New regulation makes it illegal for B.C. brewers, vintners and spirit producers to ship products direct to consumers in Ontario. Istock photo

Ontario regulation stipulates that all interprovincial alcohol shipments into the province involve its liquor board

B.C. wineries could be on the hook for $250,000 in fines, with $100,000 in fines and jail sentences for winery principals, if they ship wine directly to Ontario consumers thanks to a new legal regime that the Ontario government put in place last month.

Those same penalties apply to any person or business that sends alcohol into Ontario from another province without funneling the products through the Liquor Control Board of Ontario, according to Dentons partner Shea Coulson, who specializes in wine law and has represented B.C. wineries in challenges to interprovincial-trade barriers at the Supreme Court of Canada.

“[Winery owners should] understand what the change is because it is a legal change and it’s a substantial one,” he told Business in Vancouver. “My concern for the industry would be that, as they are busy with everyday operations, they miss this.”

Coulson said he believes that the new Ontario regulation under the Ontario Liquor Act is a “stopgap” measure, because it is set to expire on January 1, 2020, and that the Ontario government is in the process of drafting new legislation that contains the same restrictions.

“Why would you do this [regulation] unless you were building something else [such as a law] that is more nuanced?” he said.

The urgency for the Ontario government to create its stopgap measure was that the federal government, also in June, amended its Importation of Intoxicating Liquor Act (IILA) so that IILA no longer governs interprovincial alcohol shipments.

IILA existed for decades as a barrier to interprovincial wine shipments.

Central Okanagan–Similkameen–Nicola M.P. Dan Albas introduced a private members bill in 2011 that became law in 2012 and amended IILA to allow interprovincial alcohol shipments that do not involve the provincial liquor boards if the shipments were below personal-exemptions thresholds that were set by receiving provinces.

B.C. set an exemption limit that allowed B.C. residents and visitors to the province to bring in nine litres of wine, four bottles of spirits and a combined total of six dozen beer, cider and coolers from another province without being dinged with B.C. taxes. The B.C. government announced July 19 that those limits are now eliminated when a person physically brings in the booze but that the restrictions remain in place for those who order products online and have them shipped.

Many thought at the time that the Ontario government would reciprocate but it did not, Coulson explained.

Instead, the province was in what Coulson called a “weird grey zone,” because its government sometimes said that its personal exemption limit for incoming e-commerce shipments of alcohol was zero, yet it did not have any regulation explicitly stating that this was the case.

Last summer, Coulson told BIV that the Ontario government at one point had a frequently-asked-questions page on a government website that said that Ontario residents were not permitted to buy wine shipped from other provinces. The page then explained that other provinces discriminate against Ontario wines so the Ontario government was not going to allow wine from other provinces to be bought via e-commerce.

Coulson added at the time that this website text could be used in court by B.C. wineries to argue that the rationale for Ontario’s policy was “retribution,” and that this is unconstitutional.

The Supreme Court of Canada last year, in R. vs. Gerard Comeau held that while provinces could erect interprovincial trade barriers against alcohol coming into its territory, they could only do so if it were for a primary reason such as for the health and safety of residents.

—By Glen Korstrom, Business in Vancouver
gkorstrom@biv.com
@GlenKorstrom

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