06.13.2012  
 

Canadian Wineries Still Face Hurdles

Parliament approves bill allowing individuals to transport wine, but provincial tax regulations stymie shipping

 
by Peter Mitham
 
Mark Hicken
 
Vancouver lawyer Mark Hicken told Wines & Vines, “They’ve come up with policy statements that don’t have any legal effect.”
Vancouver, British Columbia—Dan Albas, who represents British Columbia’s Okanagan Valley in Canada’s federal parliament, garnered cheers as he delivered a video message to those attending the Vinos film festival in Osoyoos on June 8 that his bill, C-311, received unanimous approval from parliamentarians two days earlier.

The bill amends Canada’s contentious 84-year-old Importation of Intoxicating Liquors Act to allow the interprovincial movement of wine by individuals “for his or her personal consumption, and not for resale or other commercial use.” (For background, see “Canadian Wine Law Challenged.”)

Canadian senators are now reviewing the bill, something widely considered to be a mere formality prior to the bill being approved and enacted. Senate approval is expected prior to parliamentarians’ summer recess June 29.

But the cheering may be premature, as the provinces say tax laws prevent them from allowing the direct shipment of wine—one of the main boons wineries expected from changes to the federal law.

Direct shipping still illegal
Anticipating passage of the federal bill, BC Minister of Energy and Mines Rich Coleman announced that BC residents could bring home “one case of wine, four bottles of spirits and a combined total of six dozen beer, cider and coolers from other provinces for personal consumption.”

The changes bring BC in line with long-standing exemptions in place in Ontario, Nova Scotia and the Yukon, but exclude alcohol shipped to a B.C. address. “No jurisdiction allows direct shipping without incoming taxes at this time,” said Sandra Steilo, a representative for the B.C. Ministry of Energy and Mines.

Wines & Vines asked Steilo why a distinction exists between the two manners of importation, specifically, “If I can purchase wine or any other alcoholic beverage in another province and bring it back with me, why can’t I just buy it in another province and have it shipped to me?”

After 15 seconds of silence, she reiterated her previous comment: “Because…no jurisdiction allows the direct shipping without incoming taxes.”

Steilo, quoting a ministry fact-sheet, said each province “is accountable for its own decision-making,” but a statutory framework exempting direct shipments from provincial taxes in the province of delivery has to be, “created, in partnership with other provinces.”

But that explanation doesn’t impress Vancouver lawyer Mark Hicken, who specializes in wine-related legal matters and has followed the interprovincial shipment issue closely.

The text of Bill C-311 doesn’t specify the manner in which individuals bring (wine) across provincial borders, whether in their own vehicle or via a courier. “From a legal perspective the whole thing is kind of bizarre, because neither Ontario or BC have passed any statutory provisions or regulations that say that,” he told Wines & Vines. “They’ve come up with policy statements that don’t have any legal effect.”

The pledge to work with other provinces to develop a framework addressing the collection of taxes also mystifies Hicken. “The government seems to be saying we’re just going to do this temporarily, and then we’ll try and figure something out between all the provinces and have some sort of unified approach,” he said. “But you know—we waited 80 years for them to figure it out among themselves, and they didn’t come up with anything. So I’m not optimistic.”

Wine industry supports spirit of bill
Wine industry representatives in the two main wine producing provinces of BC and Ontario also want to see the spirit of the bill respected.

“The spirit of what the federal law was meant to do is to open it up and no longer make it illegal to transport,” said Miles Prodan, executive director, BC Wine Institute. “There’s a chance to be clear on the ability to direct-ship to a BC resident, and that hopefully will set a precedent…(allowing) our wineries’ shipments direct to consumers.”

Based on the U.S. experience, Prodan estimates that the potential movement of wine between provinces at 28,000 cases annually.

Debbie Zimmerman, CEO of the Grape Growers of Ontario, said passage of the federal bill creates opportunities for small wineries to expand their markets, but the provinces—including Ontario—seem to be exercising a loophole to protect their own retail interests.

“I’ve always been concerned that they can’t ship a case of wine, that’s why we supported the bill,” Zimmerman said. “It’s a benefit to our small wineries, and we see it absolutely as being an important element to ensure that people have consumer choice in their own country. But it sounds like it’s not going to happen at this point.”

While the move by federal lawmakers is good, she feels more work could have been done to garner support from the various provincial liquor regulators.“C-311, in the spirit, is a very good bill. But the implementation of it rests with the provinces,” she said. “Maybe there should have been more consultation on this before it went forward.”

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