Recent media reports from Ontario (see: Ontario\’s Most Prominent Bootlegger) indicate that some of Canada\’s Provincial Premiers may have broken Canada\’s archaic federal law (the 1928 Importation of Intoxicating Liquors Act) that prohibits the transport or shipment of wine across provincial borders. The errant behaviour apparently occurred as a result of gifts of BC wine that were provided to the Premiers at a recent meeting held in BC. As a result of the media coverage, both the Ontario provincial government and the LCBO have claimed that it is \”perfectly acceptable\” for individuals to transport wine across provincial borders so long as they don\’t have it shipped. In my opinion, this statement is just plain wrong in law. The federal law at issue makes absolutely no distinction between the personal transport of alcohol and its shipment. Both of those actions are equally prohibited – and it is beyond the constitutional jurisdiction of a provincial liquor board to override that prohibition, particularly when done so through a \”policy\” change. The proper way to fix this problem is for the federal government to amend the 1928 law – which is, in fact, exactly what is being attempted by Bill C-311 which is currently before the House of Commons. The Provincial Premiers, including Dalton McGuinty, should be supporting this federal amendment so that all Canadians can obtain wine from other provinces legally. They should not be making statements that minimize the problem … for more information, see the analysis in this earlier article: Rule of Law Missed by Liquor Boards on Shipping Issue.

The recent announcement that the government would sell off the wholesale distribution arm of the BCLDB raised many questions about the nature of the contemplated changes. Recent media interviews by Rich Coleman, the minister responsible for the LCLB and LDB, are beginning to provide some clues as to what is intended. It now seems apparent that the sale of the wholesale division will also include a restructuring of the wholesale pricing system in BC. At the present time, there are no real wholesale prices for liquor at all. The only wholesale discounts are given in reference to the full retail price that is fixed in government liquor stores and the discounts vary greatly depending upon license type. For example, bars/restaurants get 0% off the full government price, rural agency stores get 10%, LRS stores get 16%, VQA stores get 30% and independent wine stores get 30% (the last two categories can sell only wine). Minister Coleman has now stated three times in media interviews, including on CKNW this morning, that the province will eliminate the varying discounts and implement a \”level playing field\” for all businesses that sell liquor in the province including a single consistent wholesale price. It is not clear exactly how this will be implemented but Coleman did reference Alberta\’s system during his interview, which uses a more normal wholesale pricing structure coupled to a flat-tax on liquor which is imposed at the wholesale level (Alberta\’s system is still government controlled at the wholesale level).

Coleman also commented that the privatization of the warehousing and distribution system would not affect union jobs as it will be subject to successor rights, that there will be new liquor regulations dealing with movie theatres and special occasion licenses \”within weeks\”, that he is undertaking a further modernization effort which he described as \”tinkering\” with the rules, and that he is absolutely not considering the sale of beer and wine in grocery stores.

The BC government has announced that it will \”modernize\” the liquor distribution system in the province and will sell the monopoly wholesale liquor operations of the LDB by 2015. A letter from the General Manager of the LDB to import agents/distributors indicates that the government will \”approach the private sector to see how liquor distribution in British Columbia can be delivered in a more modernized and cost effective manner\” and will consult with the union to \”to make the transition from a publicly operated system to a different model\”. The press release states, however, that the changes will not affect the 197 government retail stores which currently operate as BC Liquor Stores. These announcements constitute a dramatic development in liquor policy within BC although it is not clear at the present time how the changes will affect the retail side. These moves appear to be part of a larger plan to \”modernize\” the liquor system as one of the Backgrounder documents to the Budget indicates at p.4 that \”in the coming months we\’ll review the rules that govern liquor sales to modernize liquor standards and create more opportunities for growth.\”

The Budget also announced that as part of the return to the PST, the rate on alcohol under the PST will go back up to 10% and LDB markups will go back down: see p.73 of the Budget and Fiscal Plan.

