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Canada direct shipping laws are outdated

Arbitrarily enforced Canadian laws dating back to the prohibitionist era are preventing wineries from shipping direct to consumers outside of the producer’s province.

Canada (Country Appellation)

Borderless Bootlegging:
The Canadian Wine Shipping Quagmire

Canadian wineries and consumers are stymied by antiquated legislation regarding inter-provincial wine shipping.

by Craig Pinhey
September 19, 2008

DropCap It is telling that, in a country that prides itself on how our wine industry has thrived under NAFTA (North American Free Trade Agreement), we still do not have free trade between our own provinces. Most Canadians think of our inter-provincial borders as merely formalities; we drive across them without noticing, mostly, and we don't even think about which side we buy goods on, be it bananas, bicycles or booze.

Wait! Hold on a second. Booze is a completely different matter, and we've known this ever since we were little kids, novice drinkers, or – more accurately – young observers of how our parents made cross border runs for alcohol during liquor board strikes.

Yes, while it is clear that Canadians travel freely within our country, this freedom does not apply to wine, beer and spirits. Technically we are not even allowed to buy wine out of province and bring it home for our personal consumption.
If you want to buy wines like Mission Hill’s highly rated 2006 Reserve Riesling, you may find yourself out of luck, unless you live in BC.

This old prohibitionist policy reared its ugly head recently, as two Canadian wineries had their knuckles rapped by provincial liquor boards over direct to consumer inter-provincial sales. Mission Hill Estate, one of Canada's largest and most successful wineries, was told to stop offering wine sales out of province via their website by the LCBO (Liquor Control Board of Ontario), whereas their Manitoba equivalent, tipped off by the LCBO (giving a whole new meaning to the term cellar rats) called out Red Rooster Winery, a Naramata Bench winery that is part of the massive Peller Wines group.

It has long been (quietly) known to serious lovers of fine Canadian wine that just about any case of British Columbian wine could be had in a mere 3-5 days just by clicking your mouse or making a phone call, credit card in hand. Ontario wine, on the other hand, has been less easy to buy, although some folks (including yours truly) have managed to snag the odd case through persistent persuasion. Don't worry, I have a system for hiding the evidence.

According to Diana Soroka, Manager, Communications, for Manitoba's MLCC, "There is federal legislation called The Importation of Intoxicating Liquors Act that prohibits manufacturers from shipping wine directly to customers out of province." This legislation dates back to the 1920's.

It is interesting to consider just who, exactly, is breaking the law. Is it the consumer who buys the wine, only paying taxes in the producer's province, instead of their own, and avoiding their local liquor board's egregious mark-ups? Is it the winery that agreed to sell it and arrange shipping? Surely they are guilty, at the minimum, of aiding and abetting a known felon (me). Or, is it the courier or Canada Post, who made the illicit delivery, perhaps pretending all the time that they were hoisting a case of bottled water onto my back porch?
Dan Zepponi, President of
Mission Hill Family Estate.

I asked a few of the key players about this, including Dan Zepponi, President of Mission Hill. He has been talking to media about this all week, and is probably sick of it, but he feels it is an important issue that is not going to go away just because of a few warnings. He supports the concept of finding a way to make it legal, to bring it out of the closet, so to speak. When he first encountered inter-provincial direct shipping, which is pretty commonplace with BC wineries, Zepponi wondered about the law. "It's kind of like jaywalking," he laughs, "is it illegal or not?" He was also a bit surprised by the complaint from the LCBO, because, "Technically it is not in their jurisdiction." "It's absolute protectionism," he says, and he expressed frustration at previous dealings with the LCBO. "They deny me a listing, then deny me shipping it [direct]."

Mission Hill has applied for listings at the LCBO – a very good client – for a wide range of their products, and has only been given them for a selected few. Since the LCBO does not wish to carry Mission Hill’s other wines, but there are interested consumers, why can't the winery sell to these customers direct? It makes sense in a free market economy.

The response from the LCBO and the MLCC on this issue is predictable. They say that they have a special order system in place if you want to buy wines that aren't listed. While this is true, there is a huge difference to the consumer between buying direct via a website or credit card over the phone, where the
Begin your wine journey now… just as long as your travels are within the listings on the LCBO website alone.
wine arrives in under a week, and a liquor board special order where you need to do paper work, then wait – often 6 months or longer in some provinces – only to receive the wine with a high mark-up attached, and after it is no longer trendy, or out of season. Although Mission Hill has direct shipped in the past, it is not because they prefer to serve their customers this way. "I'd rather have a listing," explains Zepponi, "because shipping costs are lower." Also, it would avoid lawbreaking.

