WineLaw.ca

The WTO has announced last week that a \”mutually agreed solution\” has been found for the Australia-Canada wine trade dispute which involved challenges to various measures related to the sale of wine in British Columbia, Ontario, Quebec and Nova Scotia. As such, this long-running trade dispute has come to an end. The formal announcement is here: Report of the Panel.  The final \”report\” does not provide much information on the settlement of the dispute although aspects of this were discussed in my earlier post here: Federal Excise Tax Exemption & Certain Provincial Preferences for Canadian Wine To Be Eliminated. In addition, the EU has posted a lengthy submission that relates to this dispute and which sheds light on many of the issues and positions of the parties which is discussed further here: Uncorking Canada\’s Import Measures on Wine. As discussed in this article, it is possible that these long-standing issues may well reappear in future trade complaints involving Canada.

The Okanagan wine industry is likely relieved after seeing today\’s announced \”BC Restart Plan\”. A phased reopening over the next few months will likely have the province back to normal by the fall … and will provide significant help to the wine and hospitality industries earlier than that. The gradual reduction of restrictions is summarized clearly in this BC Restart Plan Chart (downloadable from this site). The government news release is here as well as a link to the entire media presentation: BC Media Presentation on Restart Plan.

The new Public Health Order (dated May 24, 2021) is here: Food & Liquor Serving Premises Order. Related guidance for the industry is located here: Province-Wide Restrictions. I note that at the time of writing this the earlier Gatherings & Events Order (dated May 7, 2021) had not been properly updated to reflect the updated restrictions indicated by government below.

In summary, the major changes that affect the industry are:

• Today: indoor dining is permitted with the same rules that were in effect prior to the \’circuit breaker closure\’. In other words, physical distancing requirements and a maximum of 6 people to a table. Note: the recommendation that the 6 should be from the same household has been removed. Travel is still restricted but now permitted within your health region (so travel from the Lower Mainland to the Okanagan is still NOT permitted). Organized gatherings are now permitted with up to 10 people indoors and up to 50 people outdoors. 
• June 15th (earliest expected date): Liquor service is expected to be extended until midnight. Organized gatherings are expected to be expanded to allow up to 50 people indoors. Travel between health regions is expected to be permitted (i.e. travel from the Lower Mainland to the Okanagan will be allowed).
• July 1st (earliest expected date): Indoor dining group limits are expected to be removed. Organized gathering limits are expected to be expanded even further and to permit \”fairs and festivals\”. Canada-wide travel is expected.
• September 7th (earliest expected date): Expectation is a return to \’normality\’ or something close to that. 

A couple of recent articles (one mainstream media, one academic) provide interesting perspectives on recent Covid-Related Public Health Orders as well as providing a potential way forward for the hospitality and liquor sectors in terms of limiting Covid transmission during reopening. The first article is from the Washington Post. It describes how a California restaurant is using the latest scientific research on Covid transmission to create a safe dining environment by implementing ventilation and air quality technologies (How One Restaurant\’s Experiment May Help Diners Breathe Safely – also reprinted here at the SFGate site). The second is an academic study on Covid transmission from MIT (Covid19 Indoor Safety Guidelines – which includes an academic paper, supporting info, and even a web-based app to calculate risk) in which researchers provide fascinating models of Covid transmission risk – again based on ventilation and air quality. 

The articles are \’related\’ in that they are both premised on the ability of Covid19 to travel via aerosol particles in the air, which makes the virus more easily transmissible. Both also conclude that ventilation, good air quality and mask use are the best ways to restrict transmission risk … and to make it safe for people to gather again in appropriately ventilated spaces. 