The BC Civil Liberties Association has now joined the call for the BC government to reform its problematic and archaic liquor laws calling for an end to \”bizarre\” restrictions and for the modernization of the Liquor Control and Licensing Act. The story is covered in this Georgia Straight article: BC Civil Liberties Association weighs in on liquor licensing debate. You can also read the Association\’s well-reasoned open letter to the Minister here in which the President of the BCCLA points out that government policy in this area makes little sense. The issues have been brought to a head by the plight of the Rio Theatre and the Vancouver International Film Centre, both of which have been negatively affected by government policies which prohibit the sale of alcohol in establishments that are licensed to show movies. A recent attempt by the government to accommodate the Rio\’s situation may have caused more problems than it solved because the amendments failed to address the underlying policy problems at issue. For example, they permit the showing of movies in an establishment with a liquor-primary license but only if the movies are either shown outside the licensed hours of liquor service (which would normally encompass movie going times) or if the theatre applies to \”de-license\” itself every time a movie is shown. In the opinion of the theatres, neither option is a workable solution. Meanwhile, the Vancouver Sun reports that Rich Coleman, the minister responsible, has announced that there will be \”more changes to BC liquor laws\”. Hopefully, the minister and the government will now commit themselves to providing real and significant change in the form of a complete modernization of the liquor law regime in BC.

Here is the exact text of the changes to the BC Liquor Control & Licensing Regulation which affect liquor sales in theatres and the showing of movies:

… section 8 of the Liquor Control and Licensing Regulation, B.C. Reg. 244/2002, is amended 

(a) by repealing subsection (2) (b) and substituting the following:

(b) subjection to subsection (2.1), a theatre as defined in the Motion Picture Act, and

(b) by adding the following subsections:

(2.1) A licensee may show films, subject to the Motion Picture Act, or broadcasts in an establishment that is a live event theatre if the film or broadcast is not shown during the hours of liquor service of the establishment.

(5) In this section, \”live event theatre\” means a theatre in which the events are primarily presented by individuals who are physically present at the event, and include an individual performer or presenter, a band or orchestra, a theatre, comedy or variety show company or a dance troupe.

A few notes on the effects of these amendments:

• They only help \”live event theatres\” and only if they occasionally show a film. They do not help venues that are licensed full-time as movie theatres, so the underlying policy problem is not fixed.
• Movies cannot be shown during the hours of liquor service. For most licensed venues, the hours of liquor service would cover normal movie-going times so that will be an issue. The venue will either have to restrict its hours of liquor service or apply to the Branch to \”de-license\” itself every time it wants to show a movie. Neither of those options is likely to be workable for most venues.
• The definition of \”live event theatre\” is likely to be problematic. What about a multi-media event which is part movie, part live show? Is a movie a live event if a live person introduces/presents it or discusses the movie afterwards?
• Finally, the amendments do not address the underlying policy problem. It is permissible to sell alcoholic drinks to adults at live theatres and sports events (where children are present) but some how it is not permissible to do exactly the same in a movie theatre. The LCLB has said that it is because movie theatres are \”dark\”. But so are live theatres … and drinks aren\’t permitted in the dark part of the theatre anyway. Since so many other jurisdictions permit this, surely BC could figure out a way to make it work by looking at how they do it elsewhere?

More analysis and commentary is in this updated article.

Ministerial responsibility for liquor within the BC government has been changed from Shirley Bond (previously Minister of Public Safety and Solicitor General, now Minister of Justice) to Rich Coleman (Minister of Energy and Mines). Coleman was the minister responsible for the liquor portfolio prior to Bond\’s appointment and had been the responsible minister for many years under the Liberals. The liquor portfolio includes both the Liquor Distribution Branch (which comprises its retail arm, BC Liquor Stores, and its wholesale arm) as well as the Liquor Control and Licensing Branch (licensing and enforcement). Both of those branches will now move from the Ministry of Public Safety and Solicitor General to the Ministry of Energy and Mines. During the Liberals\’ leadership campaign, Coleman made comments that certain aspects of the liquor system needed reform. Since that time, both the media and the public have increasingly been requesting reform of many aspects of BC\’s outdated liquor laws.

