A spirited debate about B.C.’s liquor laws

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Peter Kimmerly's spirits distillery is at the northern end of Hornby Island in British Columbia, less than a five-minute drive from the co-op store.

For a case of his premium vodka or gin to get to the store, it first would have to go to a central warehouse in Vancouver, then to a specialty store in Victoria. From there, it goes to Courtenay before finally arriving at the co-op after a journey that takes six ferries, three warehouses and four trucks – and up to six weeks.

"That's why we're not selling it in the co-op," Mr. Kimmerly said. "The labels would be worn off by the time they got there."

The lengthy detour highlights the archaic remnants of provincial liquor laws introduced nearly a century ago to guide the province out of prohibition. While several amendments enacted in the past year have helped modernized B.C.'s liquor laws, many that remain stand in the way of a maturing attitude toward alcohol, hindering, for example, the growth of local wineries, craft beer culture and sipping spirits.

B.C.'s liquor laws date back to the early 1920s, said Mark Hicken, a Vancouver-based lawyer specializing in wine law. As the province emerged from a disastrous and ineffective period of prohibition – B.C.'s only prohibition commissioner, Walter Findlay, was himself jailed for bootlegging – stringent legislation was put into place to create a system of government control over the liquor business.

"Our entire liquor regulatory system was designed for the post-prohibition era, and it's never been properly modernized," he said.

"It's been tinkered with over the years and there have been some minor changes made ... but the overall approach to liquor regulation still inherits that control mentality."

The problem Mr. Kimmerly faces is that, while members of the public can buy his product at his distillery, he cannot supply anyone who also has a licence to sell it. That means he can't send it directly to the Hornby Island Co-op store. (B.C. wineries can sell directly to shops, bars and restaurants.)

As a result, Mr. Kimmerly must go through the Liquor Distribution Branch, shipping his vodka and gin to a receiver at a Vancouver warehouse. Because his distillery doesn't produce enough units of his Phrog brand spirits to supply government liquor stores, it is then shipped to the specialty shop in Victoria. The co-op is permitted to buy its stock only from the closest retail liquor store, which is in Courtenay, so the shipment would have to be sent there.

Mr. Kimmerly said the process costs him too much to make supplying the co-op financially viable.

"If you just left it to private enterprise, you wouldn't have these silly problems," Mr. Hicken said.

He also points to the cascade effect of the B.C. government's 123-per-cent markup on wine and 170 per cent on spirits from the wholesale price. Restaurants, hotels and bars receive no discount on their alcohol, leaving them with little choice but to charge significantly more than government liquor stores to make a profit. This is why a bottle of wine that costs a B.C. government liquor store less than $10 can be $50 on a B.C. restaurant wine list.

Private liquor stores don't fare much better: They receive only small discounts – 10 to 30 per cent, depending on the licence they have, off the pretax retail price in government liquor stores, Mr. Hicken said.

"The government controls the pricing of everything, so even if you go into a private store, that store has bought all its stock from the competitor – the government – and they bought it at a very disadvantageous price," he said. "It's kind of like telling London Drugs it has to buy all its stock from Shoppers Drug Mart at Shoppers Drug Mart's retail price."

British Columbia has made efforts to modernize its liquor laws. Energy and Mines Minister Rich Coleman, who is also responsible for liquor, said he called for an overhaul when he held the file from 2001 to 2005, and picked up where he left off when he got it back from 2008 to 2011 and again in February. Changes enacted since April mean people can now take their own wine to restaurants and bring alcohol into B.C. tax-free from other provinces. As well, movie and live-event theatres can apply for a licence to serve alcohol in lobbies and adult-only auditoriums.

"We're really trying to get to where the market can run the market and we'll just do what our priorities are," Mr. Coleman said. Those priorities are to prevent liquor sales to minors, overconsumption, overcrowding of licensed events and the illegal sale of liquor.

"I think the ultimate goal is just a mature understanding of the consumption of alcohol, from all parties, so people can actually enjoy a drink."

Mr. Coleman is working to change "tied house" laws, which prohibit a liquor manufacturer from having an association, financial or otherwise, with an establishment that would favour the company's product. Originally intended to prevent vertical ownership in the liquor market, the law means a winery owner, for instance, cannot sell his wine at an off-site restaurant he owns. (He could do so if the restaurant were on the same property as the winery.)

However, critics are concerned big companies with deep pockets could corner the market through contractual agreements with restaurants or pubs, essentially bribing them to serve predominantly their product. Mr. Coleman dismisses the concern, noting it's unlikely any establishment would agree to that.

"Nobody walks into a pub any more because there's one type of beer on tap," he said. "They're there because there are choices."

Industry enthusiasts have also called for the province to do away with the excise taxes and markups, or to consider a flat-tax system on alcohol similar to that of Alberta. Mr. Coleman said he doesn't see that in the near future.

"The biggest challenge is: How much can government afford? We have $800-million that comes into government coffers [each year]" through liquor," he said."If you take a couple hundred million off that, you have to find the revenue somewhere else.

"It's a significant contributor to the revenue of the province."

A sampling of B.C.'s liquor laws:

No "happy hours": Midday discounts on alcohol are prohibited, meaning it is illegal for restaurants and pubs to drop the price of an alcoholic beverage for a few hours a day. Weekly specials, however, are permitted. Some restaurants discount the prices of menu items for happy hour.

No newspapers at wine stores: B.C. wine stores can sell wine-related items, such as gift bags and corkscrews, but not other innocuous items such as newspapers. "They can sell lottery tickets, however," Vancouver lawyer Mark Hicken points out. "Is this because it is dangerous to drink wine while reading a newspaper but not while gambling?"

Special Occasion Licences: Caterers are currently prohibited from obtaining a special occasion liquor licence for clients, meaning the clients must get it themselves. (This law was amended this year, but has not yet come into effect.) Once a licence has been obtained, all liquor for the event must be bought from either a B.C. government liquor store or a winery. This means if a man bought a bottle of wine from a private store for his daughter's wedding, it can't legally be served at the function.

No wine at picnics: British Columbians are not allowed to drink in public places except at events with liquor licences. That means no beer at the beach or wine at a picnic. A person caught with a drink in public is usually asked to pour it out or face a $230 fine under the Liquor Control and Licensing Act.

Careful wording: A restaurant holding a food primary licence – meaning that food rather than liquor is the primary focus of the business – can use the word "bar" only if it is associated with food, and only if it is not emphasized. That makes "pasta bar" acceptable and "pasta BAR" a no-no, according to a government-issued guide.