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Outdated BC Wine Laws & Policies PDF Print E-mail
Written by Mark Hicken   
Sunday, 15 August 2010 00:00

This page shows some of the outdated (and sometimes just plain silly) laws and policies that relate to wine in BC. You can see from this list that BC is seriously out of step with other international wine producing jurisdictions.

If BC wants to encourage the continued development of its food, wine and hospitality industries, it needs to modernize these laws and policies as soon as possible. This list is non-exhaustive ... please feel free to send further examples and suggestions.

BC WINE LAWS AND REGULATIONS THAT NEED FIXING

  • Corkage Not Allowed. THIS HAS BEEN FIXED. Most places in the world let you bring your own wine to a restaurant (the restaurant may or may not charge you a corkage fee). However, in BC it is not permitted to bring your own bottle of wine to a restaurant even if you bought it from a government liquor store. The restaurant could lose its license if they let you do this. Why?
  • Transport of Wine Across Provincial Borders is Illegal. THIS HAS BEEN FIXED AT LEAST FOR SOME PROVINCES. It is currently illegal to bring a bottle of wine across the border from Alberta to BC, even if it's for personal use. Instead, you must send the wine to the LDB and let them charge you all of their excessive markups, fees and taxes (which will more than double the price of the wine). Why is it illegal to carry a bottle of wine across a provincial border?
  • BC Wineries Cannot Ship to Other Canadians. THIS HAS BEEN FIXED AT LEAST FOR SOME PROVINCES. It is illegal for a winery to ship wine from BC to a customer in another province unless they send it through the liquor board in the receiving province. We live in one country ... why are BC wineries prevented from shipping to other provinces?
  • No Sale of Wine Between Individuals. It is illegal for one person to sell a bottle of wine to another person in BC. It doesn't matter that you may have purchased the wine from a government liquor store. It doesn't matter that the tax has already been paid. Why is this illegal?
  • Government Restricts Competition in the Retail Wine Business. In most places in the world, if you want to open a wine store, you can apply for a license and try your luck at the retail wine business. In BC, the government has capped the number of private retail store licenses and has made it difficult for anyone to compete with existing stores by making it illegal for someone to open a store within 1 km of an existing store (wouldn't you like that kind of government intervention for your business?). Since when should government be in the business of preventing competition in any retail sector?
  • 135% Tax Rate on Wine. The LDB imposes "liquor board markup" (which is hidden tax since it goes to the government) on wine at the rate of 123% plus they add 12% HST on top of that (plus some other minor fees). These tax rates are ridiculously high on a product that is actually good for you when used in moderation. No amount of soda pop is good for you and it is taxed at 12%. Why is wine taxed at this ridiculous rate? BC will never become a serious international wine destination with tax rates like these.
  • 100% + Tax Rate at the Border. If you exceed your miserly duty-free allowance of 2 bottles of wine, you will be usually be hit with border charges (liquor board markup and taxes) that exceed 100% of the retail price that you paid for the wine.Once again, these tax rates are ridiculous. Why?
  • Failure to Tax U-Brews and U-Vins. As noted above, the government charges unreasonable amounts of liquor board markup on wine that is sold at retail or brought across the border. However, zero liquor board markup is charged on wine produced at U-Brew type winemaking stores. This is simply unfair and results in large amounts of lost tax revenue.
  • Government Liquor Inspectors Have No Authority in Government Liquor Stores. BC Government liquor inspectors have no jurisdiction in government liquor stores. They can only take enforcement action in private stores. Why?

 