The last few weeks have seen growing calls in the media for broad reform of BC\’s liquor laws, which in my view, are hopelessly outdated. The (unlikely) catalyst for change appears to be the situation of the Rio movie theatre in Vancouver which is caught by post-prohibition era requirements that prevent the issuance of a liquor-primary license to any business that is also licensed as motion picture theatre (see Arcane Liquor Laws Kill Rio Theatre\’s Business). While I sympathize with the Rio\’s situation, it is really the tip of the iceberg in respect of a regulatory structure which was created almost 90 years ago and which is almost completely out of touch with the requirements of modern business and the realities of contemporary society. Kurtis Kolt nails the broad problems in this blog post: Dear Mr. Mayor. CBC has run a number of stories on the issue including this one related to the sale of beer and wine in supermarkets and this political radio discussion (relevant part starts at 13:25) where all of the panelists (of different political stripes) agreed that it was time for change. The City of Vancouver has also entered the fray and will consider a motion tonight which will ask the provincial government to help the Rio out and to review its liquor laws and policies. We will be discussing many of these issues at the upcoming conference on Wine & Liquor Law in British Columbia to be held February 27th in Vancouver – please join us if you are interested. 

Two interesting stories this morning. A new study distributed by the American Association of Wine Economists (Why Reducing the Cost of Wine Might Actually Save Lives) finds that it could be good public policy to reduce wine prices and increase access (put wine into supermarkets) in order to save lives. The study is based on data that indicates that jurisdictions with higher wine consumption (as opposed to beer and spirits consumption) have much lower rates of traffic fatalities. In an unrelated story of interest to BC, the Manitoba Liquor Control Commission has announced that it is amending its liquor laws to permit the sale of alcohol in movie theatres. This issue has received significant media attention in BC where, so far, there has been no change to laws which prohibit this (see Arcane Liquor Laws Kill Rio Theatre\’s Movie Business).

The folks at ShipCompliant have written a great summary here of some likely U.S. trends for 2012 in the areas of wine law and distribution: Wine Sales and Distribution 2012 – A Look Forward. They highlight movement on the direct to consumer shipping issue, modernized marketing, privatization and federal action on wine sales and distribution. All of these are also hot topics in Canada. As the year progresses, we will have to see whether the trends in the U.S. are also reflected in the Canadian marketplace.

The 3rd annual Wine & Liquor Law in BC Conference will be held on Monday, February 27, 2012 at the Metropolitan Hotel in Vancouver. The conference immediately precedes the Vancouver Playhouse International Wine Festival and particularly its Trade Days component which runs from Feb 29th through Mar 2nd. The wine and liquor law conference will cover the latest legal and regulatory developments in the industry including shipping law reform, taxation, licensing, geographical indicators, third-party marketing, and the economics of the BC industry. Speakers include Thomas Carey (Dickenson Peatman Fogarty, Napa), Jeffrey Thomas (BC Wine Authority), Bert Hick (Rising Tide Consultants, Vancouver), Ian Tostenson (BC Restaurant & Food Association), Andy Hira (SFU), Randy Wilson (Liquor Plus, Victoria), Chris Wilson (Bull Housser Tupper, Vancouver), Al Hudec (Farris, Vancouver), Tony Stewart (Quails Gate Winery), Mike Raffan (Township 7 Winery), William Knutson (Spierhead Winery) and myself (I am co-chair with Chris Wilson). You will not want to miss this essential conference if you are involved in any way in the wine or liquor industry in BC. Full information and online registration is here on the conference organizer web site. Plus if you are a reader of \”winelaw.ca\” or are attending the Playhouse Wine Festival, you can get a 50% discount on the conference fee (register as a \”student\” on the registration page to obtain a discounted rate of $297.50 – 50% off the regular $595 fee). Hope to see you there.