Category: Latest News

The Georgia Straight has a major investigative piece today which criticizes BC\’s outdated liquor system and related laws. It\’s a well written and thoughtful piece which provides input from many industry players including the former minister, the general manager of the LDB, the head of the BCGEU, restauranteurs, retail store owners. Here\’s the article: BC\’s Liquor Rules Still Sting. A couple of points: the article does not delve into the details of some of the more egregious issues in the system … perhaps someone else will pick up the torch on that. I am quoted as favouring increased privatization (true) and the government system is defended (by others) as being useful because it ensures uniformity of price across the province. That last point has always seemed odd to me. Why is it a legitimate function of government to ensure that liquor prices are the same everywhere? The government doesn\’t do that for milk or fresh vegetables. Why on earth would they do it for liquor? Is liquor an essential service and milk is not?

Meanwhile, a potentially seismic shift comes from Manitoba where the government has announced that it will permit beer and wine sales in grocery stores (albeit under the control of liquor board employees) as well as corkage in restaurants and online social event permits: see the new release (PDF File – Province Introduces New Hospitality Strategy) and this CBC story, Liquor Sales Eyed for Manitoba Grocery Stores. While these moves will likely increase convenience for consumers to a limited extent, it makes no sense in my view to have government employees supervising the beer and wine aisle in a supermarket. That will simply drive up costs for no reason. However, it\’s a smart tactical move for the Manitoba Liquor Commission.

Hopefully, the BC government is paying attention to these issues. It\’s long past time that BC announced modernization of our rules and retail distribution system.

Terry David Mulligan\’s call to reform Canada\’s antiquated wine shipping laws has garnered more media attention than I predicted (and I think more than Terry expected). Thanks are due to Terry from everyone in the wine industry for bringing the issue to the attention of both the public and the politicians. Here are a few thoughts in terms of \”lessons learned\” from all of this.

Individual Transport of Liquor for Personal Consumption is OK? As a result of the publicity surrounding Terry\’s action, both the AGLC (Alberta liquor board) and the head of CALJ (Canada\’s Liquor Board Association) were quoted in the media as stating that it was not illegal for individuals to transport wine into Alberta from BC so long as they did so in amounts for personal consumption and so long as they personally transported the wine themselves (presumably this concession was based on parts of Alberta\’s own laws which pretty clearly state that you can do so – see here for discussion). I suppose this is progress … but why must the individual transport the wine themselves? That requirement is nowhere to be found in either the relevant federal or provincial laws. In my opinion, this is an incorrect interpretation of Alberta law … if it is OK for an individual to personally import wine then it is equally OK for that individual to import wine by having it shipped to them.

Consumers Realize the Law is Archaic … They Want Change. It\’s obvious that the law needs to be changed. The shipping law is, frankly, an embarrassment for Canada and for the development of a serious wine and food culture. If you had a law like this in France, it would be illegal to ship wine from Bordeaux to Paris. The liquor boards and provincial governments need to wake up to the fact that we are living in an internet enabled 21st century. In most places in the world today, it is possible to order almost anything online and get it delivered to your house within a few days. But in Canada, the liquor boards think it is acceptable to force consumers to use \”special order\” programs at their government store which typically result in waits of many weeks or even months before you obtain your wine. This is not OK.

Markups vs. Taxes. The real reason that liquor boards don\’t want change is that they want to charge hefty \”liquor board markups\” on wine. Liquor board markup is big business: in BC, it generates about $900 million annually for the province and on wine, it is imposed at a rate of 123%! But aside from the amounts, another real benefit for the province is that they can collect liquor board markup WITHOUT ANY ACCOUNTABILITY. This is because liquor board markup is imposed on wine as a fee at the wholesale level by the liquor monopoly. It is not a tax which would have to be passed by the legislature and subject to public scrutiny. Instead, it can be charged, increased, and adjusted, all without any scrutiny, by the bureaucrats who run the liquor board (usually on orders from the provincial government). The provinces could raise just as much money by placing an equivalent amount of tax on wine and alcohol … but then they would have to do it openly.

One Per Cent Solution? As most readers will know, a national personal use exemption has been proposed to fix the shipping law mess. This solution would make it legal for wineries to ship specified amounts of wine to consumers in other provinces (e.g. 1 case per person per month). If this solution was passed, it is unlikely to have any significant effect on liquor board revenue because direct shipping excludes most retail purchases due to the delivery delay and the cost of shipping. For example, in the United States, wineries can direct ship to about 85% of the market but that segment is only 1% of the total U.S. retail market. Canadian experience would likely be similar … and liquor board revenue would remain largely unchanged. Even if there was a detrimental effect, it would not be difficult to impose tax collection requirements on wineries who were direct shipping (this is done all over the U.S., ironically one of the companies assisting with this is Canadian). 

As a result, it\’s not that difficult to fix this problem. Canadians just need their federal government to act. Let\’s keep our fingers crossed. 

The media coverage of tomorrow\’s action by Terry David Mulligan continues as the Wine Spectator has now picked up the story: Canadian Wine Shipping Laws to be Put to the Test.

