Karen Selick is the litigation director for the Canadian Constitution Foundation, and is one of Gerard Comeau's legal team.
Pity the poor beer drinkers of New Brunswick. Except for a very small amount of beer – 12 bottles – that they're allowed to bring into the province from elsewhere, they have to buy their beer from the ANBL (Alcool New Brunswick Liquor), the provincially owned distributor. ANBL slaps a hefty 89.8-per-cent markup on the base price. This makes New Brunswick Canada's third most expensive beer jurisdiction. A case of 24 bottles or cans will cost New Brunswickers $19 more than what they would pay in neighbouring Quebec.
That price differential is what impelled Gerard Comeau to drive four hours round trip to stock up on Quebec beer in October, 2012. Mr. Comeau and 16 others were caught in a two-day RCMP sting operation. All his alcohol was seized, and he was charged with possessing excessive non-ANBL-acquired beer.
His trial took place last week in Campbellton, N.B. Rather than pay the $292 fine, Mr. Comeau challenged the constitutionality of New Brunswick's Liquor Control Act. (A decision in the case is expected around the end of April, 2016.) His lawyers' argument, in a nutshell, was that Canada's constitution, adopted in 1867, contains a provision guaranteeing interprovincial free trade of goods. The Fathers of Confederation didn't want trade barriers between provinces.
Prosecution witness Patrick Oland testified last Friday. He's the chief financial officer of Moosehead Breweries, New Brunswick's oldest independent brewery. Mr. Oland said he is not overly concerned about New Brunswickers making personal beer runs into Quebec for their own use; however, he feared that eliminating the 12-bottle import limit would lead to increased bootlegging: that low-tax Quebec beer would start entering New Brunswick by the tractor-trailer-load.
Technically, bootlegging would be impossible once the law were changed. By definition, bootlegging is the making, distributing, or selling of goods illegally. If the court struck down the import restriction as unconstitutional, then it would no longer be illegal to transport truckloads of low-tax Quebec beer into high-tax New Brunswick, so it wouldn't be bootlegging. Rather, it would be arbitraging. That's the word used to describe buying goods in one market and selling them in a different market to take advantage of price differentials.
Arbitrage happens all the time. For example, in 2013 enterprising Lithuanian arbitragers travelled to Norway to take advantage of a price war in diapers. They stuffed their cars and took them home to sell for twice as much – all perfectly legal.
With Quebec beer, nobody knows just how much illegal importation is occurring right now. There are no customs houses forcing anyone to stop for inspection on the two dozen roads between the provinces. Truckloads may be making the trip as you read this. In fact, one private investigator testified that on the six days when he observed the Quebec beer store just across the bridge from Campbellton, fully two-thirds of the vehicles bore New Brunswick licence plates and drove back across the bridge after loading up. Even the prosecution admitted that New Brunswickers do this "regularly." One New Brunswick resident told me that a common criterion used by local car buyers is how much beer the vehicle will hold.
The Liquor Control Act has been in force since the early 1960s but the 2012 sting operation was the only time the RCMP have ever tried to enforce the importation limits. New Brunswickers all seemed surprised to learn of the restriction when Mr. Comeau was charged. The main map distributed by Tourism New Brunswick warns readers that they must use seatbelts, wear bicycle helmets and not use cellphones while driving, but it's silent about bringing beer into the province. Mr. Oland eventually acknowledged that free trade in beer would have advantages for Moosehead – it could consolidate its operations in one plant.
Even ANBL might see, if it stopped squawking that the sky would fall, that its total revenues might increase if it lowered its per-bottle tax and stopped motivating consumers to visit Quebec. That's what happened when Manitoba opened its borders in 2012. In short, it's hard to find anyone who would lose from free interprovincial trade in beer.