Wine Law in British Columbia: Some Egregious Realities

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The laws and regulations governining wine sales, distribution and importation in British Columbia are byzantine at best. Understanding them requires expert knowledge and a bit of suspension of disbelief. To understand wine law here in British Columbia you need to understand a few basics about the Canadian legal system. First, Canada is a federal system, which means that the Federal Government of Canada has jurisdiction over certain matters and the Provincial Governments have jurisdiction over others. Without getting into too many details, the provinces have jurisdiction over property and civil rights and the Federal Government has jurisdiction over interprovincial and international trade. When it comes to heavily imported consumer products such as wine, the two levels of government have overlapping jurisdiction. Hence, regulation of liquor in British Columbia is subject to two sets of laws: one provincial and one federal.

The Federal Importation of Intoxicating Liquors Act dates back to the Prohibition. That’s right, the prohibition. Despite the fact that we as Canadians have long progressed beyond the moral and economic myopia of the prohibition era, we are still governed by a statute created during that period. The fundamental problem with this act is really boiled down by section 3 (1), which reads:

“3. (1) Notwithstanding any other Act or law, no person shall import, send, take or transport, or cause to be imported, sent, taken or transported, into any province from or out of any place within or outside Canada any intoxicating liquor, except such as has been purchased by or on behalf of, and that is consigned to Her Majesty or the executive government of, the province into which it is being imported, sent, taken or transported, or any board, commission, officer or other governmental agency that, by the law of the province, is vested with the right of selling intoxicating liquor.”

To translate the legalese: it is illegal to import liquor into any province unless it has been purchased on behalf of the government of Canada or the government of the province into which it is being imported. In British Columbia, the government has delegated this task to the governmental agency known as the British Columbia Liquor Distribution Branch (BCLDB) and the BC Liquor Control and Licensing Branch, the bane of most BC wine drinker’s existence. The BCLDB is granted its authority and prerogative by the Liquor Distribution Act of British Columbia, which gives the branch the “sole right to purchase, both in and out of British Columbia, liquor for resale and reuse in British Columbia in accordance with the provisions of the Importation of Intoxicating Liquors Act (Canada)” (s. 2(2)).

To control liquor in the province, the Liquor Distribution Act has banned consumers from owning any liquor unless it has been obtained from an authorized source. Again, that’s right, it is illegal to own liquor in BC unless you have obtained it from a source authorized by the statute. These sources include: persons or entites authorized under the Liquor Control and Licensing Act (private stores, restaurants, and a few other exceptions), liquor held as “acquired liquor” by the manufacturer or the manufacturer’s agent (hence the proliferation of agents in BC), liquor cleared and charged by customs for personal use, liquor manufactured in BC but not packaged for sale and still within the possession of the manufacturer (what I like to call the home brewer provision), and several other little exceptions we won’t worry about here.

So, let’s unpack all this bureaucratic nonsense.

1. Private Stores and Restaurants

The Liquor Control and Licensing Act authorizes the general manager of the BCLDB to grant licenses and permits to purchase liquor from the branch for resale and reuse. This is why most restaurant wine lists are boring – they all have to buy from the liquor stores and they cannot import wine on their own initiative. What serious sommelier wants to work in such a stilted environment for acquisition of liquor and building an amazing wine list? Not many, and it certainly doesn’t make their job very easy. Also, the private liquor stores HAVE to buy from the BCLDB, which in turn buys from manufacturer’s agents. Of course large established agents have a vested interest in keeping the system as it is and discouraging newcomers. They make more money if the selection is limited. Thus private stores buy from the same old same old agents and have the same crappy stock. That is, except for the few who have grandfathered importation licenses held by entites other than the store (it is illegal to import and retail at the same time) such as Marquis, Liberty and Kits Wine Cellars. Of course, with tax as it is, even these stores don’t have many great bottles under $20 forcing, as John Clerides of Marquis asserted to me, the vast majority of BC wine drinkers to drink swill since the base price of most wines that end up being under $20 in the province is under $10 elsewhere. This makes it near impossible to support small producers, biodynamic producers, etc. within the mass-market, leaving them for the wealthy and the wine geeks only.

2. Manufacturer’s and Their Agents

As I mentioned above, manufacturer’s agents dominate the wine landscape in British Columbia. Many in the industry know this. However, what most people don’t know is the crazy provision of the Liquor Distribution Act that governs these agents: section 6. Section 6 provides that the BC Government “holds title to” (i.e. owns) all liquor in the province as soon as it enters the province. This includes liquor imported by agents. Yes, another moment of astonishment. The BC government owns everything brought into the province even if they didn’t pay for it. Not only that, but section 7 of the same act states that they are not liable for any loss, damage, theft, etc. of these products. So, the government regulates who can bring wine in, is declared legal owner of it, sets out where and how to distribute it, but will not take responsibility for it. Furthermore, subsection (3) states that the BC government acquires title to (owns) all liquor in the province that is bottled in commercial packaging. Thus, as soon as a brewer or winery bottles their product for resale, the government owns it. I will ignore the exemptions under the federal act for the purposes of this post.

So, how do the manufacturer’s and their agents get paid? Well, luckily the government doesn’t just steal the liquor outright. Instead, it pays the agents after it has sold the liquor at its stores or through its distribution channels. Furthermore, under sections 8 and 10 of the Liquor Distribution Act the government can require an agent or manufacturer to repurchase any liquor it wants them to. So, anyone importing liquor into BC has to be willing to assume the risk that they will be forced to repurchase the liquor from the branch. This is obviously a huge bar to any manufacturer, especially a small one, who wants to take a risk in a new market. The British Columbia market is run like a cartel that has not only monopoly power over an industry, but also the means to change the rules and enforce them with civil and criminal charges (i.e., in my opinion, brute force).

