Open Barrel: A Manifesto for Consumer Based Reform of British Columbia Liquor Laws
I recently stumbled upon this “Manifesto” that I wrote a couple years ago, when discussing liquor law issues with various businesspeople in the local industry, as a basis to create a consumer advocacy group to support liquor law reform in British Columbia. Unfortunately, that group did not get off the ground due to a lack of will and cohesion. Nonetheless, I think these thoughts are still relevant today and so I’ve decided to post it on the blog. I had tentatively called this consumer advocacy group “Open Barrel”. I’ve updated a couple of the facts to reflect some changes over the past 2 years.
The Open Barrel Manifesto
Open Barrel is a community of British Columbians who want to develop B.C. as North America’s premier cultural destination for enjoying, tasting, and buying wine.
We have tremendous pride in our local communities, artisanal producers, and local businesses, and we want to share that pride with visitors and locals alike. We also believe that fairness is a fundamental element of the “Canadian way”.
Unfortunately, the current regulatory environment governing wine and liquor sales and distribution in the province is extremely unfair, and favours large corporate interests over local businesses and wineries. We think that in order to make BC both a more sustainable province and a fairer province, the current inconsistencies and inefficiencies within our liquor laws need to be reformed. We propose these reforms because we love British Columbia and we want the true heart of our province – local farmers, winemakers, and businesses – to have the opportunity to succeed and grow our province into an internationally recognized cultural destination.
To achieve this goal we propose reform in five different areas: laws governing restaurants; laws governing private stores, festivals and small producers; the operations of the liquor bureaucracy; restrictions on importing and exporting; and, taxation. This white paper will explain why we think reform is necessary in each of these five categories.
We all love going out to eat. Vancouver is quickly becoming a premier destination in North America for dining out. However, current regulations make it extremely difficult for restaurants to offer high quality wine programs at reasonable prices. Here’s why.
First, restaurants like to differentiate themselves by offering unique wines you don’t normally see on government store shelves. However, regulations currently restrict restaurants from ordering these special wines in quantities of less than 12 bottles (1 case). Furthermore, two restaurants are not allowed to pool their resources to split a case of wine. Why is this important? Many small restaurants simply can’t afford to order entire cases of wine. What is the result? There is far less diversity in wine selection across the city because government regulation has made it too expensive for small restaurants that are passionate about wine to offer unique selections.
You might also wonder why wine prices are so high at restaurants. This is because the government liquor distribution branch does not offer restaurants much of a discount off of retail. So, in order to make money, restaurants have to charge extremely high prices for wine. In almost any other city in North America you can get glasses of wine for $6-$10. Here, you will regularly see the same quality glasses of wine priced at $12-$18. We are concerned that this makes Vancouver uncompetitive at attracting tourists.
Lastly, currently it is illegal to bring your own wine to a restaurant and pay a “corkage” fee. Most cities in North America allow this, especially cities that support a thriving local wine culture such as San Francisco and Seattle. Allowing consumers to bring their own wines fosters wine appreciation and wine culture, and helps develop a niche for restaurants that can’t afford to build large and expensive wine lists. There is currently no logical rationale that denies this practice. Consumers still pay the full retail price of the bottle at the store, so the government does not lose any revenue by allowing corkage. We simply cannot understand why this practice is illegal.
To keep growing Vancouver, and British Columbia, as a destination for food lovers across the globe, these sorts of archaic and illogical rules must be changed. Otherwise, we are simply giving a huge advantage to our competitors in California, Washington, New York, Toronto, and Montreal.
Private Stores, Festivals, and Small Producers
British Columbians love local wine producers. We also love to support smaller artisanal producers, whether these are farmers, sculptors, or wine makers. We are passionate about sustainability and the “small guy”. However, current regulations make it extremely difficult to promote the small guy with festivals, wine tastings, and other special events.
Right now, private liquor retailers are one of the only sources of small production artisanal wines. The BC government liquor stores have very few artisanal products made in small quantities and with organic or sustainable farming practices. Therefore, we rely on private retailers to support these sorts of efforts. However, it is currently illegal for private retailers to host off-site wine tastings where products are offered for sale. We are concerned that this hampers small businesses’ attempts to build their businesses effectively and market smaller production wines. This law applies whether international or local BC wines are being poured. We wonder why doesn’t the government want to support local producers and international producers with sustainable farming practices? These are the things that British Columbians care about.
As an example, during the Olympics – a supposed spotlight on everything British Columbia – all private wine tastings and special events were required to buy all their wines from the BC government liquor stores. This was a monopolistic practice that unfairly hurt local businesses who were not allowed to sell their products to private events. In this environment, dignitaries from France were forced to drink large production, corporate wines rather than smaller artisanal wines because the organizers of their event were not allowed to buy from private stores, even though they wanted to.
Simply put, if the BC Liquor Distribution Board were a private company, the Competition Board of Canada would have barred these practices as illegal use of monopoly power. How can small local businesses compete in this kind of environment?
Everyone knows that bureaucracies are inefficient. But, they shouldn’t be unfair. And, we would hope, they should try to consistently reform in order not to harm local businesses. Right now, the liquor bureaucracy has such a labyrinth of rules, regulations, and practices that it is extremely difficult for small businesses to run efficiently and within a fair environment.
Here are some examples. It is illegal both for “agents” (companies that represent wineries) and for non-BC wineries to sell products directly to consumers. If a consumer wants to buy a product that the liquor board does not officially “list”, they have to put in a special request to order the item, and they have to commit to ordering an entire case of wine. This effectively means that agents cannot sell a lot of their products unless the liquor board officially carries them or a private wine store decided to purchase the wines.
