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.
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).