The BC Liquor Distribution Branch (BCLDB) has circulated an advisory letter to a number of licensee groups indicating that it is considering forcing all licensees (private stores, restaurants, bars, etc …) to use an LDB-branded credit card for all credit purchases at the wholesale level. At the present time, licensees can use any credit card that they wish. This choice enables the licensees to use loyalty cards (such as Aeroplan cards) and accumulate large numbers of points which they can then use for business purposes such as travel or employee bonuses. The BCLDB plan would prevent licensees from doing this and would cause a considerable loss in benefits for the licensees. who are the BCLDB\’s best customers. Many licensees have contacted me on this issue and are extremely upset. The BCLDB\’s stated motivation for the change is to reduce its costs \”associated with wholesale credit card purchases\” … in other words, to make more money. In this respect, it is likely not a coincidence that the BCLDB just missed its revenue targets again and reduced its revenue targets for future years.
Health Canada is adopting new labelling rules that will require the identification of potential allergens in various food products including wine. The new regulations come into effect on August 4, 2012 but manufacturers are being encouraged to adopt compliance earlier. The rules will apply to wine and will require the identification of potential allergens used for fining in wine such as egg, milk or fish products. See this press release for more information: Changes to Enhanced Allergen Labelling Regulations.
However, it is a point of debate as to whether these allergen warnings are necessary. For additional perspective on this issue, you may wish to read this earlier Wine Spectator article which dealt with the same concerns in the U.S.: Wine Producers Struggle With Proposal to Require Allergen Warnings
Apparently, it may no longer be permissible in BC for a wine store owner or employee to conduct any business outside his wine store. The LCLB recently amended the terms and conditions of private wine stores\’ licenses to indicate that all business activities \”related directly or indirectly to the sale of liquor must be conducted inside your wine store\”. The only exception noted is for permitted advertising. It seems that the LCLB is taking a strict interpretation of this \”policy\” because they recently denied a request for a private store to set up an \”order table\” at a wine tasting event.
This policy is problematic because if taken literally, it would prevent a wine store owner from replying to a customer\’s email if he received it at home or away from the store. It would also prevent a store owner or employee from discussing business if he saw a customer in a restaurant or at a social event. At the present time, it is unclear what the objective of this new policy is but it will certainly make it more difficult for the general public to order or even talk about the ordering of wine. It also raises some serious legal issues because \”commercial expression\” has long been recognized as a right that is protected under the Canadian Charter of Rights. I do not see how LCLB \”policy\” can restrict the exercise of a protected Charter right in these circumstances!
Update: Business in Vancouver has now covered this story: LCLB policies outdated in a mobile world.
A BC Supreme Court decision released on Tuesday (Northland Properties vs. BC Liquor Control & Licensing Branch) has found that the LCLB cannot use \”policy\” to restrict its obligations to properly consider discretionary decisions made under the Act and Regs. This case dealt with an application for discretion to waive the distance requirements for the transfer of an LRS to a new location. The Regulations (s.14(6)) state that the General Manager has the discretion to waive the distance requirements without outlining specific criteria for doing so. The court found that the LCLB had improperly created restrictive \”policy\” which limited its review process to a consideration of a few factors and prevented a full and correct consideration of all the relevant factors which might warrant the exercise of that discretion.
This case deals with an important issue because it is a vital principle of law that \”policy\” must always be consistent with the statute and regulations. The statute and regulations are the law: \”policy\” cannot be implemented in a manner which modifies the law or restricts it. In my view, this case also reflects a couple of longstanding problems: 1) there is too much discretion in the Act and Regs which makes it difficult for the LCLB to properly regulate, and 2) the LRS distance requirements are not really workable in any event (as I have said before, why is the government involved in regulating the distance between private businesses?). The issue of law vs. policy will be covered in more detail at the upcoming Wine Law in British Columbia conference on March 29, 2011 (50% discount on tuition for the wine industry!).
This Wall Street Journal reports in this story (A Toast to Your Health) that new USDA dietary guidelines confirm that drinking in moderation is good for you. Of course, this is not news to wine lovers and readers of this site. However, it does have significant public policy ramifications and puts the lie to some of the alarmist claims made recently that government should raise liquor prices or prevent privatization. As the Wall Street Journal article points out, many Americans should actually be drinking a bit more in order to get the health benefits associated with moderate consumption. It\’s not rocket science to figure out that the smart public policy choice is to make sure that restrictions on alcohol specifically target people with problem consumption and not penalize those who drink responsibly and get recognized health benefits from doing so.
Two extremely well respected U.S. experts in statistical analysis have raised serious questions about the validity of the conclusions publicized in a recent study from Centre for Addictions Research (CARBC) at the University of Victoria. The study was published on January 18 and is entitled \”Privatising Liquor Sales Results in More Alcohol Related Deaths\”. The press release for the study boldy stated that private liquor stores are \”harming our health\” and trumpets a finding that there is a \”27.5 per cent increase in alcohol-related deaths for every extra private liquor store per 1,000 British Columbians\”. It then jumps to the conclusion that \”government monopolies can both reduce alcohol-related harm while increasing much-needed government revenue\”.
