E-Malt.com News article: Canada: Change in law is needed to allow Canadians to take beer and spirits across provincial borders

Every day thousands of Canadians buy beer and spirits in one province and consume them in another. According to the Importation of Intoxicating Liquors Act, a Prohibition-era statute, they are all breaking the law, Economist reports.

The chances of being caught are negligible. There are no checkpoints between provinces. Indeed, you can pass from one to another without knowing it. Federal prisons are not exactly bursting with offenders. Dan Albas, an MP from British Columbia who managed to get wine removed from the act last year, said at the time it had never been enforced. Nevertheless, it is the law of the land.

Perhaps not for much longer. Buried in the myriad pledges the Conservative government led by Stephen Harper made in its speech from the throne on October 16 was a promise to amend the Act once again to allow Canadians to take beer and spirits for their own use across provincial borders.

Cynics say that the Conservatives have zeroed in on beer drinkers ahead of the general election in 2015—not a bad idea in a country where the tipple accounted for 44% of the C$21 billion Canadians spent on alcohol last year. (Wine accounted for 31%; other alcoholic beverages made up the rest.) But there is a catch. Even if the federal government amends the act, shuttling beer between provinces would remain illegal under some provincial laws. And commercial buyers still face both federal and provincial barriers.

The act was passed in 1928, even as most provinces were repealing their temperance laws (tiny Prince Edward Island held out until 1948). To keep tabs on alcohol sales within provincial borders the provinces set up liquor boards. To maintain absolute control provincial authorities had to stanch the flow of wine, beer or spirits from the outside. So they asked the federal government for help.

Canada’s 13 liquor boards (one for each province and the three territories) have become cash cows for their respective governments. The Liquor Control Board of Ontario, Canada’s most populous province, deposited profits of C$1.7 billion into the government’s coffers last year. Almost all alcohol sold in the province passes through the board before being sold to commercial users and consumers. There are slight differences in the point of sale—you can buy beer and wine in convenience stores in Quebec and from private liquor stores in Alberta—but the common theme is that it all passes through a government body first, which makes money from mark-ups, permit fees and sales taxes (which they receive even if alcohol is sold directly to consumers).

With so much money at stake, most of the provinces strongly opposed the move in 2012 to remove wine from the federal law and are likely to do the same when removing beer and spirits from the act is debated. A spokesman for the Canadian Association of Liquor Jurisdictions, the body that represents the combined provincial and territorial boards, defended the status quo last year, saying that the mark-ups on alcohol imposed by the boards helped pay for government services such as health care and education. If individuals wanted to buy wine from another province, they could always order it through a government outlet, he said.

Wine won exemption from the federal law mostly because of pressure from Canada’s 450 artisanal winemakers, who pointed out the absurdity of the current situation. “It is easier for our winery to ship 20 cases of wine to Beijing, Germany, Dubai, or Switzerland than to ship one case to our neighbour, New Brunswick,” Hanspeter Stutz, a vintner from Nova Scotia told a parliamentary committee at the time. Tourism officials and grape growers also backed the move. It is unclear whether Canada’s 200 or so craft brewers and about 20 distilleries carry the same clout.

It is ultimately up to the provinces to decide just how free they want internal trade in alcoholic beverages to be. They guard their local markets jealously, not just for alcohol but also for a wide range of goods and services. A survey earlier this year by Mark Hicken of Vintage Law Group indicated that almost a year after the federal government legalised carrying wine over provincial borders some provinces have kept their barriers intact. Canada agreed to a sweeping trade deal with the European Union on October 18th. If it could only do the same for its internal market.


06 November, 2013