Some might believe that this is a fair playing field. However, there have been many instances where consumers have tried to order a case of special order wine and the government employees refuse to place the order. A customer ready and willing to pay money for a product is denied access to that product because the bureaucracy gives government employees the power to deny such requests. The agent who wanted to sell the wine was therefore denied the sale and lost money and the consumer wasn’t allowed to buy what he wanted.
This means that in order to sell wine effectively in the province the agents who represent wineries have to obtain a government liquor store “listing”. Getting listed by the government stores is an extremely difficult, bureaucratic process that can take months and, in the end, relies on the whim of a bureaucrat. Many small wineries simply cannot afford this process, and consumers are denied access to many great wines because of the overly labyrinthine process required to even get that product in a retail store. Only large corporate wineries can consistently afford the cost of obtaining regular listings with the BC government stores. We believe it should be far easier for agents to offer consumers their products. Shouldn’t we as consumers decide what we want to buy?
Many British Columbians also love locally brewed craft beers. Right now, BC government regulations forbid breweries that make under a certain quantity of beer from listing their products in government stores. What does this mean? The government stores prefer huge corporate breweries to our own local microbreweries. The fact that you can find any local beer in the government stores is astonishing. Right now, only the private stores are truly supporting local craft beers – a scene that is growing at an incredible rate. And, given the restrictions on private retailers discussed above, this creates a completely uneven and unfair playing field for our small local brewers to compete against the corporate behemoths.
Vancouver is also becoming a thriving locale for music and arts. However, opening a new arts venue in the city has become a project only for the mega-corporations. Currently, it is nearly impossible to get affordable liquor licenses for new arts venues. A recent entrepreneur’s attempt to do so was met with a $600 000 price tag. What small business has that kind of capital to open a new venue? And, often, it can take months to get license requests approved. Do we really want to see the proliferation of corporate venues? These kinds of prices make the city a completely unfair environment for passionate local entrepreneurs who care about what they are doing. Skipping across the country to Toronto and Montreal reveals the ease with which small businesses can obtain liquor licenses in those cities and contribute to their thriving arts scenes. Do we really want Vancouver to keep its reputation as the “no fun city”?
Importing and Exporting
Any thriving cultural destination has a global mentality. Such a destination is open to new ideas and tends to become a magnet for international passion. Currently, however, British Columbia has all but closed its borders to the international culture of wine. The federal Importation of Intoxicating Liquors Act makes it illegal for anyone except licensed agents to bring wine into the country or even across provincial borders. This law, enacted just after prohibition, is infused with an 80 year old mentality that no longer makes sense. The law prohibits British Columbia wineries from shipping their products directly to consumers in other provinces and it even prohibits local BC residents from bringing a bottle of their favourite BC wine to their relatives in Ontario for Christmas. Are we still really concerned with cartels monopolizing liquor distribution? It is impossible for BC to become a cultural destination when we aren’t even allowed to ship our wines to the tourists that come here to enjoy and discover them (note: a bill to change this law is, finally, before the federal Parliament).
A similar argument applies to international wines. Why can’t consumers in BC buy wine directly from artisanal producers outside of the country? We do not believe that British Columbians have a parochial mentality, so why does the government treat us like we do? Great cultural destinations are open to ideas and products from elsewhere because being open fosters both dialogue and commerce. Currently, almost no one in the United States has even heard of British Columbian wine, and almost no Canadian outside of BC has tasted it. Making BC a cultural destination will change that situation. However, doing so is only possible with reform of the restrictions on importing and exporting wine, which are grossly unfair to British Columbians who want their province to become a North American cultural Mecca.
The last item on our list is also one of the most important. Right now, British Columbia has the highest liquor tax in North America at 123%. This means that bottles of wine that cost $20 in Washington regularly cost $40 in BC. Why would anyone in North America travel to British Columbia for wine when it is the most expensive place on the continent to purchase it?
The thriving wine cultures in California and Washington would not have developed if those states imposed a similar tax to British Columbia. In fact, Washington state reformed its liquor laws in the 1970’s (and just this year fully privatized liquor sales in a popular initiative), with such reform corresponding with the huge growth of the Washington wine industry, which is now the second largest in North America, after California.
The government consistently makes the argument that taxes are an important revenue stream. We do not disagree. However, we believe an attitude that does not want to make these taxes more fair and efficient is short sighted. Right now the BC wine industry is tiny. However, if you look at California’s wine industry, which also used to be tiny, it is now a multi-billion dollar enterprise, with a correspondingly massive tax contribution to state coffers. Doesn’t the BC government want to support growth of our local wine industry, from small retailers to local wine producers?
We believe that better prices, fairer taxes and better distribution will create a wine culture in the province that will increase the appetite for fine wine. This can only have a positive effect on the local wine industry.
In conclusion, Open Barrel advocates for liquor law reform because we love our province and we want to see it grow into the premier cultural destination it surely can become. We believe that fair rules and an open minded approach to liquor regulation will create an environment where local businesses, artisanal producers, and British Columbians will thrive. Greater diversity and greater support for entrepreneurial spirit is the necessary catalyst for growing Vancouver into an international city. Doing so is essential for our economy, for our local industries, and for our passion and pride. We hope that you will join us in our endeavor to make British Columbia the cultural envy of North America.