The methodology in the articles provides some interesting context for the current Public Health Orders affecting the liquor industry and hospitality sectors in BC (and other places). For example, if this reasoning is correct, then:

• Restrictions that make a distinction between indoor and outdoor gatherings would appear to have a scientific basis, except for the fact that they may be over-reaching or under-reaching depending upon how well ventilated the particular space is.
• Restrictions that make a distinction based upon the time that someone spends within a space would also appear to have some basis, since shorter times would lead to less exposure. 
• For example, in BC, our current Public Health Orders prohibit all indoor dining and permit patio dining. While basically sound, this would seem to be an overly simplistic approach since some \”indoor\” spaces are probably as well ventilated, or almost as well ventilated, as outdoor spaces. For example, in the Okanagan, I can immediately think of two restaurants whose \”indoor\” spaces are extremely well ventilated: anyone who has eaten at the Hooded Merganser in Penticton will know that when the patio doors are open, it is breezy, if not windy, given the restaurant\’s proximity to (above) the lake. Similarly, the Miradoro restaurant at Tinhorn Creek is perched high above the valley and when the patio doors are open, it is extremely well ventilated. There are similar examples in Vancouver (e.g. Ancora at False Creek) and, no doubt, elsewhere in the province. Indeed, in many places, the ventilation for a guest sitting \’indoors\’ next to an open window is probably as good as if the guest was sitting \’outdoors\’.
• A new BC \”Guideline for Outdoor Dining\” document creates a complicated set of rules for qualifying spaces … which partly reflect the above principles, but which are not precisely focused on ventilation and which could still exclude well ventilated outdoor or indoor spaces (including spaces that were previously ok). I note that the most recent PHO Order on Liquor Serving Premises includes some of these new guidelines. By contrast, I note that new rules for \’open air\’ dining in WA state are specifically focused on air quality level measurements so they \’follow the science\’ more closely. 
• BC\’s current restrictions on wine tasting pose similar issues. Under the current rules, it is permissible for customers to taste inside if they are standing, but not if they are sitting. They can taste outside either standing or sitting. Given the reasoning above, there may be some justification for the distinction because tasting outside is relatively safe and those customers who are standing inside might spend less time within an indoor space than those who are sitting … but again the restrictions are probably overly simplistic … because with indoor spaces, it is the time spent indoors that matters along with the ventilation. The virus does not care whether the customer is sitting or standing.
• Another relevant factor, which is not mentioned in the articles, is whether or not customers and staff have been vaccinated. This would also obviously affect safety and risks (i.e. indoor seating is for those who have been vaccinated??).

In respect of the above, and more broadly in respect of \’following the science\’, perhaps the Public Health Orders should be drafted so as to target ventilation and/or time indoors more precisely, rather than relying on categorizations such as \’indoors/outdoors\’. The \’science\’ now seems to point to ventilation and time as the key factors … if this is correct, then a more focused order might be framed such that outdoor dining or tasting is permissible … and that indoor dining or tasting can also be permissible if time limits are imposed on customers for remaining inside or if that particular space can be demonstrated to have good air quality and ventilation characteristics. According to these articles, such characteristics are not that difficult to measure … and relatively simple steps such as mandating that doors and windows are kept open could make a significant difference as to whether or not a space is \’safe\’.

Regardless of the above, and for the near future at least, these are very interesting scientific studies. If nothing else, and if only to protect both customers and staff, it would seem wise for all hospitality and liquor businesses to maximize ventilation … keep the doors and windows open whenever possible!

Today\’s Federal Budget included a spending announcement directed at Canadian wineries. Page 217 of the Budget Document indicates that the federal government proposes to provide $101 million over two years starting in 2022 to \”implement a program for the wine sector that will support wineries in adapting to ongoing and emerging challenges, in line with Canada\’s trade obligations\”. The program will be run by Agriculture and Agri-Food Canada. Details of the program were not provided … but it appears likely that this program may be designed to  address the concerns of the Canadian wine industry surrounding the loss of the federal excise tax exemption, which is scheduled to occur in June 2022.

New Public Health Orders were issued yesterday which place severe restrictions on the business operations of the hospitality sector including wineries and liquor manufacturers. The new Orders were made verbally at a press conference by the Provincial Health Officer. They have now been published in a written Order located here (Food & Liquor Serving Premises Order) and are summarized here: Province-Wide Restrictions. The new Order is effective until April 19th (or perhaps longer, if it is extended). The major effects of the Order are as follows:

• Restaurants and Bars can no longer permit inside dining. Operations are restricted to outdoor (patio) dining or take-out. For many businesses, this will dramatically reduce their operations or cause them to shut down.
• Manufacturer tasting rooms may continue to operate but customers cannot be seated indoors. They may taste indoors if standing (there is an exception for those unable to stand). Customers may be seated for tasting if they are doing so outdoors. 
• There can be no interaction between groups of patrons. There are various distancing rules and safety protocols set out in the Order.
• Winery (and other manufacturer) retail stores may continue to operate. 
• The restrictions apply to the entire province, including areas where there is a lower incidence of Covid.

