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BC Liquor Law Reforms: Further Details and Timeline

On March 6th, the BC Government released further details of its ongoing reforms to BC liquor laws including more specific information on grocery store liquor sales and a timeline for 15 of the 73 reforms that are being implemented as a result of the liquor policy review. The press release is here: BC Outlines Balanced Plan for Grocery Store Liquor Sales. In addition, amendments were introduced in the legislature that will implement some of the proposed changes: Bill 15, Liquor Control and Licensing Amendment Act 2014.

Highlights of the changes include:

  • Two ways to sell liquor in grocery stores: the first is a \”store within a store\” model where alcohol will be sold in a segregated area of the grocery store with its own cashier, and the second is the ability to obtain one of a limited number of new licenses that will permit the sale of BC VQA wines on regular grocery store shelves.
  • Work continues on the definition of \”grocery store\”. However, it will not include \”convenience stores\”. In addition, the current moratorium on the issuance of new licenses will be maintained.
  • The 1 km distance separation rule for liquor retailers will be maintained (and expanded to include all liquor stores). The 5 km maximum relocation rule for retailers will be eliminated.
  • Significantly, the government has also announced that BC\’s wholesale pricing structure for liquor will be revised and that all retailers, both government and private, will pay the same wholesale price for liquor products (apparently, the current intention is that restaurants/hotels/bars will not be included in this policy). 

A timeline is set out in the press release for 15 of the liquor policy review changes which indicates that some of the announced changes will be implemented in \”Spring/Summer 2014\” (e.g. farmers\’ market sales, festival sales, happy hour, off-site storage for licensees, intra-transfer of liquor), others will be implemented in \”Fall 2014\” (e.g. education initiatives, serving it right changes, expansion of manufacturer sales to include additional products) and some in \”Winter 2015\” (e.g. grocery store liquor sales). In addition, a complete re-write of the existing licensing statute will be done and a new Act will be introduced in \”spring 2015\”. 

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Canadian LIquor Law Reform Momentum Continues

The momentum for the reform of liquor laws in BC and at the federal level in Canada continued today with commitments in the BC Government Throne Speech and the federal budget. The BC Throne Speech contained a pledge to implement all of the recommendations in the recent BC Liquor Policy Review Report: see the Modernization section of the throne speech. In addition, the federal budget, also delivered today, repeated an earlier commitment to introduce further amendments at the federal level that would permit the interprovincial shipment of beer and spirits: see \”Removing Barriers to the Interprovincial Movement of Goods\” in the Budget. It should be noted that BC\’s promised reforms are quite extensive while the federal changes are limited. They simply extend earlier amendments (which only applied to wine) to include beer and spirits. 

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73 Changes, More to Come?

BC\’s full liquor policy review report has now been released with 73 substantial recommendations for change, most of which will be enthusiastically welcomed by the wine industry. Nevertheless, two substantial areas of reform remain and they are: 1) BC\’s wholesale pricing structure for alcohol, and 2) the LDB wholesale distribution system. Each of these areas poses significant problems for both the wine industry and the hospitality industry as a whole. In depth analysis of the problems in each of these areas can be found in the policy review submissions of both the Modernize Wine Association of BC and the Canadian Restaurant and Foodservices Association. It is hoped that the positive momentum of change invoked by the liquor policy review will continue and that the government will also act sooner rather than later on these important structural issues which affect both industry and wine consumers.

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BC Government Supports 73 Liquor Policy Reforms

The BC Government released its full Liquor Policy Review Report today and announced that it is supporting all of the 73 recommendations in the report. The report is very wide ranging and includes specific recommendations related to most sectors of the industry, some of which are summarized below. The only exceptions are general recommendations related to distribution and pricing, which presumably may become the subject of future changes. At a press conference for the release, the responsible Minister indicated that the government will move as quickly as it can to implement the changes but that some reforms will obviously take longer than others.

Previously announced changes that will benefit wineries include: increased promotion of BC wine products, simplifying licensing requirements for low risk activities such as picnic areas at wineries, streamlining licensing processes for wineries, allowing the sampling and sale of wine at farmers\’ markets, making it easier for consumers to purchase wine at tasting events (including temporary on-site private and government stores), and allowing secondary tasting rooms for wineries.

Previously announced changes for restaurants and bars include: allowing happy hour specials subject to minimum pricing guidelines, allowing minors into pubs with their families subject to guidelines, removal of requirements to order food in restaurants when ordering a drink, flexibility in operating an establishment so as to allow conversion from food-primary to liquor-primary at a certain hour.

Major changes announced today include: an appeal process for the decisions of the LCLB, the demise of fenced off beer gardens, an overhaul of the special occasion licensing system, simpler licensing for stadiums and theatres, the removal of restrictions on sampling of alcohol, allowing off-site storage for private licensees, allowing growler service in retail stores, and site-wide licensing for hotels (e.g. take a drink from one part of the hotel up to your room).

