WineLaw.ca

Following recent actions by Canada\’s liquor boards (likely prompted by Terry David Mulligan\’s cross-border wine action), I have just posted this Shipping Law Update August 2011 which explains recent moves by the LCBO and other liquor boards to okay the personal transport of wine (and other liquor) across provincial borders but to continue to prevent direct to consumer shipments. The update explains why I think it is difficult to make this distinction from a legal perspective.

The American Association of Wine Economists has released Andy Hira\’s study of the BC wine industry this morning which should make for interesting reading regardless of whether you agree with the conclusions: BC Wine Industry Study. There are a couple of references to this site in the study. I am particularly interested in Prof. Hira\’s conclusions regarding regulatory protectionism as I have previously advocated for systemic change in this area because, in my opinion, BC\’s current wine distribution system does not comply with BC\’s and Canada\’s obligations under our international trade agreements including GATT and NAFTA.

The LCBO has announced a \”policy\” that will permit consumers to personally transport alcohol into Ontario in limited quantities. The liquor board says that they will allow consumers to bring up to 3 L of spirits, 9 L of wine and 24.6 L of beer into the province so long as the alcohol is carried in \”on their person\” and is for personal consumption. The \”in person\” requirement will still prevent Canadian wineries from shipping direct to their customers in other provinces. I expect other provinces will follow along on this initiative as the liquor boards are trying to quell the public\’s distaste for Canada\’s 90 year old post-prohibition laws which prevent all inter-provincial movement of alcohol except to liquor boards. I\’ll provide further analysis and comment on this development shortly.

Prompted by environmental concerns, Summerhill Winery in Kelowna has decided to package some of its wine in bag-in-box packaging. However, the current regulations regarding eligibility for VQA status prevent VQA wine from being packaged in anything other than bottles. As a result, Summerhill\’s bag in box wine will not be eligible for VQA labeling. The story has received significant media attention: BC Vintner Loses VQA Designation and Vintner Can Teach Bureaucrats A Thing or Two About Wine. The loss of VQA status also means that this wine would not be eligible for the VQA rebates paid to wineries for sales in government liquor stores. As a result, Summerhill will likely only sell this wine to restaurants/hotels and private stores.

A potentially game changing development in the retail wine business in BC: the Everything Wine chain has been sold to the Pattison Group. EW currently has 3 large \”big box\” locations in North Vancouver, Langford (Victoria) and Surrey. This sale means that three of BC\’s largest retail wine stores will now be owned and operated by one of BC\’s most respected businessmen and retailers, Jim Pattison. The licenses held by EW are the original \”independent wine store\” licenses, which means that they receive a larger \”wholesale discount\” than most of the private liquor stores in BC.

The Globe and Mail has an interesting article today on the upcoming Ken Burns documentary covering America\’s (and Canada\’s) experiment with Prohibition. Apparently, Prohibition and that era is now a \”hot topic\” … mainly because the whole thing was such a failure … PBS describes it as follows:

Prohibition turned law-abiding citizens into criminals, made a mockery of the justice system, caused illicit drinking to seem glamorous and fun, encouraged neighbourhood gangs to become national crime syndicates, permitted government officials to bend and sometimes even break the law, and fostered cynicism and hypocrisy that corroded the social contract all across the country.

Unfortunately, in Canada today, we still need to get rid of the remnants of Prohibition-era thinking from our laws: the prime example is our out-dated law from 1928 which prohibits the inter-provincial shipment of wine direct to consumers.

Even though it\’s summer, here are some wine law developments:

Vintage Content to 85% in BC. BC\’s Wine of Marked Quality Regulation has been amended to reduce the content requirement for vintage labeled wine down from 95% of the vintage that is labeled to 85%.

NY Allows Off-Site Tasting Rooms. New York state has introduced a suite of wine law reforms designed to assist its wine industry. A major change permits wineries to open off-site tasting rooms, now classified as part of the licensed winery\’s operations. Custom crush operations are also encouraged.

WA Starts Farmers\’ Market Tastings. Washington state has started a pilot project which will permit wine tastings at farmers\’ markets.

Yesterday\’s news that the 2013 Wine Bloggers\’ Conference will be held in Penticton highlights the urgent need for the government to reform BC\’s arcane and outdated wine regulatory system. Under the current system, there will be major hurdles to holding the conference in Penticton, as well as major hassles for any of the participants who want to bring wine to the conference or hold tasting events at the conference. I hope that this will be the catalyst for a full scale review of the current system which will result in changes to bring our province into the modern era. A couple of recent blog posts also highlight the need for change: Jake Skakun\’s investigation (\”Planning the Implausible\”) of the difficulties in opening a retail wine store in Vancouver would be funny if it weren\’t so sad (and true) and John Clerides call (\”Let\’s Fix Our Dysfunctional System\”) for a wine visionary to lead us out of the dark ages is prescient.

Here\’s a short roundup of summer news, most of it good:

LCLB okays Custom Crush Operations. The BC LCLB has sent out an advisory to wineries in the province that basically approves \”custom crush\” operations so long as they are structured properly. As readers may know, there was a fair amount of media coverage of this issue recently (particularly in the Globe and Mail). Here is a copy of the release (PDF): LCLB Approves Custom Crush. This is good news and, in my view, is a correct interpretation of the existing law in British Columbia on this issue.

Wine Bloggers Conference in Penticton in 2013. The North American Wine Bloggers Conference has announced that it will hold its 2013 conference in Penticton which is good news for the BC wine industry. They normally don\’t announce conferences 2 years in advance but they are obviously aware of the headaches in dealing with BC\’s outdated wine laws since they stated that the long advance notice was partly needed to enable \”local area supporters extra time to prepare for our invasion, such as making transportation easier for our attendees and making imports of wine possible for our sponsors\”. Is it too much to hope that by 2013, we might have more sensible wine import laws? Otherwise, we may have thousands of bloggers broadcasting how arcane our system is.

Privatization in the News Again. A revised privatization initiative (supported by Costco) in Washington state has gained enough support to make it on to ballots in November. Also in Pennsylvania (which has government liquor stores similar to BC), the state is debating whether to get out of the liquor business entirely.

House of Commons Motion to Reform Wine Shipping Laws Reintroduced. Ron Cannan, MP for Kelowna Lake Country, has reintroduced his federal House of Commons motion which supports the reform of Canada\’s interprovincial wine shipping laws. These laws currently make it illegal for wineries to ship direct to consumers that are outside their own province.

In a press release issued today, BC\’s Agriculture Minister, Don McRae, states that BC is pushing for the removal of interprovincial trade barriers affecting wine shipment between provinces. He also indicated that he asked all of the ministers to review their policies that relate to the interprovincial shipping of wine. Here\’s a quote from the press release:

Developing domestic markets and responding to consumer demands are also critical to the future success of the sector and the economy. That is why B.C. continues to push at the national level for further reductions in inter-provincial trade barriers to encourage the development of our agriculture and agri-food industries. Subsequently, I asked all ministers to review their positions on the inter-provincial trade of wine.

The full press release is here. Hopefully, there will be some movement by the provinces on this issue which will help Ron Cannan\’s efforts to reform the federal law which currently prevents wineries from shipping direct to consumers in another province: Ron Cannan\’s Motion 218.