Axing interprovincial trade barriers could bring London beer, spirits to Canada-wide market
Ontario breweries, distilleries can't sell directly to customers in other provinces
As the push to do away with interprovincial trade barriers builds momentum amid a looming trade war with the U.S., London craft brewers and distillers say those roadblocks within Canada are shutting them out of a nationwide marketplace.
Ontario breweries, distilleries and wineries can't sell their product directly to customers in other provinces, something David Reed, owner of Forked River Brewing Company, says limits their sales opportunities.
The east-end brewery has fielded inquiries over the years from local customers looking to ship beer to friends and family elsewhere in Canada, but has had to decline because of interprovincial rules, he said.
Their loved ones might as well be in another country — the company had better luck selling its brews in Japan before COVID-19 than they've had selling to customers in other provinces, Reed said.
"We had beer for sale in Tokyo faster than I've had it on shelves in LCBOs in Ontario, let alone another province," Reed said. A Japanese distributor, launched by an Ontarian, helped ship cans of its pale ale to Japan for about two years in 2017, he said.
"My nephew in Vancouver, he can't order our beer like somebody in Thunder Bay could order our beer. There's opportunities for direct-to-consumer, and making it simpler to sell direct to licensees or customers."
Those same restrictions keep London beer lovers from directly ordering brewskis from other provinces.
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Talk around breaking down interprovincial trade barriers has been decades long. In addition to alcohol, they include technical barriers, like vehicle weight standards, and licensing and paperwork requirements.
The federal government, provinces and territories signed the Canadian Free Trade Agreement in 2017 to cut existing barriers, but many exceptions remain in place.
Federal Internal Trade Minister Anita Anand has suggested remaining barriers could crumble this month.
The barriers exist largely because provinces wanted to regulate certain sectors themselves, said David Soberman, a professor at Rotman School of Management at the University of Toronto.
"And of course, they were interested in protecting jobs in their own provinces, but as a result, that's created a situation where it's difficult for certain businesses … to either export or conduct trade in (other) provinces."
Provinces themselves have also sought to prioritize local industries. Most provinces and all territories operate their own liquor retailers, such as the LCBO in Ontario.
Because laws around alcohol are up to each province, rules about transporting vary nationwide.
In Ontario, the province lifted interprovincial personal exemption limits in 2019 when it comes to alcohol for personal use, the LCBO says. In comparison, SAQ, Quebec's alcohol board, says any alcohol coming into Quebec, including donations, gifts, and souvenirs, must be reported.
Until 2019, federal law regulating alcohol importation into Canada had also barred importing liquor from another province without a provincial liquor board's permission. (Worth noting, Canadians can't ship home alcohol through Canada Post.)
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"The whole thing is just cumbersome," Soberman said.
"There doesn't seem to be any reason why a brewery, vineyard or a distillery shouldn't be able to ship product anywhere in Canada, as long as they're respecting all national regulations."
Ontarians can order from other provinces through LCBO's private ordering program, however suppliers may require a minimum order, and the process may take weeks.
Local producers can apply to sell in another provincial liquor store, but each has its own approval processes and rules around selling, storing and labelling, which creates a logistical headache, says Gavin Anderson of Anderson Craft Ales.
"Without having, basically, a full-time employee to figure out the listing process for every province, it's not really feasible for someone our size," he said. Shipping costs and varying tax amounts in each province are also a challenge.
According to Ontario Craft Brewers, Ontario has the highest craft beer taxes in the country. The province began reviewing alcohol taxes in 2023, but it's unclear where things currently stand.
"If we sold beer to another province and got to pay those tax rates … it would probably recoup some cost of shipping it out there," Anderson said.
Ontario distillers and winemakers also face high provincial tax, on top of the federal alcohol excise tax, said Michelle Debus, a partner at Paradigm Spirits Co., which markets online and at its distillery.
Debus said fewer barriers would expand sales, noting the distillery won the grand prize at the Canadian Whiskey Awards last year, prompting nationwide calls from interested buyers.
She believes it would be hard getting provinces to harmonize alcohol taxes to make interprovincial trade easier.
"We're hopeful, and it would be great if the provinces could come to the table and come up with a solution, but we know that this is a long, long outstanding issue."
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