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Canadian Wine Shipping Laws to Be Put to the Test

Radio host plans to cross provincial borders with wine, challenging a shipping ban

Adrian Bryksa
Posted: May 12, 2011

As the U.S. Congress debates the proposed CARE Act and the future of direct wine shipping, Canada is having its own battle over wine. A Canadian TV and radio personality is planning to engage in civil disobedience this week by transporting wine across provincial borders, which is illegal under Canadian law. Terry David Mulligan hopes to call attention to the country's ban on direct shipping between provinces, at a time when many in Canada's growing wine industry say the law should be reformed.

The law Mulligan will be challenging is the Importation of Intoxicating Liquors Act, passed in 1928 during Canada's prohibition period, which strictly forbids the transportation of alcohol across provincial lines. The law has been kept in place ever since, and critics complain it allows provincial governments to enjoy monopoly control over beer, wine and spirits sales, leading to massive tax revenues.

Mulligan, who lives in British Columbia and hosts a weekly wine radio show, plans to send a message on May 13 by carrying a case of British Columbia wines across the border to Alberta. He then plans to bring Ontario wines back.

"There are three things here that really bother me," said Mulligan, who faces potential fines of $200 for the first trip and $1,000 for the second offense. "It is a violation of our personal rights that you cannot take your own property from one province to another. It's a violation of the constitution as it affects the trade between provinces and it is totally counterproductive in the promotion of the Canadian wine industry across our country."

(This isn't Mulligan's first defiance of authority. He recently played a song that is banned by the Canadian Broadcast Standards Council. "Money for Nothing," by Dire Straits, has been barred from the radio in Canada due to lyrics the Council claims are homophobic.)

Canadian wineries have long complained that the transport ban effectively prevents them from doing direct business with Canadian consumers. Tourists visiting the Okanagan Valley in B.C. or the Niagara Peninsula in Ontario can't bring wine back home or have it shipped to them. The Liquor Control Board of Ontario (LCBO) recently demanded that Mission Hill Family Estate Winery of B.C. stop accepting out-of-province orders on its website.

While enforcement of the law is difficult, industry members have witnessed firsthand how some provincial alcohol control boards deal with outcry and defiance of the law. "These liquor control boards are hyper-sensitive to this issue, and some of them will not shrink from punishing wineries that speak out too much by taking their [wines] off the shelves," said a B.C.-based industry insider.

In a market where producers are reliant upon these provincial control boards as their only legal channel to sell their wines, having their products taken off shelves and away from consumers' eyes is a financial death sentence. Most producers who want to sell their wines in other provinces do not have production levels high enough to meet the volume demands of the control boards. Direct shipping would provide new customers.

There have been several reform suggestions, such as the implementation of a personal consumption allowance or a shipping permit system that would require the wineries to receive permission from provincial liquor control boards to ship their wine while provincial taxes are collected. Some have suggested that the law is unconstitutional due to liquor boards applying different markups and levies on wines sourced within their provinces, making the playing field uneven. No one has challenged the legality of the act yet, but Mulligan hopes his action will change that.

Mary Jane Phillips
Farmington Hills, MI —  May 12, 2011 1:11pm ET
Very interesting, as I visit Canada regularly and when visiting friends in Toronto I love to go to the "Vintages" wine shops. They carry a wonderful selection of French wines, and often the Canadian dollar is favorable in the pricing. Point is that I am allowed to take 1.5 litres of wine across the border INTO Canada, any more and the duty is prohibitive. However when bringing wine back into the U.S. and declaring it, after 1.5 liters being duty free, the additional duty is .27cents per 750 bottle.

Many people do not realize that when returning from 48 hours in Canada, you can purchase alcohol (liquor) AT THE DUTY FREE SHOP and pay tax and duty (after your allowed 1 bottle) and it is still extremely cheaper than purchasing it in the U.S. You simply declare it at customs, go in and pay the tax and duty. Example: Often Stoli vodka is priced at under $15 per liter, and tax and duty is approx $3 per bottle. In Michigan that is a savings of almost 50%. All of this is totally legal.
Scott Mitchell
Toronto, Ontario —  May 12, 2011 3:01pm ET
Inter-provincial shipping is the least of our concerns.
Adrian Bryksa
Calgary, Alberta, Canada —  May 12, 2011 3:47pm ET
Mr. Mitchell, would you care to elaborate more on your comment? I would like to understand what you believe the number one issue facing the Canadian Wine Industry is right now.
Philippe Gilbert
Denver, Colorado, USA —  May 12, 2011 9:17pm ET
I have recently moved to the United States and can say that the wine is extremely cheaper here. More so, I can shop on the internet and find the best prices and have it delivered to my front door from anywhere in the country. Coming from Québec, I can tell you how frustrating it is to see the provincial government take so much advantage of the monopoly on wine.