The U Vic study garnered a lot of initial publicity despite the fact that its conclusions seem contrary to common sense. It is relatively easy for anyone to compare the alcohol related death rates between privatized and non-privatized jurisdictions by looking at neutral government data that is readily available on the internet. For example, over the past few years, the alcohol related death rate in BC has generally been slightly higher than that in neighbouring Washington state, despite the fact that their system is almost entirely privatized for beer/wine sales and that prices for all alcohol are considerably lower (CARBC also favours raising alcohol prices in BC). Comparisons to California also raise questions about the validity of the study because their alcohol related death rates are very similar to BC\’s despite having an entirely privatized system for all alcohol sales as well as dramatically lower prices. If it was true that there should be a \”27.5 per cent increase in alcohol related deaths\” for each of those extra private liquor stores, then CA and WA should have dramatically higher alcohol related death rates, which they do not.
The U.S. article, Privatising kills! Or does it?, raises more serious questions. The authors are two prominent U.S. experts in statistical analysis, Rebecca Goldin, who has a Ph.D. from M.I.T. and Robert Lichter who has a Ph.D. from Harvard. They question the conclusions of the U Vic study by noting that the overall alcohol-related death rate in BC actually went down during the privatization expansion (which the U Vic study pretty much ignores) and that the study\’s conclusions are generated from a less reliable analysis of small geographical areas. The data from this latter analysis appears to be questionable since it is inconsistent and contains a \”poor description\” of the study\’s calculations along with bizarre results such as an indication that the opening of each additional government liquor store would actually reduce alcohol related deaths by more than 56%!!! As the authors point out \”a logical policy consequence of these findings would be to open new government liquor stores even faster than you close private stores\” which is, quite obviously, ridiculous.
The authors conclude by warning that parties to the privatization debate should be \”cautious about using a newly published scientific study as a political football\” until the questions surrounding the study are resolved. Particularly, they warn that the proper purpose of \”scholarly research is to advance debates, not stifle them\”. These latter warnings are particularly prescient in the case of the U Vic study because the study\’s conclusion that \”government monopolies can … reduce alcohol related harm\” has obvious political connotations. In my view, and as noted earlier, the CARBC study ends up with conclusions which are contrary to common sense. Perhaps its time to rethink the research?
Update: this story has now been covered by the National Post: Playing with numbers while under the influence
The Ottawa based effort to reform Canada\’s inter-provincial shipping laws has been gaining momentum with positive press coverage from across the country including, as previously reported, endorsement from the Globe & Mail and, now, from many other media sources. See the FreeMyGrapes.ca web site for details on the effort and their Facebook page for updates on the continuing publicity.
The current campaign is a call for a solution at the federal level to create a personal use exemption such that consumers can order wine from other provinces without breaking the law (as is now the case). I have just returned from the Direct to Consumer symposium in Santa Rosa, CA where the American approach was summarized. The U.S. now has a patchwork system with different regulations for wine shipping in EVERY state. As a result, wineries are faced with a nightmarish regulatory structure and must resort to specialized third party compliance businesses to ensure compliance (ShipCompliant is the leader). However, the current proposal for Canada would create a much better solution. If the problem were fixed at the federal level with a national personal use exemption – then wineries would have one national standard which would be easy to understand and to comply with.
As a friend in Napa told me … Canada will have a better wine shipping system than the U.S. if the current proposal is successful. Please continue to support this initiative. These issues will be covered in more detail at the upcoming Wine Law in British Columbia conference on March 29, 2011 (50% discount on tuition for the wine industry!).
A draft SFU report on the state of the BC wine industry (The Wine Industry in British Columbia: A Closed Wine But Ready for Harvest – PDF) raises questions about the long term health of the industry by citing multiple areas where the industry may be vulnerable: market saturation, cost of land and inputs, lack of alternative markets, heavy reliance on tourism, dependence on regulatory protection, difficulties in learning how to export, lack of coordination, poor coordination of supply chains, and lack of innovation. This report is likely to provide fodder for a lively discussion about these issues. I\’ll comment more on the regulatory issues once I have had a chance to digest the whole analysis. Incidentally, this website is cited as a reference in one part of the report although I haven\’t spoken with its author about any of the covered issues yet.
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Wine Law Conference: March 29 2011
The second conference on Wine Law in British Columbia is now set for Tuesday March 29, 2011 in Vancouver, immediately prior to the commencement of the Vancouver Playhouse Wine Festival Trade Days events on Wednesday. There is a great lineup of topics covering the economics of wine production in BC, interprovincial shipping laws, business partner relationships, tied house reform, host liability, social media and issues related to starting or operating a winery. The faculty includes numerous leading lawyers as well as prominent wine industry figures such as David Enns (Laughing Stock), Toby Frisk (Farm Credit Canada), Josie Tyabji (chair of the BC Wine Institute), Barry Bieller (LCLB), Sandra Oldfield (Tinhorn Creek), Christine Coletta (Haywire, Coletta & Associates, BC Grapegrowers) and Michael Bartier (Road 13). The full schedule and agenda is here: Wine Law in British Columbia. The regular tuition for this program is $595. However, those employed in the wine industry can register with a 50% discount: please contact the conference organizer, Law Seminars International, directly in order to register at the discounted rate. The conference is presented this year in conjunction with the Vancouver Playhouse Wine Festival.
As everyone knows, both of BC\’s major political parties now have leadership races well underway. As far as I am aware, none of the leadership candidates have yet taken policy positions on the modernization of BC\’s archaic wine and liquor laws. In my view, BC\’s current liquor distribution systems is in desperate need of wide ranging reform: see this summary of BC\’s outdated laws and policies to see why. Regrettably, previous governments have paid insufficient attention to these issues and we are still lumbered with a system which needs multiple fixes. Hopefully, these issues will become part of the policy debates that relate to the leadership races. I look forward to seeing the candidates\’ positions on wine and liquor law reform. I urge readers to get involved in the political process and to make this reform into an important political issue.