Those interested in a full analysis of these policy changes including potential business opportunities and challenges may wish to attend the 2014 Wine and Liquor Law Conference in Vancouver on February 24th which is dedicated to a sector by sector discussion of the reforms. Those employed in the wine and liquor industry are eligible for a discounted tuition rate of $300 for registration at the conference.

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Upcoming Seminars Highlight BC Liquor Law Reform and Ontario DTC

Two upcoming seminars will provide important information to the wine industry in both Western and Eastern Canada.

The 5th annual Wine and Liquor Law in BC conference will be held on February 24th in Vancouver at the Metropolitan Hotel. This day-long conference focuses on the recommendations issued by the BC Government\’s Liquor Policy Review. It will provide a sector-by-sector analysis of the proposed changes including regulatory reform, effects on current stakeholders and emerging business opportunities. Check out the great line-up of speakers here including Doug Scott (new general manager for the LCLB) and Barry Bieller (director of policy for the LCLB). A special discounted conference fee of $300 applies to those working in the wine or liquor industry. Register Here.

The second event is the MNP Direct to Consumer Workshop which will be held on February 18th in Niagara-on-the-Lake at the White Oaks Resort. This half-day workshop will provide essential information to Ontario wineries who wish to take advantage of new markets in other provinces that have opened up following changes in interprovincial shipping laws. Speakers will include Dan Paszkowski from the CVA, myself (Mark Hicken) and MNP\’s Geoff McIntyre and Kal Ruprai. The workshop is free to industry attendees. Register Here.  

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2014 – Year of BC Liquor Law Reform

The new year in BC has rolled in with the promise of significant modernization to the province\’s liquor laws. The liquor policy review concluded on November 25th of last year with a written report by John Yap, MLA which was submitted to the responsible minister, the Hon. Suzanne Anton. The report contains 70 recommendations. To date, the government has unveiled 20 of the 70 recommendations, and has indicated that it will support and implement those 20. The first batch of 12 were announced in earlier December and were aimed at assisting the BC wine industry as well as craft beer and spirits producers: see First BC Liquor Policy Review Changes Help Local Wineries. Later in December, another batch of 8 recommendations were announced which will help the province\’s restaurants and bars including the return of \”happy hour\”, easier licensing processes, permitting children into pubs with adults during certain hours, allowing restaurants to transition to liquor primary service at certain times, and expanding the Serving It Right program: see BC Toasts Happy Hours, Hospitality, Legion Changes. I understand that support for further changes will be announced in the coming weeks and that the full liquor policy review report is scheduled to be released in mid-February.

If you are interested in learning more about these changes and the opportunities that may arise from them, you may wish to attend the annual Wine and Liquor Law in BC Conference which will be held in Vancouver on February 24th. This year\’s conference will be focussed entirely on the liquor policy review recommendations. A discount of more than 50% on the conference fee is available for those working in the wine and liquor industry. 

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First BC Liquor Policy Review Changes Help Local Wineries

The BC Government has announced support for the first batch of recommendations proposed by the BC Liquor Policy Review. The initial 12 recommendations, which government indicates that they will proceed with, include a number of positive changes that will benefit the local wine industry (as well as local beer and spirits producers). The full press release and backgrounder are here: Liquor Changes Plant Seed for Tourism and Economic Growth. Here is a summary of the changes:

  • Numerous initiatives to promote locally produced products including working with the LDB, with tourism associations and out of province groups.
  • Elimination of the requirements to obtain license endorsements for low risk tasting activities such as picnic areas.
  • Relaxation of licensing so that wineries can offer products that were not produced on-site, including working with the Agricultural Land Commission to ensure that their rules also permit this.
  • Relax licensing requirements for wineries, breweries and distilleries.
  • Allow BC wine (and other liquor products) to be sampled and sold at farmers\’ markets.
  • Make it easier for consumers to purchase wine (and other alcohol) at festivals and tasting events including allowing both government and private retailers to operate temporary stores at such events.
  • Allow secondary tasting rooms for manufacturers (e.g. off-site tasting rooms away from the winery as in Walla Walla or Woodinville). For example and depending upon how it is implemented, this could permit a BC winery (or group of wineries) to open a tasting room and sales outlet in Whistler or other locations close to major markets.
  • Relax licensing requirements for tourist destinations.  
All of the above are welcome positive changes. There are a further 58 recommendations from the Liquor Policy Review which will be publicly released \”early next year\”.

