Author: MarkH

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.

This article provides a quick update on the status of the main Covid relief orders that have been issued by the BC Government over the last year as they apply to wineries and the hospitality industry. 

Many of these orders have already been extended previously. It seems likely that many may be extended further beyond the current expiration dates listed above. It is also possible that some of these temporary orders may eventually be made permanent.

Unfortunately, the Public Health Orders (PHOs) that have been issued in BC in response to the Covid19 pandemic continue to cause confusion for the general public and for affected industries including the liquor and hospitality industry. The following discussion provides an updated analysis for the BC wine and hospitality industry by reviewing the orders and related guidelines. 

Restaurants/Bars/Lounges (including Tasting Bars)

The governing Public Health Order for restaurants, bars and lounges (including winery tasting bars) is now the Food and Liquor Serving Premises and Retail Establishments Which Sell Liquor Order which was issued on December 30, 2020. This Order largely re-stated a previous order but also prohibited the sale of liquor after 8 pm on New Year\’s Eve (the latter change came barely 24 hours before the effective time, causing significant financial loss for affected businesses). This PHO previously required and still requires that nightclubs must close. There are various rules for continued operation for all other premises including:

• Customers must be seated and remain seated except to use the washroom or for initial seating. An exception is made for liquor manufacturers so winery tasting rooms can have customers who are standing at the tasting bar.
• Appropriate separation (generally 2m) of customers or customer groups must be made. Alternatively, can use physical barriers.
• Maximum of 6 people per group at a table or counter. No movement between tables.
• Liquor service must end at 10 pm.
• No dancing, singing, etc …
• Contract tracing info for customers is required.
• Workplace Covid Safety plan required.

There is now a requirement for mandatory masks in all indoor public spaces with some limited exceptions including for the consumption of food and drinks. This requirement was issued under this Ministerial Mask Mandate Order rather than a PHO. As a result, masks are now required for staff and customers unless the customer is seated at a table or counter for the purpose of eating or drinking (i.e. a customer must wear a mask during initial seating or going to the washroom).

In respect of events, a revised Gathering and Events Order was issued on December 24th, 2020. This prohibits a restaurant/bar/lounge from holding any \”events\” until at least February 5, 2021. This would likely prevent any type of special event outside the restaurant\’s normal business such as a winemaker\’s dinner or winery sponsored tasting. I note that this order is confusing and does not adequately define many of the terms used. In addition, much of the guidance related to the order (see Province Wide Restrictions page) is not consistent with the order. The definition of \”event\” is problematic because it seems to encompass any \”gathering\” of individuals for \”private or public\” purposes either \”inside or outside\”. This is a sweeping definition that goes far beyond the normal definition of an event. To make things more confusing, the guidance then lists many types of \”gatherings\” which are supposedly permissible but which may fall literally within the definition (for example, \”going for a walk\” with others is supposedly permissible as long as it does not turn into a \”group of people meeting outside\” – which does not make sense). 

Particularly, I note that in this regard and for the purpose of seating customers, restaurants/bars/lounges are not required to determine whether patrons reside in the same household or bubble. Indeed, the Orders do not prohibit customers from different households from sitting together unless that could somehow be characterized as an \”event\”.

Retail Stores (e.g. On-Site Store, Liquor Stores)

The governing PHO for retail stores including on-site stores in a winery or manufacturer is the Workplace Safety Plans Order which was issued on May 14, 2020. This was supplemented by an additional Workplace Safety Order issued on December 16, 2020. Generally, these orders require the following:

• Workplace Covid Safety plan required.
• Daily health checks required.
• Encouragement of working from home, whenever possible.
• Appropriate capacity planning, protective barriers and customer control measures.

As mentioned above, the requirement for masks is now mandatory in retail stores for both customers and employees under the Ministerial Order. 

Events

The revised Gathering and Events Order (above) prohibits all events of any size until at least February 5, 2021. As noted above, the definition of events is problematic but it likely means that all the types of special events that a winery or manufacturer would normally hold are canceled until at least February 5, 2021. For example, weddings, celebrations, parties, auctions, fundraisers, wine tasting seminars, etc… must all be canceled. The previous 50 person limit for events has been suspended (at least temporarily) and the allowable number reduced to zero (the limit for weddings is 10 people which would eliminate most if not all \’winery weddings\’).

Court Commentary

There has already been some judicial commentary dealing with the confusion associated with these Orders. In a recent case that analyzed the effect of these Orders and family custody arrangements, Mr. Justice Kent of the BC Supreme Court noted that the Orders were confusing and hard to understand. The Justice stated: 

There has been some confusion recently on the content and effects of the recent Public Health Orders (PHOs) that have been issued in response to the Covid19 pandemic. The following discussion attempts to alleviate some of that confusion for the BC wine and hospitality industry by setting out the contents of the actual orders and related guidance and recommendations. 

Restaurants/Bars/Lounges (including Tasting Bars)

The governing Public Health Order for restaurants, bars and lounges (including winery tasting bars) is the Food and Liquor Serving Premises Order which was issued on October 9, 2020. This PHO mandates that nightclubs must close. There are various rules for continued operation for all other premises including:

• Customers must be seated and remain seated except to use the washroom or for initial seating. An exception is made for liquor manufacturers so winery tasting rooms can have customers who are standing at the tasting bar.
• Appropriate separation (generally 2m) of customers or customer groups must be made. Alternatively, can use physical barriers.
• Maximum of 6 people per group at a table or counter. No movement between tables.
• Liquor service must end at 10 pm.
• No dancing, singing, etc …
• Contract tracing info for customers is required.
• Workplace Covid Safety plan required.

