Small but mighty: B.C. wineries fight for Canadian Wine For All

Small but mighty: B.C. wineries fight for Canadian Wine For All Supreme Court of Canada hears from interveners during rare two-day hearing

Five small B.C. wineries, intervening on behalf of a coalition of more than 100 B.C. wineries, had their day in court on Thursday, December 7, during a rare two-day hearing at the Supreme Court of Canada.

The wineries were represented by Coulson Litigation. The R. v. Comeau hearing addressed the legal barriers to inter-provincial shipping of Canadian wine, and how it has negatively impacted consumer choice, as well as threatening the local wine industry itself.

“The court was engaged in a deep debate about whether to expand the constitutional guarantee for a national common market in Canada, and if so, to what extent,” reflects Coulson. “The court was particularly concerned with judges entering too far into the policy jurisdiction of the democratically-elected provincial governments. At the same time, they recognized that the current situation regarding national distribution of liquor is not ideal.”

The case is a constitutional challenge, stemming from when Gerard Comeau was stopped and fined in 2012, after carrying purchased beverage alcohol from Quebec across the New Brunswick border. The challenge is to convince the court to uphold the “letter and spirit” of the 1867 Constitution, to provide some level of constitutional guarantee of free trade.

The majority of non-government interveners, as well as most Canadians (89 per cent, according to a recent Ipsos poll), side with Comeau. If the constitutional interpretation ends up reducing interprovincial trade barriers, it will become easier for individuals, as well as industry to access a national market, potentially contributing an additional $50 to $130 billion to the gross domestic product. The outcome of the case, expected to be decided on in 2018, will determine the extent to which Canada is a national common market for Canadian-made liquor. The case will have resounding impacts across Canada, however it is decided.

The five intervening small B.C. wineries are Okanagan Crush Pad, Liquidity Wines, Noble Ridge Vineyard and Winery, 50th

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Christine Coletta, owner of Okanagan Crush Pad, who traveled to Ottawa to attend the discussions, says “My hope is that we will be able to direct ship to loyal wine lovers across Canada. This will give small wineries like ours incentive to develop broadreaching tourism initiatives that draw people to wine country. Once visitors return home and request our wines, it is essential that we can continue the relationship from afar.”

Ian Macdonald, owner of Liquidity Winery, agrees. “I hope the Comeau Case will give the nearly 800 small wineries in this country the chance to share their farm-based products freely with all Canadians. Direct-toconsumer wine shipments are the norm in all other wine-producing countries, and have proven essential for small winery economic viability.”

Other interveners included the attorneys general from almost every province and territory, as well as representatives from the Canadian Vintners Association, the Association of Canadian Distillers, Canada’s National Brewers, Cannabis Culture, the Canadian Chamber of Commerce, and Canadian Federation of Independent Business, among others.

Leslie D’Andrea, owner of B.C. winery Noble Ridge, adds “My vision for Canada is that every Canadian, regardless of home residence, can easily and readily enjoy the opportunity of tasting, purchasing, and receiving any and all Canadian wines, as supported by our Canadian Constitution, Section 121.” o

What does it mean to “intervene”?

The Supreme Court of Canada hears cases of national importance. Often there are interests in the country that are impacted by the court’s decision, but who are not parties in the case itself. Such interests may apply to the court for status as ‘intervener’. This requires the applicant to show both that it has a direct interest in the appeal and that it has a unique perspective to add to the case that is not addressed by the parties.

In seeking open access to interprovincial trade, are Canadian wineries asking for something that is not allowed in other countries?

Other countries that are federalist constitutional democracies, such as the United States and Australia, have their own constitutional provisions that deal with interstate free trade. Those provisions have distinct wording from the Canadian provision. However, in both the United States and Australia, a type of interstate free trade is permitted and governed by a constitutional test established by the highest courts in those countries.

Why should Canadian readers, viewers and listeners care about this issue?

R. v. Comeau is about much more than just liquor. It is a case that goes to the heart of the meaning of the Canadian federation. It addresses the question: to what extent is Canada a common market? The economic impact of the industries that will be impacted by this decision, including the winery sector, is in the multi-billions of dollars.

Moreover, this decision is taking place in the context of ongoing international trade negotiations, particularly the renegotiation of NAFTA. The scope of internal free trade within Canada is highly relevant to the negotiation of these international trade treaties.

Which provinces in Canada currently allow shipment of Canadian wine without trade barriers?

Currently only British Columbia, Manitoba, and Nova Scotia permit unfettered access to their provincial markets to outof-province growers and manufacturers of Canadian wine.

What’s the current governance around interprovincial shipping of liquor and wine?

The current governance dealing with interprovincial shipping of wine is Byzantine. The federal government regulates shipping through the Importation of Intoxicating Liquor Act. In 2012, the federal parliament amended this statute to permit interprovincial shipping of Canadian liquor for personal use. However, the amendment explicitly made that exception subject to provincial law. To date, all provinces other than British Columbia, Manitoba, and Nova Scotia prohibit the interprovincial shipping of Canadian liquor and wine into the province. The provinces do so through various mechanisms. Some have prohibitions explicitly in statutes, others have prohibitions in regulations and others have prohibitions only in policy documents. The regulatory structure is inconsistent and unclear across the country.

How much potential business is lost in this lack of interprovincial shipping of liquor?

Currently, there is no statistical or economic analysis of lost business. However, when comparing Canada to the U.S., it is clear that in the U.S., where direct-to-consumer interstate shipping is permitted in most states, the total revenue derived from direct-to-consumer shipping by small wineries is up to four times greater than it is in Canada. As the direct-to-consumer shipping channel is the most profitable, it is clear that prohibiting directto-consumer shipping within Canada comes with an extreme cost to the financial sustainability of small wineries.

Is it not possible for small B.C. wineries to sell everything they produced within the province?

The British Columbia market is reaching market saturation for B.C.-produced wine. Small producers thus need access to the rest of the Canadian market to continue to grow, like their counterparts in the United States. Many wineries are only barely profitable or unprofitable in their start-up years. Small wineries need to ensure they attain a certain volume of sales in order to find sustainable profitability. Within the saturated B.C. market, it is very difficult to do so. A free market across Canada would undoubtedly give small wineries a chance to grow to a size that is sustainable in the long term.

If the Court decides to liberalize interprovincial trade, how will this affect the price of wine/liquor for consumers across Canada?

It is impossible to predict how the price of wine will be impacted at this time.