For one, British Colombia and Ontario make some beautiful wines. The problem is the accessibility to these wines. Québec doesn't import a lot and when they do, they are easily 20% more expensive. So it is pretty temping to cross the border when it's 30 minutes away!

Second, the wines from U.S. are certainly not a bargain because of the monopoly. Let me give you just one example. Opus One 2006-2007 are priced in Québec at 342$ for 750 ml. That's twice the price!!! Given I can only bring two bottles when visiting the states, being a wine lover in Canada is quiet expensive.
Scott Mitchell
Toronto, Ontario —  May 13, 2011 9:15am ET
The number one issue facing the Canadian Wine Industry is the excessive production of over-priced swill.

From a consumer's perspective, the government monopolies and the excessive taxation of wines are tied for the number one problem.
Joe Callahan
Saint John New Brunswick CA —  May 13, 2011 12:03pm ET
Being an American and Canadian citizen I can tell you what the problem is. Because they have always been a monopoly and never had any competion they do not care about the public and never will. They are fat and lazy because they have the aditude of to heck with you. Take it or leave it, because they know you have no where else to by it. I was shocked to read in the paper a couple of years ago the Liquor Corporation here asked the supplyers to go up on there prices to the government so they could make some more money. At a 130% minimum mark up for the government, I guess they were imbarested that they were making tons of money and the supplyers were not. In closing Barefoot 750 ml. $11.99 every day and the over all selection is terrible!
Warren Porter
Toronto, ON Canada —  May 13, 2011 12:20pm ET
The ability to cross the provincial border with product that you own (whether something you've collected for years or just bought) has other ramifications which is what the provincial liquor boards are fighting. If I can buy much cheaper in Alberta (which I can) and am allowed to transport back to Ontario then the Ontario liquor board now has competition.

No one could reasonably argue that a British Columbian business person shouldn't be allowed to sell his products freely to an Ontarian (as is set out in the constitution) but the government in the higher priced province will fight hard I believe as a Pandora's box would soon open.
Adrian Bryksa
Calgary, Alberta, Canada —  May 13, 2011 2:05pm ET
Thank you all for your insightful comments. The taxes collected from adult beverages is a problem that isn't going to go away as if the control boards / provinces lose these key revenue streams, that money is going to have to be recovered elsewhere (higher personal taxes / cuts to gov services). The overproduction issue raised may stem from the control boards requiring wineries to meet certain production levels which has the negative impact of homogenization. The main issue as I see it is one of control for these boards and with a little out of the box thinking, a solution could be implemented where Canadians are not criminals for buying / transporting their wines out of province and the control boards continue to get their tax revenues. This shouldn't be a difficult problem to solve if the all parties involved actually acknowledge it and are creative enough with a solution where everyone benefits.
Stacy Hughes
Regina, SK —  May 16, 2011 5:15pm ET
Inter provincial transportation is not the issue here as I order in wines from all around the world for myself as most are not available where I live. Here is a good example of how we get roasted by government taxation and the thirst for huge profits.

Here is a nice wine not available in my province; Dr.Loosen Riesling Kabinet Mosel Erdener Treppchen 2008, (12)ordered from the winery at $81.00 for the case and sent/charged to distributor, distributor price to the SLGA, Government liquor agency was $127.00, my price to purchase from SLGA $308.00 for a case of 12 x 750ml bottles. Thats $6.75 to the winery per bottle, $10.58 per bottle to the SLGA and lastly I pay $27.25 per bottle.

Note: Again I stress that Interprovincial shipping is not the issue here, its being gouged by government. Increase of 158% from distributor price.
Now you know why we can't affrd to buy/bring in a high end wine from anywhere in this world, its just to damn expensive.

Sorry for the rant, but I sure feel better now.

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