Ron Cannan, the Kelowna MP, who championed reform of the shipping laws in the last session of Parliament has also issued a press release today supporting modernization of our outdated laws (PDF File) – Time to Modernize: Supporting the Canadian Wine Industry

Terry David Mulligan\’s plan to transport wine \”illegally\” across the AB/BC border this Friday at high noon is getting a huge amount of media attention. This week, the Calgary Herald wrote this lead editorial supporting change to provincial liquor board policies on this issue: Alberta Should Allow Direct Purchases from Wineries. Hopefully, politicians at both the federal and provincial levels will pay attention to this issue and work towards quickly introducing a national personal use exemption, which was championed by Ron Cannan in the last Parliament. It seems abundantly obvious that Canadians want this change, which is a relative \”no-brainer\” in my view. In the U.S., the introduction (and success) of direct to consumer shipping has affected only 1% of the overall retail wine sales (the editorial says that it affected 1% of state revenue which is not necessarily the same). The effects in Canada would likely be similar: a tiny effect on provincial revenue but a huge boost for both consumer choice and for the wine industry.

Update: The Vancouver Sun has also picked up the editorial from the Calgary Herald: Law Needs Sober Second Thought

Note: While I am obviously in favour of getting the law changed … I am a lawyer and, as such, don\’t advocate anyone breaking the law.

Whatever your political leanings, the federal election results on Monday, which produced a Conservative majority government, are likely positive news for efforts to reform Canada\’s archaic wine shipping laws. The Conservative government had previously taken the position that it would reform the problematic Importation of Intoxicating Liquors Act (the 1928 law that prohibits interprovincial direct to consumer shipping) and had included a line item in the last budget to indicate that they would do so. While one of the proponents of reform did not run in the last election (Stockwell Day), the other major force (Ron Cannan) was reelected and will likely continue the effort. In the interim, this issue has been getting a great deal of media attention due to the announcement by Terry David Mulligan that he will transport wine across the Alberta/BC border on May 13th in an effort to highlight the need for reform. No doubt, there will be more to come on all of this.

A flurry of news reports this morning all challenge Canada\’s outdated wine laws and related liquor board policies.

The Globe & Mail has two articles. The first (In the Vineyard, fermenting dissent by Rita Trichur) chronicles the struggles of Ontario\’s small quality producers to get reasonable access to the monopoly controlled distribution system within their own province. This is a timely article because, while British Columbia does provide somewhat better access for its wineries, it highlights the wineries\’ discontent with a provincial government that appears to prefer using short term subsidies to support its wine industry rather than providing a better long term solution through a restructuring of the LCBO controlled distribution system. The second Globe article is by Tony Wilson (Hand liquor sales to small business). It describes the waste of taxpayer dollars that occurs when liquor boards implement minimum product pricing under the guise of controlling social behaviour. I have commented on this short-sighted policy before: all it does is provide suppliers with windfall profits at the expense of consumers. It\’s an easy way for bureaucrats to increase liquor board revenue but it is not intelligent policy. Both these stories raise the broader issue: why are Canada\’s provincial governments still wasting taxpayer dollars on government liquor retail when they are scrambling to fund health care and education? Liquor retail is simply not a core government service. Canadian taxpayers, and wine consumers, should be be concerned about this ongoing issue.

CTV also has a report on Terry David Mulligan\’s previously announced quest to challenge Canada\’s outdated interprovincial shipping restrictions: Outlaw Terry David Mulligan Plans Illegal Road Trip. Apparently, the convoy of \”illegal\” wine shipment is now planned for May 13th (that\’s a Friday … is TDM tempting fate?). Terry\’s plans were also reported in this Vancouver Province news story: Mulligan set to take \’wine bullies\’ to task.

Terry David Mulligan has gone on the record saying that he is willing to risk jail in a bid to reform Canada\’s archaic and outdated wine shipping laws. In this article from Business in Vancouver (Terry Mulligan Willing to go to Jail to Fight Liquor Law), he states that he is planning to have video footage taken of him going to Alberta, buying wine, and bringing it back to BC (which is currently illegal). He then plans to inform the liquor board and ask them to charge him.

TDM\’s plan is also covered in this Globe & Mail story which provides additional explanation regarding the wine shipping problem: Wine Makers See Red over Prohibition-era Law.

The Washington state legislature has approved some minor reforms to its wine laws which will permit wineries to offer tasting samples at farmers\’ markets and for restaurants to waive corkage fees in certain circumstances. The changes also make a consumer friendly change on filling beer jugs. The details are in this Seattle Times editorial: Legislature deserves a toast for new beer and wine laws. Meanwhile, here in BC, the pace of change seems to be glacial. The trade practices reforms (including tied house reform) that started out promisingly about a year ago, are still not effective. And we can only dream about corkage and more sensible tasting policies.

If you are interested in the retail side of the liquor business in BC, you may want to read this intriguing new analysis of the economics of BC\’s current government control system: British Columbia\’s Alcohol Control System: Are Government Liquor Stores Redundant? (PDF file – 325KB) This paper by two economics students at UBC argues that privatization of BC\’s current system would generate a $10.8 billion increase in net present value for BC taxpayers, equivalent to a $1 billion annual annuity. The authors argue that privatization would increase government revenue and general social welfare. Interesting food for thought!

At today\’s Canadian Wine Summit at the Vancouver Playhouse International Wine Festival, wine industry leaders called for reform of Canada\’s inter-provincial wine shipping laws. Participants agreed that the Importation of Intoxicating Liquors Act (from 1928) is \”embarrassing\” to all Canadians and should be changed. While the scope of reform was a contentious issue, all speakers at the session agreed that the law is outdated and needs to be changed. Check out the twitter hashtag #canwinesummit for additional comments. Update (2011-04-05): the discussions at the summit have now been reported in a great article by Peter Mitham in Wines & Vines: Canada\’s Wine Industry Wants a Vote.