Q: “What’s the difference between Canada’s inter-provincial liquor regulations and Smokey and the Bandit?
A: One is a farce based on the antics of local authorities chasing around entrepreneurs to enforce prohibition era liquor regulations…and the other is a Burt Reynolds movie. (Ba-dum)
The sad reality though is trade regulations governing alcoholic beverages have evolved into a rather unfunny joke in most provinces. Any long-forgotten public policy benefits these regulations may have once had (if any) lay long buried under shovels full of parochialism and politics.
It’s timely to note that Canada’s plunge into restrictive inter-provincial trade policies was initiated with the movement of liquor across provincial borders. It was during the height of the prohibition era the Supreme Court of Canada (SCOC) jumped in and gelded section 121 of the Constitution Act, the part which clearly states the framers intent of unfettered free trade between provinces.
As I’ve outlined on this blog before, the Canada Temperance Act (CTA) governing the sale of liquor came into force in Alberta in January of 1921. In February of that year, Gold Seal, a liquor retailer in Alberta, asked Dominion Express to deliver liquor to some folks outside of Alberta. Dominion Express refused because it felt that to do so would violate the federal CTA. So began Gold Seal Ltd. v. Alberta (Attorney General) which eventually made its way to the high court.
With the Gold Seal decision, the SCOC’s interpretation of section 121 limited its application to prohibiting only inter-provincial “customs duties” and, for what some have advanced were political reasons, the SCOC poured section 121 and the free-trade intentions of the Fathers of Confederation into the gutter.
Since that decision, successive politicians, courts, government officials, special interests and other political constituencies have used the Court’s interpretation of section 121 to successfully create trade schemes and regulation on virtually everything but especially…liquor.
Until recently, CFIB thought provincial governments were getting the message. At least we were until the Notley government in Alberta delivered its recent budget and changes to the Alcohol and Gaming Regulations. Without consultation and without warning, the government changed the regulations around the importation of beer from outside the New West Partnership (NWP) provinces, B.C., Alberta and Saskatchewan. Before the budget, breweries outside the NWP were charged 20 cents a litre to sell their product in Alberta. Today, they’re paying $1.25 a litre.
A six-pack of “imported” beer is going up $3, a case will increase by $11 and a keg by $30. Importers say the 525 per cent increase in tax means small importers’ products will not be able to compete with the large internationals, effectively killing a piece of Canada’s burgeoning craft and artisanal beer sector.
When the Calgary Herald asked about the changes, a Finance ministry spokesperson sent an email back saying the budget changes support Alberta businesses. “Alberta craft brewers create jobs that help grow our economy,” the email read. “Our government will use the tools we have to help this and other industries grow.” Sure.
In fact, as a result of the changes, some small craft brewers based outside the NWP region have announced they are pulling out of the Alberta market. Ontario-based Muskoka Brewery said the tax increase has created “unacceptable conditions” and it is winding down operations in Alberta, B.C. and Saskatchewan. More recently, Justice Earl Wilson of the Court of Queen’s Bench granted an injunction to Steam Whistle, another Ontario brewery, temporarily preventing the government of Alberta from collecting what they claim is a discriminatory tax on its beer.
Craft breweries from coast to coast to coast should be the poster children for how business will be conducted in the 21st century. While they compete, they also collaborate to build their industry in the face of some of the worst regulatory impediments government could devise.
It borders on the bizarre that the Alberta government feels it’s a good time for what amounts to a ham-fisted, unconstitutional, interventionist approach to an industry that up until now, without these “tools”, has been growing across the country in leaps and bounds.
With the NWP, B.C., Alberta and Saskatchewan were a model for the reduction of inter-provincial trade barriers. With this latest protectionist move the Alberta government has reverted to the same 1921 prohibition era thinking that got us into this trade mess in the first place.