3. Customs

We’ve all been seriously annoyed at the 2 bottle personal exemption when bringing wine back into Canada. But few of us know the legal regime that supports this practice, for which we have to turn to section 19 of our best friend the Liquor Distribution Act. Under this section, a “casual importer” (you and me) must surrender all liquor to customs upon entering BC. Of course, remembering trusty section 6 we will remember that the BC government now owns the liquor we just brought into the province, and lest we forget, section 4 makes sure that it is illegal for us to own it unless we follow the procedures of section 19 and repurchase the liquor from the customs officer. That’s right – if you bring in liquor into BC, you forfeit title to it and have to rebuy it from the government. Given our outrageous tax rates, this means bringing liquor into BC, even for the most avid personal collector who still spends tons of money on wine in the province, is an expensive pain in the ass that to my mind violates some pretty important property and economic rights.

The Constitution

Speaking of rights, let us consider how these three harsh situations play out under the Canadian Constitution. First of all, s. 121 of the Constitution Act states: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.” In other words, Canada is a free trade zone within itself. If a product is manufactured within a Canadian province no other province can charge duties against that product. This is all well and good in theory, but as the United States has taught us with their full faith and credit clause, it can take a lot of money and a lot of lawsuits to eliminate shipping bans between states for alcohol. Even after a string of constitutional cases that declared it illegal to discriminate against importing another state’s wine, there are still many US states that ban the practice. So, what hope does Canada have? Well if one of the provincial governments charges a winery or individual for shipping wine across provincial borders and tries to fine or imprison them, a legally ambitious winery or individual might challenge the law on constitutional grounds and succeed. If that happened maybe the Federal government would reform its prohibition era statute and let Canada be the free-trade zone it should be.

The Charter

But what about bringing in liquor internationally? That’s a more difficult situation and the federal government does ultimately have jurisdiction over international trade that courts will likely defer to more readily. However, what if someone were charged criminally for bringing in 3 bottles of wine for personal use without declaring them or paying tax? Section 7 of the Charter of Rights of Freedoms states: “Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.” This is obviously a very complex provision, but is it reasonable for an individual to be criminally charged because they wanted to enjoy a bottle of wine without paying extraordinary taxes on it? Is this an offense really worth a major fine or even imprisonment (for which the importation of intoxicating liquor act provides)? I can’t answer this question, but to my mind, and perhaps I’ve been influenced by my stint studying Constitutional Law in the United States, to deprive someone of their liberty because they didn’t pay tax on a few bottles of wine they are going to drink themselves is certainly not in accord with the principles of fundamental justice and is not, as section 1 of the Charter states, “demonstrably justified in a free and democratic society”. While provincial governments continue to benefit from their extortionate tax rates on alcohol, particularly in BC, consumers, afficionados and wine geeks continue to pay a disproportinate amount of tax that goes straight into the general revenues of the province. Hence, you wine geeks out there are disproportionally funding the construction of roads, sewers, and even olympic structures. Does this make any sense in a society that is supposedly liberal and free? It certainly doesn’t to me.

Some Wine

I cannot finish this post without quickly writing down my thoughts on the glass of wine that I consumed while writing this diatribe, a 2004 Kilikanoon Oracle Shiraz from the Clare Valley in Australia. This was a pretty inspiring wine and kept me writing with its amazing nose of spice, blueberry, sweet rich dark black fruits, vanilla, chocolate, nutmeg, and eggnog. Incredibly layered and expressive there is definitely french oak use here, but in a very refined way. The palate is simply stunning with amazing fruit concentration and flavours like blackberry, blueberry, raspberry, red delicious apple, dry baking spices, walnuts, chocolate, plums and plum skins. The finish is extremely long and complex while the wine has a surprisingly elegant texture for shiraz and superb balance. The fruit is very expressive, but not too pushy and the oak is a delicate (rather than brutish) backbone for the wine. One of the most complex shiraz’s I’ve tasted. I only wish this wine could predict brighter futures for the BC wine consumer.

Excellent to Excellent+
$80 at BCLDB

Disclaimer: Any errors or omissions are my own. This article does not constitute legal advice.

Comments

  1. Sean
    August 20, 2009

    Nice break-down of our crappy laws. Just thinking about this makes me fume. I need a glass of wine. Oh wait… the BCLDB is holding my shipment of samples. Apparently they own it now.

  2. Shea
    August 20, 2009

    It's pretty astonishing – if any other area of business were regulated like this people would go absolutely nuts. Somehow its been accepted for liquor regulation. I'd like to know why.

  3. Colin
    August 21, 2009

    For a relatively uninformed wine consumer, would you say that the vintage of a wine can indicate whether it will be above average, regardless of the label?

    The reason I'm asking is that 2004 was supposed to be an excellent year in the Clare Valley (which has now been supported by your review), and coincidentally, my friends are selling a whack of '04 Clare Valley unlabelled Shiraz to raise funds for EWB.

    I think I'll only have one shot at this, so I'm deciding whether to go big or just get one or two. Any sommelier advice would be lovely. -C

  4. Shea
    August 21, 2009

    I'm no sommelier, but the producer is pretty important as is the vineyard. It all depends on who made the wine really, assuming the fruit itself is good. Why don't you buy 1 and taste it before buying more?

  5. Colin
    August 21, 2009

    That would be the prudent thing to do, however it is a time-limited offer, and also a web order that incurs shipping charges.

    I suppose I will get a couple of bottles and savour them if they're good.

  6. Shea
    August 21, 2009

    Ya, frankly it's pretty weird to sell unlabeled wine, so that's probably a good bet.

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