The Canadian Wine Stimulus Package

It doesn’t take long these days to hear a new idea to save the economy. This one might sound a little “kooky” but hear me out. What if Canadian Wine could stimulate the national economy? What if BC Wine was the catalyst for the stimulus?

Imagine it, “BC Wine” as the example of an era of “hyper patriotic consumerism” while the dollar and economy are in the dumps.

We have a vast country. When I explained it to my German sister-in-law I found myself saying; “Each province is like a European country, because of sheer size”. Which is an over simplification, but it illustrates the situation to a foreigner.

Provincial lines, held up with taxes and government infrastructure, are hard to change. Each province manages the sales of alcoholic beverages in their own way. Mixed Public and Private business systems govern each province. Government owned monopolies are the norm when it comes to selling booze in Canada.

Wine, beer and spirits are universal in consumption. When you remove the Canadian stigma’s associated to drinking, you see commodities as common as soap in people’s homes. The majority of Canadians never have a problem with alcohol. They keep up a healthy relationship with the drink. Remember that not all consumption ends in a M.A.D.D commercial.

So why is it so hard to buy small-lot wine from Ontario in British Columbia and near impossible to get BC Wine shipped to someones door in Quebec?

Direct to consumer sales woes

Direct to consumer (DTC) sales has been a growing market for vineyards in British Columbia, Ontario and Quebec since 2012’. With the growth of wine clubs and e-commerce, this was a natural progression.

It seemed easy enough. Sell online to Canadians. Ship with one of our many national providers. Pay the proper tax differences when they come up. Drink Canadian Made wine anywhere in Canada. It seems so logical and simple.

Now, here is the dizzying breakdown for inter-provincial DTC;

British Columbia and Manitoba have both allowed DTC sales but not without confusion. The laws in each province allow for “personal use” purchases. Which is generally considered one case. So selling in larger quantities allows for the liquor board to interpret it for commercial use and subject to, you guessed it, tax and penalty.

Alberta and Prince Edward Island are next to confuse people. You may legally “import” wine for “personal use” to either province, but not by courier. It must be carried by you. Generally, the legal authorities have seen this as near impossible to manage. How could you import without shipping?

Nova Scotia changed from the complete prohibition of inter-provincial sales to full out allowing it in mid 2015′. With similar restrictions to those of British Columbia, they became the third province to announce this change.

Ontario is a “buy at your own risk” kind of situation. There is no explicit statute on e-commerce. The Liquor Control Board of Ontario (LCBO) does have a mandate to only allow Canadians to carry one case of wine back into the province. Carry, not ship. The laws in Ontario are deliberately silent on these questions. As is the case in most first world countries though, when the law does not explicitly prohibit it, it is generally allowed. The LCBO is a true monopoly though. Testing the waters with them would mean financial ruin for most. I can only share in the fear that I felt as a licensee and Sommelier in Ontario and nobody messes with them.

Saskatchewan recently amended the laws to allow DTC sales to consumers in late 2015′. This applies to BC products only. You first need a license that expires every year from the SLGA. Then, upon receipt of the wine you must pay $5.25/per bottle to the SLGA. You are also limited to 9L of wine (1 case), per year.

Newfoundland and Labrador, New Brunswick and Quebec, is just a no. Bootlegging business anyone?

In late 2015′ Newfoundland and Labrador even took FedEx to court for shipping a case of wine from BC to the province. FedEx won the battle, being ruled to have not committed any crime. They even went on a Twitter offensive to discuss the provincial restrictions.

Nunavut, Yukon and Northwest Territories are also silent on the laws. They have a mixture of prohibition and addiction management based policies that manage liquor laws. This would make a BC Vineyard think twice about just shipping to the North.

Dizzy?

What if I told you that Stephen Harper’s National Government decriminalized direct-to-consumer wine sales across provincial lines in 2012′. Let that sink in. The former conservative government thought it was a good idea.

This was an amendment to a dated law, unanimously approved in the House of Commons. It was designed to free up access to small producers throughout Canada. Many of which are not carried in liquor stores anywhere across the country.

Thus far, even an act of parliament has not loosened the grip of most provinces.

Provinces drunk on tax profits

After spending a career in this industry, I am certain that taxes only go up. When times are tough, when times are good. Liquor, Tobacco and Gambling will always fill the provinces bank accounts. It is bad for profits to allow for more e-commerce. So they will likely hold this system until the wave of public sentiment forces a change. It is up to the consumer to “UBER” this situation.

Most governments are not up to speed with technology, e-commerce and the online retail environment online either. Which makes them defensive to change.

The Liquor board of Ontario (LCBO) is the second largest buyer of spirits and wine in Canada. So big, that if you can’t fill there 853 stores, you are likely not able to get on the shelves. It’s easier to get Russian Vodka from the LCBO, then BC wine.

Consider the situation in British Columbia where the BCLDB, in not only in the tax business of managing what comes into the province. They are also in the liquor retail business, as you can see in every BC town and city centre.

Restaurants and Bars are forced to buy from the government monopoly at the same price as the consumer. With only a PST exemption as the difference.

As of February in British Columbia only, BC vineyards and Distilleries will be able to sell to Restaurants and Bars for any price they see fit. So in 2016’, the fifty year old BC wine industry can now sell for a competitive price. This will encourage more restaurant sales. We are getting there.

So, could BC Wine stimulate the economy?

The original idea of offering a Canadian Wine Stimulus Package is a bit of a hopeful exaggeration, unfortunately. The industry is tiny but it does cast a wide net. Across every town in every province wine and spirits are sold. The “optics” are huge.

Wine and grapes are not in the class of commodity of our minerals and lumber, but they could be. Adding another strong, nationally sold and internationally recognized industry couldn’t hurt the economy right?

When speaking to local wine makers and grape farmers, the sentiment is clear. If the doors to the national economy we’re open for easy inter provincial commerce, the industry could double or even triple in size.

The Canadian Wine industry is just starting to hit the world stage. We have grown a little older, and the world is looking at us. Climate change is also attracting the major players from the south into the BC industry.

I for one am a little embarrassed at the restrictions. When I speak to my German sister in law, I find myself explaining how confusing we have made the Canadian Wine industry for Canadians.

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