As a result, the latest versions of the most applicable Public Health Orders for the hospitality and winery sector are as follows: 

• Food and Liquor Serving Premises Order issued on March 31, 2021. Applies to the hospitality sector including wineries and liquor manufacturers.
• Gathering and Events Order issued on March 24, 2021. Applies to many situations and sectors. Parts of it will affect winery and manufacturer operations.
• Workplace Safety issued on December 16, 2020. Applies to all workplaces including wineries and manufacturers.

The following is a summary of the main Covid-related Public Health Orders which affect winery operations in BC. These orders change frequently. The links below take you to the actual written orders which set out the legal effects and requirements of each Order.

• Food and Liquor Serving Premises Order issued on March 12, 2021. Applies to the hospitality sector including wineries.
• Gathering and Events Order issued on March 24, 2021. Applies to many situations and sectors. Parts of it will affect winery operations.
• Workplace Safety issued on December 16, 2020. Applies to all workplaces including wineries.

Some of the provisions of these orders (and/or the interactions of the Orders) are confusing. Two earlier articles (2021 BC Liquor & Hospitality Industry Health Order Update and Covid Regulatory Rabbit Holes: What is an Event?) may assist in their interpretation, particularly on the issue of what is or is not \”an event\”.

Two significant developments in the liquor industry today.

Firstly, the BC Government has made wholesale (i.e. normal) pricing for the hospitality industry permanent. This measure was introduced in July of last year on a temporary basis to assist the struggling industry and was set to expire at the end of next month. However, the change has now been made permanent. This is a very welcome change and has been a policy reform that the restaurant/bar/hotel industry has been requesting for decades. It was a recommendation of the original BTAP Report and was the subject of continued consultation of the BTAP group and Government. It means that BC now has a normal pricing system for liquor in the hospitality business under which the industry can purchase liquor at regular wholesale prices (as happens almost everywhere else in the world). Prior to this, industry had to buy at full retail price which created higher end-consumer prices and lower hospitality profit margins. This is a very welcome change which will be vital for the recovery of the industry following the pandemic. News release here: Permanent wholesale pricing will help hospitality sector recover.

Secondly, Government has also re-introduced the ability of local manufacturers to deliver direct to consumer from secondary storage locations. This measure was also introduced on a temporary basis last year and expired on October 31. It has now been re-introduced with a current expiry date of December 31, 2021. This measure was also the subject of continued consultation between the BTAP group and Government. I note that this also places BC manufacturers on an equal footing to their competitors in neighboring jurisdictions. All of the west coast jurisdictions currently permit this. LCRB Policy change is here: DTC Off-site Storage Permitted.

A revised BC Public Health Order related to “Gatherings and Events” was issued on February 10^th by the Provincial Health Officer. In respect of the hospitality sector, the Gathering and Events Order supplements an earlier Food and Liquor Serving Premises Order which was issued on December 30, 2020. Along with another earlier order on Workplace Safety, these three orders constitute the framework for the operating restrictions which currently apply to restaurants, bars, hotels, liquor retailers and liquor manufacturers (including wineries).

The earlier orders have been described here previously (see 2021 BC Liquor & Hospitality Industry Health Order Update). Generally, the latter two Orders impose either objective standards relating to compliance (e.g. maximum of 6 people at a table) or require that a business create a viable safety plan based on certain guidelines. However, the Events Order imposes additional complications because it is considerably more subjective and imparts significant ambiguity into what is permissible. It prevents any of the businesses covered by the earlier Food & Liquor Serving Premises Order from permitting their premises to be “used for an event, including a private event” and prevents these businesses from organizing or hosting “an event”. As such, hospitality businesses are effectively banned from allowing “events” in their facilities.

