WineLaw.ca

The Federal Budget 2019 was tabled in Ottawa today. Of note to the wine (and alcohol) industry, the Budget Document promises at p.119 to change the federal law (the Importation of Intoxicating Liquors Act or \”IILA\”) that restricts the shipment of alcohol between provinces. Specifically, it states:

To facilitate internal trade, the Government intends to remove the federal requirement that alcohol moving from one province to another be sold or consigned to a provincial liquor authority. Provinces and territories would continue to be able to regulate the sale and distribution of alcohol within their boundaries.

This promise has the potential to positively impact the regulatory restrictions that currently prevent consumers from purchasing wine or other alcohol from other provinces. The federal restriction is a core part of the regulatory regime that prevents DTC sales and shipment and if the federal restrictions are changed, then DTC could conceivably become easier. The devil is in the details … and, of course, in whether this promise results in actual legislative changes (particularly given the fact that an election is looming). Don\’t hold your breath … but hang tight for the details and cross those fingers.

The upcoming Vancouver International Wine Festival\’s trade conference will host a symposium on February 27th dedicated to discussing the place of Canadian wine in global wine markets. This should be a fascinating discussion moderated by WineFest keynote speaker, Jon Bonne, and including panelists Chris Coletta (OK Crush Pad), Nik Darlington (UK importer), Janet Dorozynski (Trade Commission, Global Affairs Canada), Dr. Jamie Goode (UK wine writer and academic), as well as Sebastien LeGoff (well-known sommelier and director of Cactus Club\’s wine program). There are many other excellent events of interest to the trade all of which are listed on the WineFest\’s trade conference agenda here.  

The annual BC Wine & Liquor law conference will be held on Monday February 25th in Vancouver, which is the beginning of the week of the Vancouver International Wine Festival. Great line-up of topics and speakers this year including analysis of this year\’s liquor policy priorities from government, a report on the work of the Business Technical Advisory Panel, an update on interprovincial shipping, international trade developments, and a summary of the progress being made on geographical indicators in BC. As this will be the 10th anniversary of the conference, there will also be a special closing address from industry pioneer, Harry McWatters. Full details of the conference including registration links are here: BC Wine & Liquor Law Conference. Chris Wilson and myself will be chairing this year\’s conference.

There is a \”50% off\” discount for wine industry members: if you use the online registration form, change the Rate on the form (dropdown box) from \”regular\” to \”industry member\” and the reduced conference fee will apply.

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.