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Fallout from Comeau decision: “Canada has suffered a great loss” plus, what’s next for freeing the grapes in Canada

Canadian wine

By Rick VanSickle

“The people of Canada have suffered a great loss,” is how Niagara’s Hidden Bench vigneron and proprietor Harald Thiel described the Supreme Court decision yesterday to maintain the freeze on the free flow of beer and wine across provincial borders.

Note: Read more on the details of the Comeau decision and reaction in this post from yesterday here

In Canada’s other main wine region, B.C.’s Okanagan Valley, Okanagan Crush Pad owner Christine Coletta is already planning the next steps in the battle to free Canada’s grapes from a bureaucracy that is stifling growth, hurting bottom lines and keeping great Canadian wines out of the hands of consumers across the country because of the stubbornness of two main provincial combatants — Ontario and Quebec.

Canada wine

“Before the next shoe drops, we need to work with politicians to effect change,” the feisty winery owner, pictured above, said in a Q&A today with Wines In Niagara. The Crush Pad was one of five small B.C. wineries that joined the Comeau case as third-party intervenors. The other four wineries were: 50th Parallel EstateLiquidity WinesNoble Ridge Vineyard & Winery, and Painted Rock Estate Winery.

The Supreme Court of Canada decision on the Comeau case Thursday sent a wave of disappointment across the country after the court affirmed the constitutionality of a New Brunswick law that ensnared a man (Gerard Comeau) who brought home beer and liquor from neighbouring Quebec.

The unanimous high court decision affirms the constitutional legitimacy of provincial liquor monopolies and makes it clear that provinces have the power to enact laws that restrict commerce if there is another overriding purpose — like maintaining public safety and protecting public health.

The ruling allows interprovincial barriers to stay in place, as long as the primary goal of the restriction is not to place restrictions on interprovincial trade, protect a local industry, or punish another province.

ontario wine

Shea Coulson, the lawyer who represented the B.C. interveners, had some optimism about the ruling. Coulson states that when one looks deeper into the ruling, one will read that it’s now unconstitutional to enact a law or a policy that, as its primary purpose, imposes a tariff or “tariff-like” measure on another province’s products and that future courts will have to look at the effects of a law on the ground to determine if it is, in truth, performing a protectionist function rather than serving a legitimate provincial purpose. He also says that the spirit of the Court’s judgment is supportive of national free-trade that balances local interests with national interests and is critical of protectionism and trade wars between the provinces.

Coletta joined a chorus of wineries, including Niagara’s Hidden Bench, vowing to continue to ship their wines to anyone in the country who wants them, seemingly in defiance of a law that has many shades of gray.

“We are protecting our market,” said Thiel on Friday. “We will continue to ship wine anywhere in Canada.”

B.C. wine

Thiel, above, says the “devil will be in the details” as “larger entities,” code for provincial monopolies such as the LCBO and SAQ, start exorcising their might to force wineries to stop selling wine outside their own borders.

Enforcement measures could include shipping bans on Canada Post and other shippers from delivering wines from province to province that forbid it. Also, says Thiel, the AGCO could be forced by the Ontario government to provide a record of any wines shipped out of province to keep track of rogue wineries.

Thiel calls it pure greed on the part of the Ontario and Quebec governments to allow the current situation to exist. All this would be a moot point if provinces simply changed legislation to allow the free flow of Canadian wine across provincial borders.

Thiel says he doesn’t have a problem with provincial governments taking their share of taxes from alcohol, but what the LCBO and SAQ want, he says, is an extra cut from a mark-up from any Canadian wines brought into their provinces.

“They shouldn’t get a mark-up because they haven’t done any work,” Thiel says.

With provinces scrambling to lock down their borders in light of the Comeau decision, Thiel likens the situation to “10 distinct countries in our federation from an agricultural point of view.”

He says the biggest beneficiary of all this will be exporters of wine to Canada. “We’re the easiest market in the world to sell wine into,” Thiel says. “We have 10 points of contact for alcohol sales.”

What are the next steps to
freeing the grapes in Canada?

Wines In Niagara had four burning questions for Okanagan Crush Pad owner Christine Coletta on what the next steps are in the wake of the Comeau decision.

Wines In Niagara: Where do Canadian wineries go from here? Many, like you, say they will continue to ship wine to anyone who wants it. What happens when/if the next shoe drops and measures take place to make it illegal to use Canada Post or shipping companies to move product to consumers out of province?

Christine Coletta: We continue to direct ship. Most of us have been doing it for years and will continue to. Before the next shoe drops, we need to work with politicians to effect change. An example would be if B.C. and Ontario agreed to allow wineries in those two provinces to have the same privileges — (for example) DTC (direct to consumer) and DT on premise. National restaurant and hotel chains could offer an affordable Canadian wine list, consumers in each province could order directly. B.C. has allowed Ontario wineries DTC for a few years now and the world hasn’t ended.

WIN: What are the next steps? In your reaction statement you said there is a silver lining. For the life of me, I can’t see another protracted fight taking the issue back to the Supreme Court. So, where to go from here?

CC: The silver lining is that in their ruling it was noted that tariffs or tariffs like barriers that disadvantage one manufacturer over another in any protectionist manner is not acceptable. So, for example, if B.C. wineries are allowed to direct ship to restaurants, Nova Scotia and Ontario wineries should be able to as well.

WIN: Of course, this is pretty much a moot point if the province of Ontario passed legislation allowing for the free flow of wine across provincial borders. Why do you think the government of Ontario continues to resist changing legislation and do you believe they ever will change it?

CC: For the life of me I don’t know as I am not close enough to it. Perhaps the Ontario wine industry doesn’t want it. Do they view B.C. wines as a competitor? What I do know is that we had very little support from the Ontario wine industry during our fundraising efforts for our Comeau legal fees. Are there other more pressing issues that they face? I don’t judge them for not coming to the table, but I really don’t know how important this is for them.

WIN: Some Ontario wineries maintain that Canada is the easiest place in the world for foreign wineries to export wines to in large part because they have 10 points of contact (provinces) all with the power to charge what they want for their product because there is no competition. Does the Comeau decision only fuel that and make it much more appealing for imported wine.

CC: Canada is an attractive market for the reason that the liquor monopoly system makes life simple. Especially when you compare Canada to a market like the UK. But I don’t think any of us expected the monopoly system to crumble. I think that Canada is becoming a very mature, saturated wine market. When that happens, prices go down and the big importers may find other more profitable channels in different emerging wine consuming countries.

My opinion is that we need to put pressure on provincial politicians. The CVA could facilitate meetings between the BCWI (British Columbia Wine Institute) and the OWC (Ontario Wine Council) and their provincial political partners and start the conversation. I would hope and expect that this work is already underway.