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An undated archive image of the Rio Theatre in East Vancouver.

Vancouver's Rio Theatre is cancelling all film screenings as of Monday, after a roller coaster ride of a week involving its long fight for a liquor licence. On Wednesday, it appeared that fight had been won, as the Rio announced it had been granted a licence to serve alcohol at adult-only live events, such as concerts. "This is great news for the future of one of the last remaining Independent Theatres in Vancouver," read a celebratory news release, sent out late Wednesday.

But when it came time to sign the licence on Thursday, the Rio was presented with a surprise clause by the B.C. Liquor Control and Licensing Branch:

"Under current regulations and policies, you cannot operate as a licensed live theatre at some times and an unlicensed movie theatre at others. Therefore the following term and condition will be placed on your liquor primary license: This establishment is not permitted to show movies or any type of cinematic screenings at any time."

The news came as a blow to Corinne Lea, who has been running the theatre for about three-and-a-half years.

"I was shocked; absolutely shocked," says Ms. Lea. "The condition is really harsh. ... I just don't understand the need to restrict us when we're not selling alcohol."

She argues the Rio is not by definition a movie theatre, as movie theatres screen films exclusively and don't host live concerts and community events.

"We're not a normal movie theatre, and so it seems pretty arbitrary that someone in Victoria who's never been to the Rio has decided because we show movies we're a movie theatre," she says.

Put on the spot, Ms. Lea was forced to choose between selling liquor during live events and cancelling all film screenings, or continuing to go without the liquor licence.

"It was a really, really tough decision," she says. "We spent a year and three months trying to get this license and here it was. We finally got it. ... Basically my business can't survive without getting a liquor license. We've been hanging on, just waiting for it. So I have no choice."

She signed, and cancelled all screenings after this weekend (the liquor licence goes into effect on Monday).

Ms. Lea knows her decision will have an impact: it's not just a matter of cancelling screenings of The Girl with the Dragon Tattoo after Sunday. It means no DOXA documentaries, no Out on the Screen Film Festival screenings, no Movies for Mommies.

"I don't understand how that can be justified," says Ms. Lea.

The LCLB emailed a response to the Globe and Mail's inquiries on the matter late Friday, stating "the Rio Theatre cannot operate occasionally as an unlicensed movie theatre and as a licensed live-event venue at other times. One of the significant considerations has always been the large number of movie-goers that are youth and the unique challenges posed by darkened movie theatres against the government's responsibility to ensure that minors do not have access to alcohol."

Asked whether the LCLB might change its stance, the Branch wrote: "Government is considering whether changes might be made to allow the licensing of movie theatres themselves in the future; however, no decisions have been made to date."

There are theatres in B.C. that can serve alcohol, but the rules are complex. The Silver City complex in Coquitlam, for example, has a liquor licence for its lounge, which is physically separate from the unlicensed areas and has a separate entrance. Movie-goers can't take alcohol into the theatres.

Some local artists are rising to the defence of the Rio. Independent filmmaker Tyler James Nicol sent a letter of protest to members of the media on Friday. He explained that the Rio has given him opportunities he wouldn't have had elsewhere, and wrote that the restriction doesn't make sense.

"You may watch sporting events while surrounded by your family and imbibe, you can have a pitcher of beer and throw a 10-pound bowling ball down a faux-wood alley and be within your legal right, but you can't see sequential images projected on a screen in a building that houses liquor and be expected to be lawful."

While the Rio also has to cancel its wildly popular Friday midnight screenings, next weekend, The Rocky Horror Picture Show will go on - sort of. A shadow cast that usually acts out the film as it plays on the screen behind them will go through the motions, but without the motion picture.

"Although we're not happy with the rules, we will follow them," says Ms. Lea. Then she added: "until they get changed."