Ontario should put wine consumers first: Hicken

UPDATE: An Ontarian representative of the liquor industry decries BC’s complaints, accusing BC’s wineries of being ‘entitled’ and says “The government of Ontario should be applauded for protecting taxpayers and saying no to winery welfare.” Clearly, a very strong anti-free trade sentiment exists among Ontarian liquor sellers, and this story is long from over.

Last week, BC Premier Christy Clark met with Ontario Premier Kathleen Wynne in the hope of getting Ontario to open its borders to the interprovincial shipment of wine. The legality of this was permitted and encouraged at the federal level by the passage of Bill C-311 in June of last year.

Despite receiving a fine bottle of Quails Gate Chardonnay from the BC Premier as part of the persuasion, Premier Wynne was not publicly receptive to the idea. Instead, she rejected the idea of directing her bureaucrats to open the borders in favour of having a “bigger conversation” on the issues, an obvious delay tactic.

The Ontario Premier’s reaction is disappointing although hardly surprising. She appears to have received both poor policy and legal advice from the bureaucrats at the LCBO, Ontario’s monopoly liquor board, who are ostensibly under her command.

From a legal perspective, and contrary to the Premier’s assertions, it actually is as simple as the Premier directing her underlings to open the borders. The only current impediment to legal importation in Ontario is a “policy statement” on the LCBO’s web site that purports to allow the importation of small quantities of wine, beer and spirits into Ontario so long as they are personally transported into the province, not shipped – a distinction that disavows the existence of e-commerce and the internet.

However, regulatory “policy” cannot exist in the absence of a supporting law and, in fact, Ontario’s liquor laws are silent on the issue of the interprovincial importation of wine. As a result, since the federal law now permits this and on the basis of the long-standing legal principle of “that which is not prohibited, is permitted”, Ontario residents should be free to import whatever wine they wish from other provinces for personal consumption. The LCBO “policy” very likely has no legal basis at all.

In addition, it would be remiss not to point out that, like it or not, it remains illegal under federal law to import beer or spirits into Ontario by “personal transport”. As a result, the LCBO policy is telling Ontario residents that it is okay to commit a federal criminal offence for these products while also telling them that they cannot have wine shipped to them, which is legal.

The policy aspects of this issue are even more troubling. According to a recent Harris-Decima poll, 82% of Canadians want the freedom to order wine from other provinces and have it shipped to them. The House of Commons and Senate both unanimously passed the relevant changes to the federal law.  In a highly partisan parliament, this feat demonstrated an incredible level of common sense support for reform of an outdated prohibition era restriction that would be laughable in most Western countries.

It appears that the Ontario Premier may also have been influenced by the efforts of CALJ, a consortium of the government liquor monopolies, that has been opposed to these changes from the start. CALJ has oft claimed that the provincial governments stand to lose $300 million in liquor revenue from interprovincial imports. This is malarkey to put it kindly. BC and Manitoba have now had open wine borders for a year and neither province has seen any loss of government liquor revenue.

The U.S. experience backs this up. Inter-state wine shipments now reach 90% of the U.S. market and any revenue losses have either been so negligible as to warrant inaction or have been dealt with by permitting and tax collection systems, the latter of which was proposed to CALJ prior to the passage of the federal reforms, and which CALJ unreasonably rejected. Indeed, many U.S. states long ago discovered that it makes far more sense to raise liquor revenue from normal taxation than from an unpredictable stream of “liquor board markups” that are subject to the vagaries of liquor board operating efficiency or the lack thereof.

Perhaps Premier Wynne and the other provincial leaders should reconsider their reliance on liquor boards for policy advice. Bureaucrats are usually in favour of maintaining the status quo because that is how they maintain their jobs. No where is this more true than on the liquor file where the bureaucrats are clearly more interested in maintaining the absolute power inherent in a monopoly distribution system than in acting in the best interests of provincial wine consumers.

The interprovincial importation of wine would provide Canadian wine consumers with a small amount of “wine shopping freedom” that is enjoyed in nearly every other civilized democracy in the world. It will not change the vast majority of wine sales which occur at retail for bottles that are to be consumed within 48 hours of purchase. Instead, it will simply allow a small number of Canadians to purchase hard to find wines direct from other provinces where the wine is available – either direct from the winery or in some cases at retail. The end result would simply be an increase in selection, better service for the consumer, a modicum of competition between government liquor monopolies and support for Canadian wineries.

To that end, Premier Wynne may wish to reconsider her LCBO scripted anti-consumer stance and side instead with the wishes of Ontario wine consumers and voters.

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More on this story…the Ontario Premier’s stance has been roundly criticized by multiple news media reports including the following: Provinces Stomp on Consumers Ability to Buy Canadian Wine (Vancouver Sun op/ed); Ontario Won’t Loosen Up Wine Importing Laws (Globe and Mail); Inaction on Ontario Wine (Toronto Sun); Who Wants to Limit Your Choice of Wine(National Post) and Open Borders for Wine Urged (Winnipeg Free Press). Hopefully, Premier Wynne will take note of the waves of protest and adopt a pro-consumer position sooner rather than later.