Wineries still live in fear of liquor control boards

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Four weeks have passed since Ottawa lifted its ban on direct-to-consumer wine sales across provincial lines, but most Canadians have yet to benefit from the change.

Bill C-311 was meant to do away with Prohibition-era restrictions that prevented people in one province ordering from a winery in another for personal consumption. As a result, the borders are now wide open in Manitoba, while British Columbians can order out of province with a few restrictions: The vintage must be made from 100-per-cent Canadian-grown fruit, purchased directly from a domestic winery.

But it's a different story in Quebec and the Atlantic, where provincial regulations still stand in the way of wine drinkers. Even in provinces with no explicit law against the practice, such as Ontario, wineries fear they could be indirectly punished by liquor control boards, which hold the power to decide which vintages are stocked.

"There's always the concern that the liquor boards could quietly but systematically crush a winery. If the liquor boards were to decide next year that they're carrying fewer kinds of wine from [a winery], that could bankrupt the winery," said Shirley-Ann George, founder of Free My Wine, which lobbied for C-311. "The wineries are very, very afraid of the liquor boards."

There is no evidence of liquor boards doing this, Ms. George said, but she argues provincial governments must explicitly back the direct-to-consumer sale of wine in order to dispel producers' fears.

A spokesman at Ontario's Ministry of Finance, which oversees the LCBO, said it would not punish out-of-province wineries for selling to consumers in Ontario. However, Queen's Park interprets C-311 to mean that selling wine across provincial lines is only legal if the province in question passes a law permitting it. Until Ontario does so, the province argues, federal prohibitions still apply.

The federal government could not immediately clarify Friday whether this is so, but several people in the industry say Queen's Park has got it wrong.

"Basically, Ontario laws are silent on importation and possession of wine from other provinces," said Mark Hicken, a Vancouver lawyer who publishes the blog Winelaw.ca. "There is a legal principle that says, 'that which is not prohibited is permitted,' although Ontario does not agree with me."

A spokeswoman for the government of Manitoba, which also has no rules around direct-to-consumer wine sales, said C-311 now makes the practice legal in the province.

John Skinner, proprietor of the Painted Rock Estate Winery near Penticton, B.C., says there is no legal impediment to selling his product in Ontario.

"Who's going to stop me?" he said. "The province isn't. The federal government is well and fine with it."

Other wineries, however, are more cautious, preferring to wait for definitive signals from other provinces before setting up shop. Several B.C. operations contacted by The Globe over the past week said they would refuse to fulfill orders from Ontario, Quebec, Saskatchewan or the Atlantic provinces for fear of having their wines seized.

"The Naramata Bench Wineries Association won't be sending wine to any province that has not clarified their shipping restrictions," said Cynthia Enns, co-owner of Laughing Stock Vineyards near Penticton, B.C.

In anticipation of the free market, Ms. Enns spearheaded a wine-club initiative that permits consumers – in British Columbia, Alberta and Manitoba for now – to order a mixed case of selections from estates in the Naramata Bench district of the Okanagan Valley.

"This is a region that's getting ready and mobilized for consumer exploration of Canadian wine," Ms. Enns said.

Alberta is taking a similar position as Ontario, but many producers have still decided to start selling there. Unlike in Ontario, Alberta's liquor stores are private enterprises, but the provincial gaming and liquor commission still authorizes warehousing and distribution.

Ontarians can order from out-of-province wineries through the LCBO, but the service can be more costly than simply having the wine couriered from the producer. Both Ontario and Quebec, the country's largest markets, are reviewing their laws. If they explicitly endorse direct-to-consumer sales, they would be heeding the wishes of 82 per cent of Canadians – according to a Harris/Decima poll conducted in June– and could set the tone for the rest of country.

And vintners like Mr. Skinner say they have nothing to fear in the brave new world of e-commerce. Most of the sales would likely be done by small wineries like his with a niche market, not the big operations that move large quantities through liquor stores.

"Right now, the only wineries really affected are the little guys. We're a drop in the bucket," he said. "We're really hopeful the Ontario government will get on board."