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BC Liquor Policy Review Report Due Today

Today is the big day for liquor policy modernization in British Columbia. Parliamentary Secretary, John Yap, was tasked with responsibility for running the review and for preparing a report which has been delivered to the responsible Minister, Suzanne Anton, today. The report will be made public, apparently \”early in the new year\”. The Minister and Cabinet will then consider the recommendations and implement some or all of them in the spring session of the legislature. The latest news on this is that the report will recommend a limited form of liquor sales in supermarkets, see this press release: Grocery Store Liquor Sales Recommended for BC. There are 70 recommendations in the report according to the press release.

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BC Reforms Charity Wine Auction Rules

The BC government has announced that new rules regarding charity wine auctions are effective as of today. The new rules will permit the auction of privately donated wine, in smaller quantities without a permit and in larger quantities with a permit. The press release is here: Charities Benefit from New Liquor Auction Rules. These changes should assist with resolving the problems for charities that resulted from an earlier change in policy by the Liquor Control & Licensing Branch (see: BC Charity Wine Auction Update and BC to Permit Charity Wine Auctions, Problems Remain). 

The new rules are brought into effect by Order-in-Council 507, effective November 22nd. Essentially, a new vendor category for alcohol is created under the Act for charitable auctions. A charitable auction which does not exceed certain amounts of alcohol (6 litres of spirits; 18 litres of wine; 51.2 litres of beer/cider/coolers) can proceed without a permit. Auctions for larger than the specified amounts will require a new permit which is available on application from the Licensing Branch for $50.

Auctions can be held by specified non-profit organizations or by charities, but in either case the auction proceeds must be used for charitable purposes (which means that fundraisers for the benefit of some non-profits and for political purposes are not allowed). An organization cannot hold an auction within 30 days of the last auction. There are reporting requirements and various other restrictions including not allowing consumption of auctioned liquor at the event.

The new regulations do not actually refer to private wine donations and it is not entirely clear on first reading how they are permitted for an auction. However, I have confirmed with the LCLB that they are permitted because the organization holding the auction is not a licensee under the Act (rather they are a permit holder, if required). The regulations indicate that the only restriction on sourcing auction liquor is that the product be commercially produced (i.e. not u-brew or u-vin product). The other restrictions related to alcohol sourcing in the Act and Regs do not apply because they apply to licensees. As as result, the holder of an auction can sell any product from any source including private donations so long as the product is commercially produced.

A policy directive is available here: Liquor Auctions and Private Re-sale of Liquor to LDB

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Health

Another Perspective on Liquor Law Reform and Alcohol-Related Problems

The BC Government is currently conducting a Liquor Policy Review whose consultation phase is slated to end on October 31st, following which the Parliamentary Secretary responsible, John Yap, will prepare a report to the responsible Minister (Hon. Suzanne Anton) with recommendations for change. 

The review panel has received a wide range of submissions dealing with many different issuesAs would be expected in any review process such as this, there are many different viewpoints including a number of groups that are advocating for very limited changes to BC\’s current system of \”government control\” over liquor distribution. Indeed, some groups are advocating for stricter controls over liquor such as raising the drinking age to 21, increasing prices, and either limiting or reversing the expansion of private sector involvement in the liquor business. The general rationale for such positions is that alcohol creates a significant number of social and health problems … and that increased or continued government control over the liquor business is the best way to limit the incidence of such problems.

Of course, it is true that alcohol can cause problems when used to excess and that government should try, wherever possible, to reduce or eliminate those problems. However, the mandate of government must be to ensure that any adopted measures will actually be effective in reducing problem behaviour. Since Prohibition, the approach in BC (and Canada generally) has been to adopt strict rules which apply to everyone, regardless of how they consume alcohol, in the belief that this will limit problems. This way of thinking is a carry-over from Prohibition since it is based upon the belief that all alcohol consumption is \”bad\” and that any regulatory attack on consumption is necessarily \”good\”.

Certain studies are often cited as providing proof that stricter government control results in a lower incidence of alcohol related problems. However, statistical studies of social science issues can sometimes produce erroneous conclusions, particularly if they are based on smaller data sets or include assumptions that are not verifiable. Indeed, the best way to verify conclusions is often to compare them to much broader data and to see if the conclusions still hold true. In this respect, it may be wise to cast a cautious eye on the smaller alcohol control studies because the latest broad-based data and experience shows that the \”strict government control reasoning\” is probably simplistic and may actually be harmful.

British Columbia\’s current regulatory system provides a good example of this when compared to our immediate southern neighbours, Washington, Oregon and California. BC has extremely high prices for beer and wine compared to all of our southern neighbours, often double or triple at retail. BC\’s and Washington\’s prices on spirits (hard liquor) are not that far apart … but BC is more expensive than Oregon and much more expensive than California. Washington and California have liquor distribution systems that are entirely privatized. Oregon has a mixed system, with beer and wine privatized and spirits still sold in government stores. In terms of licensing (e.g. ease of getting a license) and related regulation (such as happy hours and the service of alcohol at festivals), all of the west coast states are much less restrictive than BC. In California, you can wander around a farmers\’ market with a glass of wine in your hand. In Oregon, it is quick and easy to get a license to open a craft brewery. In Washington, consumers can now buy beer, wine and spirits at Costco and other big box stores.