Since there are significant fines and other penalties (including possible closure orders) for violating the Order, businesses should be able to determine what constitutes an “event” relatively easily. Unfortunately, it is not clear from the Order or from the accompanying guidance what is a prohibited event and what is not. The Order seeks to define “event” but it does so by stating that an “event” is any gathering of people in any “private or public place”, “inside or outside”, “organized or not” and which is held on a “one time, regular or irregular basis”. This is a very sweeping definition of event – a meeting with a single friend (or even your spouse) for lunch could conceivably be an event under this interpretation. 

The first problem is that this approach fails to recognize that whether or not something is an “event” is likely to be defined by the subjective experience of the participants and, perhaps, the organizer. If you look at the dictionary definition, it includes reference to whether or not the occasion is viewed as being “important”. I may not consider it to be an “event” if I go out for dinner with a few friends … but I might think that the same dinner is an “event” if it is done to celebrate my birthday or graduation.

The second obvious level of uncertainty is that the Order’s definition does not specify a number for a “gathering” that constitutes an “event” … so theoretically, it might include gatherings of small numbers. 

Further uncertainty is created by an extensive example list of “events” which people may agree with or not, depending upon their subjective intentions. For example, “meetings” are listed … but how many people do you need for a meeting to become an “event”? Or how important does the meeting have to be for it to turn into an event? The same problems arise for the inclusion of “party”, “celebration”, a “musical performance” or “a gathering in vacation accommodation”. For nearly every example, it is unclear when, how or why the example occasion would turn into an “event”.

The commentary that was issued along with the Order does not help things appreciably. For example, the commentary says that you can’t meet anyone outside your household in your backyard but it is permissible to go for “a walk or hike” with others so long as the walk or hike does not turn into “a group of people meeting outside” … which makes no sense since it is obvious that a walk or hike with other people is a group of people meeting outside. 

The problems are magnified when you try to read this Order in conjunction with the earlier Food & Liquor Serving Premises Order which contained a clearer set of operating guidelines based on more objective standards such as allowing 6 people per table and imposing certain physical distance requirements. If the business follows these clearer guidelines, is it on-side? Most in the hospitality sector are taking the position (understandably) that they do not have to go beyond the more objective rules. Incidentally, and as mentioned in an earlier post, the Orders do not prevent individuals from different households from eating or drinking together unless that can somehow be determined to be an \”event\”. There may be some situations (e.g. a large party trying to sit in multiple tables of 6) where the business can reasonably determine that there is an impermissible \”event\” … but there may be many other situations where it is not clear.

The introduction of regulation through subjective terms such as “event” will pose significant challenges for hospitality businesses and may end up creating enforcement problems. I am not convinced that these Orders will be enforceable in any situation where there is ambiguity. These issues certainly illustrate the difficulties of trying to regulate public behaviour.

On the positive side, BC’s hospitality businesses have been permitted to remain open during a time when many jurisdictions have either mandated absolute closures, imposed significant capacity restrictions, or permitted only take-out or outdoor dining. As such, and despite the uncertainty, if the choice is between subjective regulation and clearer but more restrictive rules, BC’s hospitality businesses may prefer the more ambiguous approach.

The 2021 Canadian Wine & Liquor Law Conference will be held online on February 25th. This conference is the successor to the annual BC Wine & Liquor Law conference which was originally launched in Vancouver in 2009 and subsequently held in association with the Vancouver International Wine Festival. The conference is now sponsored by AIDV which is the French acronym for the International Wine Law Association.

Each year the conference has always been a must-attend event for anyone interested in or working in the area of wine and liquor law or policy. This year is no different with an impressive line-up of speakers. There is a national regulatory update, sessions on geographic indicators, various panels on international trade and a discussion of counterfeiting and wine fraud (featuring Maureen Downey who appeared in the Sour Grapes movie which dealt with the Kurniawan case!).

The full conference agenda including registration information is here: AIDV Canada Wine & Liquor Law Conference. Membership in AIDV is not required to attend the conference.