WineLaw.ca

The proposal to create a sub-geographical indicator for the Naramata Bench area in the Okanagan has received approval from those wineries and growers who qualified to vote. The BC Wine Authority has issued the results here: Naramata Bench Ballot Results. The Yes vote ranged from 71% to 81% in favour depending upon the categorization of the results. However, in all cases, it exceeded the minimum 2/3 threshold required for approval. The BCWA will now submit a report and recommendation to the Minister of Agriculture.

The Alberta Government has indicated that it is filing a trade challenge (presumably under the Agreement on Internal Trade) aimed at opening up the Ontario market for small liquor manufacturers from Alberta. The news release (Trade Challenge Launched to Support Small Brewers) indicates that only 20 Alberta products are currently sold in Ontario while 745 Ontario products are sold in Alberta. 

At the same time, Alberta has indicated that it is canceling its Small Brewer Development Program which provided grants to small local breweries. This program (and an earlier preferential markup system) were the subject of legal challenges, two of which found that the programs discriminated against out-of-province producers by providing financial incentives to small in-province manufacturers. In its place, Alberta will introduce a volume-based \”universal small producer\” markup such that small producers from anywhere can receive lower markup if they produce less than 50,000 hectoliters of annual worldwide production.

One of the earlier legal decisions was the Steam Whistle case which applied reasoning set out in the Supreme Court of Canada\’s Comeau decision (previously discussed on this blog). The Alberta government had previously indicated that they would appeal Steam Whistle. While there is no mention of the appeal in the news release, it appears from these developments that the Alberta government has determined that it cannot implement preferential markups and is now switching to a non-discriminatory markup system. 

This is an “early fall” update on the legal issues arising from the Supreme Court of Canada decision in R. v. Comeau which was handed down in April of this year.

The full decision is located here: R. v. Comeau (2018 SCC 15). As is widely known, the case dealt with an individual (Gerard Comeau) who drove to Quebec from New Brunswick, purchased some beer and spirits, and then brought them back to New Brunswick. After being stopped by the RCMP, he was charged with a provincial offence since the amount of liquor that he ‘imported’ from Quebec exceeded the amounts permissible under the applicable provincial law. Mr. Comeau’s lawyers argued that the provincial laws were unconstitutional because they violated a section of the Constitution that relates to free trade between the provinces. The Court rejected this argument and upheld the ability of a provincial government to place legal restrictions on the inter-provincial trade in alcohol (which could also include DTC shipments) so long as the primary purpose of the law is not to restrict trade. Nevertheless, the Court also stated that such restrictions may not be permissible if they discriminate as between “in-province” producers and “out of province” producers.

This latter issue could end up being important in respect of provincial policies or laws that treat wineries (or other liquor manufacturers) from one province differently than those from other provinces. A summer decision (Steam Whistle Brewing Inc v Alberta Gaming and Liquor Commission, 2018 ABQB 476) in Alberta applied the reasoning in Comeau and found that preferential markups and grant programs for beer in Alberta were unconstitutional since they provided beneficial treatment to local in-province producers over those from out-of-province producers (i.e. an impermissible ‘trade restriction’). This decision, if upheld, means that the Alberta government cannot impose a different markup regime on producers from another province if it provides better treatment for its local producers. The Alberta government has indicated that it will appeal this decision. 

If the trial level decision is found to be correct then the end effect could be that a provincial government would have to “level up or level down” in regards to markup treatment. In other words, if a government provides lower markups, exemptions or grants to local producers, then it would have to either extend those benefits to all Canadian producers (regardless of provincial origin) or eliminate them entirely. Such a result would have the potential to affect markup policies in a number of provinces.

The BC Government has now released the report of the Business Technical Advisory Panel: LCLB Liquor Panel. The Branch\’s page includes a PDF copy of the report as well as information releases and the written submissions that were made to the Panel from various industry stakeholders. The report discusses various issues related to the BC liquor industry and makes 24 recommendations. The Panel was chaired by myself and included representatives from the BC Craft Brewers Guild, Canada\’s National Brewers, Craft Distillers Guild, Alliance of Beverage Licensees, BC Restaurant and Foodservices Association, Restaurants Canada, BC Wine Institute and the Rural Agency Store Advisory Society.

The Supreme Court of Canada released its judgment in R. v. Comeau (the interprovincial alcohol transport case) today. The court reversed the trial level decision from New Brunswick which had found that a provincial law restricting the possession of alcohol from outside the province was unconstitutional. The Supreme Court disagreed with the trial judge\’s approach, finding that the provincial restriction was valid. The full Comeau decision is here. 

The Supreme Court of Canada has announced that its judgment in the interprovincial alcohol transport case (Comeau) will be delivered this Thursday, April 19th at 945 am Eastern time (645 Pacific). Details here. This ruling deals with the issue of whether or not a province has the legislative power to prevent or restrict alcohol purchases from another province. 

The Supreme Court of Canada will hear an appeal of the decision in R. v. Comeau (the inter-provincial alcohol transport case) on December 6th and 7th. The hearings are scheduled for 930 am (Eastern – 630 am Pacific) on each day. The SCC website contains all of the factums (arguments) that have been filed for the appeal. In addition, the site will host a live webcast of the hearings on each day.

The United States has filed a second WTO complaint regarding the BC \”wine in grocery\” retail model which appears to be designed to re-start the clock on negotations. This action is reviewed in this Globe & Mail article: US Takes Canada to WTO Over Wine Retailing.

BC\’s new NDP government was sworn in yesterday. The minister responsible for liquor is David Eby who is the Attorney-General (and who is also responsible for ICBC and lotteries). He is the MLA for Vancouver-Point Grey and was previously the opposition critic for liquor issues.

As reported earlier in numerous posts, the BC \”wine in grocery\” model has triggered an international trade dispute with numerous countries joining the challenge. It is now apparent that the dispute has expanded beyond the original complaint to include a long list of preferential policies as well as those from other provinces. A couple of documents (trade deficit comments and NAFTA comments) filed in relation to the U.S. dispute indicate that the U.S. industry wishes to include challenges to B.C.\’s policies related to grocery stores, liquor board markup exemptions, direct delivery, VQA rebates, distribution system advantages, farmers\’ markets, and NAFTA\’s retail store exemptions. The policies of other provinces are also included, particularly those of Ontario and Quebec. As such, the dispute has now extended to issues far beyond the original grocery issue – and it would seem likely that the other countries may also raise similar concerns. 

In addition, the new U.S. Trade Representative, Robert Lighthizer, recently indicated (see video here starting at the 1 hour 4 minute mark) that he considered this to be a \”very serious\” and \”extraordinary\” problem for which there was \”no justification\”. He also indicated that he was \”very pro-enforcement\” and would either refer the dispute to a full WTO dispute panel or would include it in the upcoming NAFTA re-negotiation. This topic will be the subject of a presentation by myself as part of the Wine Talks forum in Penticton at Okanagan College on Monday evening at 6 pm.