According to the \”strict regulation\” advocates, BC should have a much lower incidence of alcohol related social problems than any of the west coast states since we have much more government control and regulation. Indeed, those states should be awash in problems since their \”government control\” systems have either been scrapped (WA, CA) or scaled back dramatically (OR). In fact, if one looks at the statistics, the opposite is true. BC\’s incidence of alcohol related social problems is either the same, or sometimes worse than our neighbours.

The alcohol related death rate is a measure of health problems caused by problem alcohol consumption. In the past decade, BC\’s department of Vital Statistics tells us that BC had just over 1800 alcohol related deaths each year.  For every 100,000 residents, that translates to about 39 annual deaths. By contrast, the U.S. Center for Disease Control and Prevention indicates that Washington had an equivalent rate of 31, Oregon had a rate of 36.7, and California\’s rate was 31.3. As a result, BC\’s rate is the poorest of all of the west coast jurisdictions.

Another important statistic is the rate of alcohol related traffic fatalities, which MADD keeps track of for all North American jurisdictions. BC\’s rate has been getting better due to our targeted new laws on drinking and driving but in 2009/2010 (prior to the introduction of the new laws but with our government control system), MADD\’s data says that the rate was 3.6 annual fatalities per 100,000 residents with 38.6% of all total crash deaths being alcohol related. In contrast, Washington\’s rate was 2.5 per 100,000 residents with 37% of crash deaths being alcohol related. In Oregon, the rate was 1.8 with 22% of crashes being alcohol related. In California, the rate was 2.0 with 29% of crash deaths being alcohol related. Again, BC\’s rates are poorer than our neighbours who have less government control.

Similar results to the above were found in the U.S. by this study (Social Impacts of Liquor Privatization) which compared the same statistics amongst U.S. jurisdictions and found that the \”government control\” state of Pennsylvania either fared no better or worse on the statistics than states with no government control.  

Recent experience with liquor distribution reform in Washington state points to a conclusion that privatization may actually reduce problems! In 2012, Washington finally scrapped all remnants of government control from its distribution system by closing all remaining government liquor stores and allowing spirits to be sold in private retailers (beer and wine had been privatized earlier). More than a year later, the statistics show that Washington is actually a safer place after privatization. Washington\’s annual alcohol related collision rate in 2008-2009 (before privatization) was 2,861 and the number of DUI arrests was 21,941. In the past year (after privatization), the rates have dropped to 2,347 and 19,703 respectively. In addition, the arrest rates for \”minors in possession of alcohol\” have also dropped considerably from 1,483 to only 777. Finally, the compliance rates for selling to minors from private stores are almost the same as they were before with government stores.

Is it possible that stricter government control actually makes things worse? That is the point of this recent article: \”Alcohol Crimes Decline in Washington After Liquor Privatization\” which references a study in the U.S., that hypothesized: \”more stores nearby mean that people have to travel shorter distances to buy their alcohol and may not have to drive at all—decreasing the likelihood of these consumers driving while intoxicated.\” Another article argues the same thing: Liquor Privatization Saves Lives? And there is also this interesting study from the American Association of Wine Economists which speculates that shifting consumption to wine through better availability may reduce traffic fatality rates: \”Notably, states with higher consumption shares of beer and spirits have higher traffic fatality rates, and therefore states with a higher consumption share of wine have lower traffic fatality rates. Our results suggest that arguments against legislation that proposes to introduce wine into grocery stores for reasons related to traffic fatalities may be misguided.\”

In respect of the Canadian experience, it is also worth noting that the province with consistently the worst impaired driving statistics is Saskatchewan, a jurisdiction which has maintained its \”government control\” approach very stringently. It seems likely that alcohol related social problems have more to do with socio-economic factors and culture than with \”government control\”. What is apparent, though, is that there is no reliable correlation between ultra-restrictive liquor regulatory policies that apply to everyone and alcohol related harms. Sound public policy should treat different kinds of consumption differently. Responsible consumption should not be punished. Rather, problem consumption should be targeted because it is the actual cause of the harms.

Finally, it should be noted that whenever liquor policy reform is suggested, and regardless of jurisdiction, there will always be opponents of reform. Many of those opponents may genuinely believe that \”liberalization\” or \”modernization\” of laws will be harmful. However, such beliefs are often proven to be incorrect. Prior to Washington\’s recent modernization, many claims were made that the privatization initiative would lead to greater social harms and problems. In reality, the opposite actually occurred. Yes, some kinds of alcohol consumption are problematic. But for the vast majority of British Columbians, a glass of wine or a beer will simply bring a small amount of pleasure … and will not cause any social harms at all.