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John Skinner, of Painted Rock Estate Winery in B.C., already sells directly to Ontario consumers, despite that province’s regulation of interprovincial wine sales, ‘and I’m not apologizing for it.’

It is the law that was supposed to free the grapes, ending a prohibition-era federal ban on individual purchases of wine across provincial borders.

It hasn't quite worked out that way.

A year after the passage of Bill C-311, the vast majority of Canadians still can't buy wine directly from an out-of-province winery, unless they haul it back themselves.

That's because just two provinces – British Columbia and Manitoba – have so far authorized interprovincial Internet and phone sales to individuals since the law was passed.

Most notably, Ontario, Alberta and Quebec continue to jealously guard the revenues that flow through their own liquor distribution systems – the latest example of internal trade barriers that persist in spite of concerted efforts to remove them.

"It just seems so ludicrous to me that we make a homegrown product. It's local. It's Canadian. It supports farming. It's small business," lamented Sandra Oldfield, chief executive and wine maker at Tinhorn Creek Vineyards in Oliver, B.C.

"These are the kinds of things we should be supporting in Canada."

The small winery, located at the southern end of the Okanagan Valley near Osoyoos, B.C., still can't sell its wine online or by phone to Canadians who want its product, except in Manitoba and B.C.

"I don't think the intent or the spirit of C-311 has been followed by the provinces, so that's frustrating for me," Ms. Oldfield said.

Other wineries are choosing to turn a blind eye to lingering provincial restrictions, taking their cue instead from the federal government.

"I sell directly to consumers in Ontario right now, and I'm not apologizing for it," said John Skinner, proprietor of Painted Rock Estate Winery of Penticton, B.C.

Mr. Skinner said his growing direct sales in Ontario represent a tiny slice of the massive wine market, but are nonetheless crucial to making his small business "viable."

Speaking at an event at another B.C. winery last week, federal Industry Minister Christian Paradis blamed the problem on "foot dragging" by Ontario, Alberta and other provinces.

"The elephants in the room are Ontario and Alberta," agreed Beth McMahon, vice-president of government and public affairs for the Canadian Vintners Association, the lobby group for Canadian wineries.

"They see it as a threat to their liquor retail systems. They don't want to see people go online or join a wine club and get wine shipped to them, and step around their own marketing systems."

Industry sources said the provinces also worry that allowing Internet sales could open a back door for the sale of foreign wines directly to consumers.

Bill C-311 amended the 1928 Importation of Intoxicating Liquors Act, eliminating restrictions on moving wine across provincial boundaries for personal use.

But the amendment didn't touch the provinces' right to to regulate the possession, movement and sale of wine. The Canada Revenue Agency points out on its website that "supporting provincial legislative or regulatory changes are also required to permit individuals to move wine interprovincially or to place orders with wineries by telephone or over the Internet."

The Liquor Control Board of Ontario, which has a monopoly on liquor sales in the province, argues that ordering direct is unnecessary because consumers can buy "any wine" not sold in its stores through the LCBO's private ordering program.

But wineries say that's not viable because of steep markups charged by the LCBO. Mr. Skinner of Painted Rock said he would have to sell his wine for nearly $100 a bottle, compared to his normal $55 list price.

So while the LCBO may say any Canadian wine is available, the reality is that most small wineries can't make money and so don't sell that way, Mr. Skinner said.

Another anomaly is that Ontario allows its own residents to buy directly from Ontario wineries, but yet balks at interprovincial sales.

"It really is absurd," said Ms. McMahon of the Canadian Vintners Association.

The provinces' fear of Internet sales is misguided, she added. The U.S. experience, where 40 states now permit it, has shown that it expands the overall market, but grabs just 1 per cent of total sales.

Ms. Oldfield said direct sales are all about building a "Canadian wine culture," not doing an end run around provincial liquor boards.

"With wine, it's all about the connections you make with people," she said. "It's really hard to do if you can't ship to them."

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