The recent verbal PHO (November 19, 2020) has not significantly changed the rules for restaurants/bars/lounges. There is now a requirement for mandatory masks. See Province-Wide Restrictions page.

• Masks required for staff and customers unless customer is seated at a table or counter (i.e. for initial seating or going to the washroom).

In respect of events, the reissued Gathering and Events Order (see discussion below) prohibits a restaurant/bar/lounge from holding any events until at least January 8, 2021. This would prevent any type of special event outside the restaurant\’s normal business such as a winemaker\’s dinner or winery sponsored tasting. I note that for the purpose of seating customers, restaurants/bars/lounges are not required to determine whether patrons reside in the same household or bubble. Indeed, the Order does not prohibit customers from different households from sitting together (although the spirit of the guidance would not encourage this except in certain cases, such as where people live alone or where they are meeting for non-social purposes such as business).

Retail Stores (e.g. On-Site Store, Liquor Stores)

The governing PHO for retail stores including on-site stores in a winery or manufacturer is the Workplace Safety Plans Order which was issued on May 14, 2020. Generally, this requires the following:

• Workplace Covid Safety plan required.
• Appropriate capacity planning, protective barriers and customer control measures.

The recent verbal PHO (November 19, 2020) has not changed the rules for retail stores, other than that the requirement for masks is now mandatory. See Province-Wide Restrictions page. 

• Masks required for staff and customers in all indoor areas.

Events

The recent verbal PHO (November 19, 2020) ordered that all events of any size are prohibited until at least December 7, 2020 (now extended until January 8, 2021). The definition of events is contained in the Gathering and Events Order which was revised and reissued on December 2, 2020 to reflect the verbal order. This Order effectively means that all the types of special events that a winery or manufacturer would hold are canceled until January 8, 2021. For example, weddings, celebrations, parties, auctions, fundraisers, wine tasting seminars, etc… must all be canceled. The previous 50 person limit for events has been suspended (at least temporarily) and the allowable number reduced to zero (the limit for weddings is 10 people which would eliminate most if not all \’winery weddings\’). See Province-Wide Restrictions page. 

In the midst of a pandemic which has caused widespread economic pain for the Canadian wine industry, the SAQ (the Quebec liquor authority) has issued an information bulletin which threatens Canadian wineries outside Quebec with enforcement action if they direct ship wine to Quebec customers. The bulletin is located here: Sale and direct delivery of beverage alcohol products to Quebec. Apparently, this bulletin was also sent directly (in the form of a letter) to certain Ontario wineries.

It should be noted that the issues surrounding the interprovincial shipment of alcohol in Canada are complex and were the subject of a relatively recent Supreme Court of Canada decision, R. v. Comeau, which largely upheld restrictive provincial laws. However, the decision also indicated that provincial laws or rules that discriminate as between \”out of province\” and \”in province\” producers could be held to be unconstitutional. Quebec has such laws/rules in that it permits Quebec wineries to direct ship within Quebec but does not permit \”out of province\” wineries to do so. For more detailed information on the laws and rules related to interprovincial DTC shipment, wineries may wish to consult with a lawyer or, for more general information, subscribe to the Alca Winery Compliance Subscription that is available on our sister web-site.

The issuance of the bulletin by the SAQ is a disappointing development as the Canadian wine industry has been working on initiatives to open the country up to the interprovincial trade in wine for years (see Wine Growers Canada and FreeMyGrapes websites). Indeed, the provinces had committed to increase interprovincial access for the alcohol sector in an Action Plan stemming from the 2017 Canadian Free Trade Agreement and had formed a feasibility group to accomplish this. This action flies directly against the spirit of these efforts. At at time when the Canadian economy needs all the help that it can get, it is sad to see a provincial liquor board take an action that will suppress interprovincial economic activity and actively hurt Canadian wine producers in other provinces. Such actions would be unheard of in France where it is, of course, completely legal to ship wine from one part of the country to another. Unfortunately, it appears that the SAQ, and the Quebec government, is taking a narrow short-term view that will ultimately harm Quebec wine consumers.

The BC Liquor and Cannabis Regulation Branch announced today that its earlier program to allow expanded service areas for liquor licensees (including winery tasting rooms and lounges) is being extended from its current end date of Oct 31, 2020 to Oct 31, 2021. This program allows for larger serving areas (e.g. patios) for licensees in order to accommodate physical distancing requirements and other public health order requirements. The policy directive and details are here: Temporary Expanded Service Area – Extension. This change is obviously good news for licensees who will now be able to plan for expanded service areas to continue through the winter and through the bulk of next year. 

In an open letter to the BC Provincial Health Officer and the BC Government, the members of the BC Technical Advisory Panel on Liquor Policy (\”BTAP\” – a group appointed by the BC government to advise on issues related to the liquor industry) have asked for reconsideration and modification of recent orders made by the Health Officer related to the Covid19 pandemic.

On September 8th, Dr. Bonnie Henry, the Health Officer, ordered all nightclubs and standalone banquet halls to close, ordered music volumes to be reduced, and ordered that all liquor service in all licensees throughout the province must end at 10 pm. BTAP is concerned about both the policy rationale and the devastating economic consequences of these orders, and are particularly concerned about these issues in relation to ending liquor service at 10 PM.

Specifically, BTAP has requested and suggested that government consider the following:

• Extend the end of liquor service from 10 PM to midnight
• Greater enforcement of non-compliant venues and customers, targeting the problem areas directly rather than unfairly affecting good operators
• Provide transparent timelines and/or public health targets so businesses can gauge the long-term effect of any restrictions

Download a copy of the letter.

Full disclosure: I formerly chaired the BTAP Panel and am still a member of the Panel.