Five ways to reform B.C.’s antiquated liquor laws

The following op-ed was co-authored by Mark Hicken and John Skinner, directors of the Modernize Wine Association. It was originally published in Vancouver Sun.

The B.C. government is conducting a liquor policy review that extends to all parts of the regulatory and distribution systems for alcohol within the province. A new website is live for public input, and the government is actively seeking feedback through social media. As well, MLA John Yap, the parliamentary secretary responsible for the review, is meeting with numerous stakeholder groups in an attempt to solicit further input and ideas.

Our group, the Modernize Wine Association of B.C. (MWA), is also meeting with Mr. Yap. MWA is a registered non-profit society that includes members who represent the food and wine industries, the hospitality industry and wine consumers. We are advocating for positive reforms that will benefit both the food and wine industries, as well as consumers, while taking care not to risk the revenue government earns from liquor sales. Our ultimate objective is to promote change that will result in an enhanced food-and-wine culture throughout the province.

To bring B.C.’s liquor regulatory system into the 21st century, we propose reforms in five areas:

1. B.C. must modernize the wholesale pricing system for liquor. The B.C. Liquor Distribution Branch (BCLDB) uses an exceptionally complex formula to mark up products by unusually high margins (e.g., 117 per cent for wine, 163 per cent for spirits) and then sets artificial wholesale prices for all private licensees (in other words, all of its competitors) by allowing for small “discounts” off its own retail prices. No other jurisdiction in the world uses a system as complicated as this.

Moreover, the system does not treat private retail level licensees equally. Differing classes of private retail stores get “discounts” that range from 12 to 30 per cent off the government retail price. Restaurants/hotels/bars get nothing. They have to pay full retail price for all products despite being some of the LDB’s best customers. If you’ve ever had sticker shock after seeing the price of wine in a typical B.C. restaurant, hotel lounge or bar, you can blame the province’s bizarre liquor mark-up system.

B.C. must adopt a system that is closer to global standards, and which uses normal wholesale pricing in conjunction with simpler taxes applied at the wholesale and retail levels. In this way, all retail businesses could purchase at the same normal wholesale price (tax included), and government would be guaranteed the revenue that it collects annually from liquor sales.

2. We recommend that B.C. streamlines the BCLDB’s liquor delivery and distribution system for private licensees. Already, 56 per cent of the product sold to private licensees is distributed by methods other than the BCLDB. Unfortunately, the remaining 44 per cent is subject to an inefficient system under which product is subject to numerous bureaucratic rules, and is “touched” so many times in the distribution chain that delivery times for distances as short as Richmond to Vancouver can often exceed 2 weeks.

MWA recommends that products delivered to private licensees should be freed from the BCLDB distribution system altogether. Authorized import agents can do this work more efficiently, and at a lower cost to consumers and to taxpayers.

3. We recommend that B.C. expands upon its successful farm gate sales programs, which have resulted in a thriving local wine industry and agri-tourism sector. To achieve this we propose two approaches: that wineries are permitted to sell and offer tastings of wine at farmers’ markets; and that wineries are given permission to operate satellite tasting rooms away from their wineries. The latter has been proven to be successful in Washington state towns such as Walla Walla and Woodinville.

4. We recommend that the provincial government improves the framework for the issuance of liquor licences. These suggestions include such common-sense items as: making the rules and regulations surrounding liquor clearer and more easily accessible; reducing the amount of time it takes to obtain a liquor license; reforming our complicated and bureaucratic special-occasion license system; allowing educational wine tasting events; and permitting commercial wine auctions to occur in B.C.

5. We propose that several licensing rules and policies be updated to reflect contemporary attitudes and standards. For example, B.C. should permit licensees to store liquor at secure off-site storage facilities. The current system limits choice and increases costs for private operators, which are handed down to consumers.

B.C. should also permit restaurant or retail chains to transfer liquor between locations, and allow flexible pricing on liquor products during the day. It should be permissible to pour reasonable quantities of alcohol at tasting events, and it should also be OK for private retailers and wineries to do business at wine festivals. With today’s secure technology, wineries should be able to use ecommerce tools for sales away from their licensed facilities.

We salute the government’s liquor law reform efforts to date — such as advocating for more open shipping over provincial boundaries, or allowing consumers to bring their own wine in exchange for a corkage fee. Now is the time for the next bold step. With our association’s constructive recommendations, we believe the B.C. government can adopt a 21st-century approach to regulating liquor, and leave behind the antiquated rules that hold us back.

Mark Hicken and John Skinner are directors of the Modernize Wine Association of B.C. ( Hicken is a wine industry lawyer. Skinner is the owner of Painted Rock Winery.