Chris Layton, Media Relations Coordinator for the LCBO, has other concerns, in the area of unfair competition. "There are also questions/concerns of how level the playing field would be for domestic wineries with direct sales from out-of-province wineries," claims Layton. "With direct sales to consumers, provincial liquor boards would not get other related markups and levies (e.g. 58% markup, bottle deposit, etc.) yet local Ontario wineries still have to pay such on sales in Ontario. This is something that has been raised by some on the industry side."
Chateau des Charmes Wines’
Paul Bosc Jr.

Paul Bosc Jr. heads up Chateau Des Charmes winery in Niagara, and is also the Chair of the Canadian Vintner's Association. While he is not against direct shipping, and feels that the industry needs to address this and find a way to do it legally, he doesn't believe wineries should be given free rein to sell without restrictions. "If they see it as an unfettered right, if they don't pay local taxes, and don't deal with social responsibility issues, then that isn't right," Bosc says.

"The modern consumer has an expectation of immediacy," he adds, "and we at the Canadian Vintner's Association see it as an opportunity to start to develop a national wine market for the best wines in the country, which are often s

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Reader Feedback

Reader Comments... [14]

Jeff , Winemaker
Look at the protectionist speak coming out of the liquor boards, but especially the Canadian Vintners Association: 'only the best wines will be given limited country-wide distribution' blah, blah, blah. It is utterly disgraceful that this problem has not been dealt with until now. How can you pretend to represent Canadian Vintners, and have done nothing about this problem until now? What have you guys been doing for the last 20 years?

I mean, this is staggering incompetence. If you want to find out how to solve this problem, and solve it quickly, ask the Australians. They have no interstate trade barriers. In fact, to my knowledge, it is actually illegal for trade barriers to be in place. As a consumer, you are free to buy wine from any winery in Australia. Wake up and look beyond your own borders. Find someone who has solved the problem (Australia), copy what they have, and let's all go back to making and selling wines to whomever wants them, regardless of where they live.
[see my follow up comments - comment #9]

Seaton McLean , Co-Owner
Closson Chase Vineyards, Prince Edward County, ON
Well, said Jeff [comment #1].
We are located a three hour drive from the Quebec border. A large percentage of visitors to our winery are Quebecers. As it stands now, and has stood for the last sixty years, any of these people returning home with a few bottles of our wine in their trunk could be arrested at the Quebec border! So much for promoting Canadian unity. I love your wine Jeff, but not enough to go to jail.

The real reason that this hasn't changed is that the folks at the LCBO fear an erosion of their monopoly by direct delivery. Obviously, they can't get their hands on any of the revenue that comes from an out of Province sale via the Internet. Access to markets, especially those within our own country, is vital to the survival of small to mid-size wineries and our politicians need to hear that message loud and clear.

Bradley Cooper , Winemaker
Township 7 Vineyards, Penticton, BC
I am against restricting the sales of food products that contain alcohol with artificial provincial trade barriers. I do not believe the wine I make should be sold and shipped any differently than my neighbour's apples. Let's get rid of these onerous regulations that prohibit the citizens of one province in this country from accessing the products of another province. It's an international and domestic embarrassment.

Brian Raue , Managing Director
Masterpiece Premium Wines, Australia
I read with interest the article and whilst we enjoy cross border wine sales in Australia and do not have old and outdated laws that are a hangover from the '20s, to appease the provinces in Canada, I propose the following:

Wine shipped from province 'A' to province 'B' attracts taxes ONLY in province 'B'. This way taxes are paid where the wines are consumed.

Province 'A' will miss out on all taxes, so it will not be long before the province missing out, will lobby to get rid of the laws created so long ago, when times were different. Greed of Government may bring sanity into the liquor laws of Canada!

Jeff , Avid wine consumer
Atlantic Canada
Provincial Liquor Boards only exist to practice nepotism, and allow political parties an avenue to exert influence. Their moral ethos was lost long ago, their economic advantage is a myth, and their only remaining argument against on-line wine sales is a preposterous lie – underage drinking would be encouraged (what a blatant lie, at the expense of the taxpayer they pretend to serve). Take a cruise through any internet social network site. The kids could not bother trying to acquire more access to booze than they have now! They can't drink what they have!

Let’s ask questions like: Who has the better wine cellar in Canada? An LCBO Board Member or the average Canadian who likes wine?

Who paid the most for the cellar contents (really)?

Let's face up to the truth – they protect us from nothing, they offer us nothing we could not have without their little industry spinning away, and they only exist to serve themselves.

Now, that feels better, eh? Glad I got that off MY chest. So why do we allow them to continue intruding into our lives, and making Canadian products harder to get than American ones?

The phrase "first against the wall when the revolution comes" comes to mind.....

