Alberta).
Unfortunately for BC wineries, no such deal has yet been announced between BC and Ontario. In this regard, BC currently charges zero markup to Ontario wineries shipping to BC … but Ontario currently does not permit any shipments at all to Ontario consumers. I note that the BC system requires no additional administration or registration for the winery … while the ON/NS model requires registration and quarterly reporting (which, if extended, could mean doing so for all participating provinces).
Fingers crossed that all of this will be resolved promptly … and perhaps before May 1st.
In addition, I note that the above system could potentially form the basis for an international trade compliance challenge under GATT or other applicable trade agreements since domestic wine is treated much more favourably than imported wine (if we even care about such compliance any more).
