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Wine Set to Flow Freely Between Canada's Provinces

Consumers still at risk in some provinces, however
by Peter Mitham
June 27, 2019

Ottawa, Ont. – Canada’s wines may flow unimpeded between provinces, thanks to an omnibus bill passed on June 21, just as Canada’s parliament prepared to adjourn for the summer.

The bill, now known as the Budget Implementation Act, 2019, No. 1, covered a variety of measures ranging from taxation to superannuation provisions for Canada’s famed Mounted Police as well as prompt payment for construction work.

However, as part of several “regulatory modernization provisions,” it overturned the provisions of the Importation of Intoxicating Liquors Act of 1928 that delegated control of liquor to Canada’s provinces and territories. It allowed them to set the terms under which liquor could be imported into their jurisdictions.

The old law expressly prohibited individuals from importing “into any province from or out of any place within or outside Canada any intoxicating liquor,” unless it passed through government hands. The revision limits the prohibition to liquor “from a place outside Canada.” (The change doesn’t allow direct shipments to businesses.)

“In my view, this is a very positive development,” said lawyer Mark Hicken, principal of Vintage Law Group in Vancouver and a close follower of the issue. “The removal of that barrier is a major step forward.”
He told Wine Business that the change loosens the restrictions on wineries, which have fought a running battle with provincial liquor authorities on the matter for more than a decade.

The growth of wine production and the advent of e-commerce saw the authorities overseeing liquor sales in the provinces of Ontario and Manitoba issue letters to B.C. wineries warning them off interprovincial shipments in September 2008.

Publicity around the letters triggered a push for reform. An essay in the professional journal Advocates’ Quarterly discussing the basis for the 1928 law led to discussions among lawyers regarding a potential legal challenge that would free Canada’s wine.

Some lawmakers even got on board, culminating in the passage in June 2012 of a bill that made it legal – at least in the eyes of the federal government – to transport wine between provinces, “if the individual brings the wine or causes it to be brought into another province, in quantities and as permitted by the laws of the latter province, for his or her personal consumption, and not for resale or other commercial use.”

While some wineries leapt at the opportunity to ship wine to consumers, the question of whether a third-party could carry the wine on behalf of the consumer continued to be debated.

The case of New Brunswick resident Gérard Comeau, busted by the Mounties later that year as he returned home from a liquor run to Quebec with 14 cases of cheap beer and three bottles of spirit eventually landed in Canada’s top court.

Supreme Court justices decided to uphold provincial control over liquor entering their jurisdiction on the grounds that this was allowed and wasn’t specifically aimed at restricting trade between provinces.

The new federal law clarifies and entrenches the right of wine (and intoxicating liquor generally) to move freely between provinces, giving wineries a new revenue stream with broader margins.

But if the new law frees wineries to ship wine, those on the receiving end may not be out of the woods.
“There are still various provincial laws and policies that restrict the possession of wine purchased from another province, but those are mainly directed at consumers,” said Hicken.

British Columbia, Manitoba and Nova Scotia are the only provinces that explicitly allow consumers to receive shipments from domestic wineries.

While he has yet to do a complete analysis of the new law, Hicken says consumers in some jurisdictions may be subject to provincial requirements regarding liquor imports.

Alberta, for example, has allowed imports subject to provincial regulations. Saskatchewan has allowed consumers who obtain a one-year authorization to receive wine from B.C. only (up to one case per shipment), and requires them to remit $5.25 per 750ml bottle received.

The wording and interpretation of provisions in most other provinces effectively make it illegal, or tightly circumscribed. Newfoundland, for example, allows consumers to import 1.14 litres but it must accompany them. New Brunswick simply hasn’t allowed importation, notwithstanding the time-honored tradition of the Quebec beer run.

The recent amendment to federal law will likely see provinces adjust their own regulations to address consumer behaviour.

Speaking after the Comeau decision last year, Canadian Vintners’ Association president and CEO Dan Paszkowski said his association had proposed having each province license wineries that want to ship wines to local consumers and have wineries remit applicable taxes and fees to the province of delivery.

Record-keeping and reporting tools today make compliance a lot easier than in 2002, he noted, when Canada Post began accepting intraprovincial wine shipments.

Paskowski didn’t respond to a request for comment on the latest legislative change, but the net effect should be positive regardless of any changes the provinces make. Wineries will have a new, legal distribution channel while consumers will have greater access to wines from across the country.

“While there is still some work to be done on the part of the provinces to truly free up the country, the wineries will likely be breathing a sigh of relief because the federal restriction is gone,” Hicken said.

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