Paul B.
Toronto, ON
It is time for the prohibitionist hangover to end. We live in a time when the artisanal wine scene is flourishing, and will likely continue to do so due to the development of new-generation grape varieties that can produce fine wine across much of continental North America. What is needed is a positive, rather than regressive, approach, to allow consumers the freedom to discover wines from all across the country. Further, wine, like fine artisanal cheeses, ciders, beers, etc. must begin to be seen not merely as (1) a commodity, and (2) a noxious substance, but as food. What we need is the common-sense of the Australian approach (no trade barriers within the country), and the healthy, wholesome approach to wine that exists in the cultures of France and Italy, to name but two.

Tilman Hainle , Winemaker / Owner
Working Horse Winery, Okanagan Valley, BC
The inter-provincial liquor trade barriers are indeed a post-prohibitionist holdover (hangover?), and I will support any reasonable, concerted effort to get rid of them, so that wine enthusiasts across Canada can get access to the finest wines that this country can produce.

We live in a time when the challenges related to mail, phone or internet ordering of wine can easily be overcome (look just south of the 49th for an example), so let's try as an industry to make it work.

Gabriel Anderson , Canadian wine lover
It would appear that the LCBO is only concerned about out-of-province wine buyers when they are not the beneficiary of the sales – a point well made by Globe and Mail columnist Beppi Crosariol in his Sept 17th article “Tear down provincial barriers to wine and you get my vote”:

"We are required to ensure that suppliers abide by the law," LCBO spokesman Chris Layton said, …the board would have been remiss in its obligations if it had not warned the winery to alter its website to block out-of-province orders...
…It seems obvious to me that the LCBO is being inconsistent in citing the moral high ground in dissuading parties from shipping wine across provincial lines. The LCBO itself, in its 2005-06 annual report, proudly pointed to a $25-million windfall from the preceding fiscal year attributable directly to cross-border shopping by Quebeckers seeking relief from a strike at the SAQ, the LCBO's provincial counterpart.
…I can find no mention in the annual report of Ottawa-area LCBO cashiers doing the responsible thing and ramping up ID spot checks to ensure customers were not from Quebec, even though parking lots were teeming with out-of-province plates and with drivers clearly intending to break the venerable ‘Importation of Intoxicating Liquors Act.’ Any fool could see what was going on. But why sabotage lawless behaviour when you stand to gain $25-million on the balance sheet?

Gee!...the LCBO – a model of hypocrisy and self-interest. What a surprise! Read Beppi’s full storey here.

Jeff , Winemaker
In response to my original comment [comment #1] on the issue of inter-provincial barriers to trade in wine, I must digress and state that it is best to wait 24 hours and think out my thoughts before posting feedback for the world to see. As a winemaker, I find it very frustrating not to be able to share the fruits of my passion with consumers across Canada. My comments were not meant to sound as if I was advocating for the abolition of liquor boards, but rather to voice my frustration with a system that does not permit Canadians to access the high quality wines they learn about in magazines, newspapers and television programs. I cannot understand why the facilitation of consumer choice for our best 100% Canadian wines is taboo? Is it possible that our provincial governments and liquor boards are on the wrong side of public opinion on what wine consumers are demanding?

In my quick response to the Craig Pinhey article, I also suggested that the Canadian Vintners Association (CVA) is doing nothing to facilitate consumer choice. I was clearly wrong and for this I apologize. Many colleagues have informed me that this is on the radar screen of the CVA and they are developing options for a direct-to-consumer delivery system in Canada. Since retailer theory would suggest that "the consumer is never wrong," let’s move quickly to ensure that consumers from across Canada are provided a direct delivery system which will permit them to enjoy the best that we have to offer.

Cathy B , Canadian Wine Consumer
Ottawa, ON
As a wine consumer, I was shocked to hear that it was illegal to purchase wine directly from an out-of-province winery. In this modern day of internet when I can purchase almost anything and have it legally delivered to my doorstep, it makes no sense to exclude wine. I think that the LCBO has great retail stores, but let's face reality -- they don't have every bottle of Canadian wine that I would like to purchase.

As a growing fan and consumer of Canadian wines, when I learn about great wines from BC or Nova Scotia, why shouldn't I be able to order them online and have them delivered in record speed. This would not deter me from continuing to purchase wines offered by my local LCBO, but it really irks me to think that our governments would punish Canadian consumers with a fine or worse jail term, for ordering a case of award winning CANADIAN wine! Let's give consumers the chance to enjoy what Canada has to offer, and grow what is a really exciting wine industry.

As a consumer I want this debate to continue. Has anybody considered starting a petition, blog etc., to show our provincial governments and liquor boards that they are on the "wrong side" of public opinion on this one?
~ Cathy B

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