BC LDB POLICIES THAT NEED FIXING

  • LDB Has a Conflict of Interest. The LDB acts as the wholesaler to all private retail stores within BC as well as to its own chain of government liquor stores which are in direct competition with the private stores. This creates a serious conflict of interest. Imagine how this would look in other sectors. Independent coffee shops have to buy all their coffee from Starbucks? London Drugs has to source all its stock from Shoppers Drug Mart? This system is seriously flawed and needs to be changed.
  • Most Imported Wines Relegated to "Spec" System. A very large part of the selection of imported wine in BC is relegated by the LDB to an outdated category called the "SPEC" system. Generally, this means that the wine is held in a bonded warehouse in Richmond to which no one has access (even the importer). The only way the wine can get out of this wine "purgatory" is if someone orders it through the LDB. The LDB only permits sales in full boxes. No order splitting is allowed. The order must be processed by the LDB and delivered by them. So if a restaurant wants some of that wine, it has to order a full box even if it only wants 3 or 4 bottles and they have to wait for the LDB to deliver it. The restaurant can't pick up the wine themselves and they can't pick and choose to create a case. This severely limits selection and increases prices.
  • No Wholesale Discount for Restaurants. In most places in the world, restaurants (and bars/hotels) are given a wholesale discount when they purchase wine. In  BC, even though these customers are some of the best customers for the LDB, they get ZERO discount. They pay the same full retail price as you and me. This means that wine list prices in restaurants are much higher than in other competing jurisdictions such as Alberta and Washington state.
  • Restaurants Must Purchase From Designated Government Liquor Store. With the exception of BC wine (which can be ordered direct from the winery), all imported wine in a restaurant must be purchased by the restaurant from a government liquor store "designated in writing by the general manager". The restaurant is not permitted to buy from any other stores (government or private). The designated government store may be out of stock on products or not carry the ones that the restaurant wants. If the restaurant wants to go to a different store, they have to complete paperwork to get the other store "designated". Or they have to order it and wait for the LDB's slow order and delivery process. Why?
  • Slow and Inefficient Delivery and Ordering Process for Imported Wine. Private wine stores can order BC wine directly from the winery and get it delivered almost immediately. However, if they want any imported wine, they have to order it through the LDB wholesale system. If the product is in stock, it generally takes between 10-14 days to get delivery from Richmond (!!). If the product is not in stock in the warehouse, it can literally take months to get the product. As an example, a store could order a case of Chardonnay from the Okanagan (a 4 hour drive) and get it the next day but if it wanted a case of wine from a Washington state winery (2 hours drive to Woodinville), it could take weeks or months for delivery.
  • No Transfer of Wine Between Other Locations of the Same Restaurant or Store. If a restaurant or private wine store chain has more than one location, they are not permitted to transfer product between those locations. It doesn't matter that all taxes have been paid. It doesn't matter that the LDB may be out of stock and unable to deliver the product to the location that has run out. Why?
  • No Off-Site Storage. Restaurants and private wine stores are not permitted to store extra wine inventory away from their place of business. It doesn't matter that they have paid all the taxes on the product. It doesn't matter that they may have a small location with limited storage space. It doesn't matter that the off-site storage may be totally secure. Why?
  • Minimum Shelf Prices. The LDB creates minimum shelf (retail) prices for its products. For example, the minimum shelf price for a 750 ml. bottle of spirits was $23.00. They recently raised that to $23.75. However, because the LDB uses a fixed markup formula, all this does is result in a directive to the supplier to raise the wholesale price, thus creating a windfall profit for the supplier. In what other business would your customer actually ask you to charge them more when you are selling a product to them? The LDB makes a bit of extra money on the price hike ... the supplier makes a lot of extra money. This makes no sense.
  • Centralized Purchasing. In the 21st century, why would a small number of centralized buyers determine what wine products are available throughout an entire province. Imagine if this was applied to coffee shops ... the government dictates what type of coffee would be served throughout BC???
  • Commercial Winery Licenses. The larger wineries in BC operate as "commercial wineries". They basically operate as agents of the LDB: at the end of every day they have to deposit all of their revenue from sales directly into an LDB bank account. Later, they get paid a commission by the LDB for what was sold. What kind of "free enterprise" system is this where major businesses have to give all of their sales revenue to the government at the end of every day? Don't we live in modern North America not the Soviet Union? (Note: estate wineries operate in a more normal fashion)
  • Truth in Marketing. The largest "domestic" wine sales category in BC consists of products called "Cellared in Canada" which are made by the "commercial wineries". These wines are not really domestic wines. They are made from inexpensive bulk wine or juice that is imported here in giant vats from elsewhere in the world. Up until recently, the wine was bottled here and sold with packaging that was similar to BC wines. Prior to the Olympics, they were sold in LDB stores under signs that said "British Columbia". Following very bad international press coverage, the signs were made more accurate and changed to indicate that the wine is a blend of international and domestic wine (although there is in fact no requirement in BC that any domestic wine be in the bottle). However, the sales are still reported by the LDB as being domestic wine. In addition, despite a federal law that requires a country of origin declaration on every bottle of wine sold in Canada, these wines do not identify the country of origin. In an age where consumers demand transparency and honesty in marketing, this should not have happened.

 

BC LCLB POLICIES THAT NEED FIXING

  • Tasting Policies. If you have ever been to France, Italy, Washington or California, it is very common to go into a wine store which also has a wine bar so that you can taste wine before you buy it. BC has extremely restrictive policies for wine tasting in stores. For most stores, the amount poured is limited to tiny amounts, often served in miniscule plastic glasses. Modern technology, like the Enomatic tasting machine which preserves wine for tasting purposes, cannot be used unless a staff person operates the machine. The store is supposed to dump any wine remaining at the end of the day (thus defeating the purpose of the Enomatic machine). Stores cannot do off-site tasting events. In addition, wineries face severe restrictions on their own tasting rooms ... for example, current policies prohibit off-site tasting rooms which have been amazingly successful in places like Healdsburg (CA), Woodinville (WA) and Walla Walla (WA). These towns have seen dramatic increases in wine tourism by creating small downtown areas filled with tasting rooms where customers can walk (a good idea, yes?) from winery to winery. Our outdated policies make the BC wine industry look positively backward. We need to modernize our tasting rules.
  • Bizarre Retail Restrictions. BC Wine Stores can sell wine related items in their stores but not other products such as gourmet food or newspapers. They can sell lottery tickets, however. Is this because it is dangerous to drink wine while reading a newspaper but not while gambling?
  • Advertising. Any advertisements for wine in BC cannot show anyone actually drinking wine. Presumably, this is to protect you, just in case you did not know what the purpose of wine was.
  • Special Occasion Licenses. Currently, special occasion licenses, which are legally required for many private functions such as weddings, can only be issued by a government liquor store. Wine to be served at the licensed function must be purchased from a government liquor store (not a private one) or directly from a winery. The rules are overly restrictive and encourage massive non-compliance. In addition, why are private stores not permitted to issue these licenses and sell wine to be served at them?
  • Caterers. THIS HAS BEEN FIXED. Under current BC liquor "policy", caterers are allowed to control and serve liquor at the events that they cater. However, they are not permitted to go and pick up that very same liquor for the customer (despite, in my view, statutory provisions which permit them to do so). This just creates inconvenience for the public with no discernable policy objective. Better yet, why not license caterers so that they could serve and sell liquor legally?
Last Updated ( Thursday, 19 July 2012 18:55 )