Tuesday, October 8, 2013

Storm of Bureaucratic Red Tape Threatens Iconic East Van Brewery

If you are headed done to Storm Brewing this week to fill your growler or to order a keg for your next party, you may want to call ahead.

Storm's owner-brewer, James Walton, was told Monday by a Liquor Control and Licensing Branch liquor inspector that he is to cease selling his beer to anyone but licensees, meaning pubs and restaurants, until he applies for and is approved by the LCLB for an in-store retail license.

That's right, no growlers to take away from the brewery for home consumption, no kegs for events or parties unless those buying are licensees in the eyes of the LCLB.

That's right, no Storm growlers or kegs for you says LCLB liquor inspectors, unless you are a licensee
Walton has been selling kegs for private parties and to event organizers for 19 years without issue. The Liquor Distribution Branch (LDB) has been well aware of Storm's sales to non-licensees and has been quite happy to give him sales skus for his products and take their cut from those sales, which make up about 50% of Storm's business.

The only thing that has changed in the past 19 years is that recently Storm jumped on the growler train and started doing fills at the brewery. Walton has been quite pleased with the results, having filled about 120 growlers last week. He thought he had done things properly by getting a cash register to record growler sales and applying for and getting a sku with the LDB for his growlers before commencing sales.

Enter the other bureaucratic arm of the BC liquor industry, the LCLB who appear to not be so enthralled  as the LDB are with Storm contributing to government coffers by harmlessly selling kegs and growlers from his iconic brewery.

This is a classic case of one bureaucratic branch of the government not talking to the other even though they both deal with alcohol sales in BC. One approves the sales by granting skus, processing the paperwork and collecting the government's cut while the other says that the sales are illegal and must stop until the proper approval is given.

Apparently, in 2008, control of brewery store fronts, tasting rooms and retail stores, were shifted from the LDB to the LCLB and this is where the confusion lies in regards to what Storm can and can't sell.  

"The LDB has known and never had a problem with Storm selling to individuals," stated Walton. "Bulk or counter sales are half of my business. I just assumed that the liquor board (LCLB) would just carry on with what was in place."

But last Wednesday, Oct 2nd, two liquor inspectors showed up, without warning, at the brewery and they right away noticed empty growlers. 

This caught the liquor inspectors' attention.

Walton, believing all his ducks were in a row and that he was in compliance with the law, proceeded to show the inspectors his cash register, LDB list of skus for his products and his LCLB license. Monday, Oct 7, Walton received a call from one of the inspectors who had popped into the brewery and was told that Storm was in contravention of their LCLB license and Walton was threatened with a total suspension of his license to sell beer if he did not cease selling to non-licensees immediately.

Walton has already sent in the paperwork to apply for the proper retail license he believed he already had, but is worried about the processing time. "The wait time for some of these things is six months," states Walton who believes his business, that has taken 19 years to build is, "facing extinction" if things don't get cleared up soon.

Walton pleaded to be allowed to carry doing as he has done since opening his doors in 1994, while things are being processed, but to no avail. He is not disputing the ruling made by the liquor inspector, or the fact that he may have made a mistake in not reading the fine print of a memo sent in 2008, and is trying to cooperate, but is worried that 50% of his business is now not accessible to him for an undetermined amount of time due to some bureaucratic red tape and an honest mistake.

"I just don't like that they won't let me continue even though I was very polite and agreed to do everything they wanted," says Walton. 

This is a prime example of how the LCLB  and their inspectors seemingly make what is legal one day illegal the next. It is also a prime example of how the LCLB are punitive when they don't have to be and why licensees fear them as their livelihoods are in the hands of liquor inspectors who have way too much power. Walton was doing what he has always been allowed to do, but suddenly his business is threatened and his livelihood threatened because of an oversight. And it is just as much an oversight on the side of the government bureaucracies as it is Walton. 

Why have they let him operate as he has for the past 19 years only to now be told it is wrong? Why have the LDB given him the go ahead to sell kegs and growlers, taking their cut, without telling Walton he has the wrong license to do so?

This is the exact kind of bureaucratic nightmare that John Yap and his liquor policy review need to eliminate. 

How is potentially crippling Walton's business due to a technicality suddenly in the interest of public safety?  

Shame on the LCLB and LDB for allowing someone to build up a business by operating a certain way for 19 years only to suddenly pull the rug out from under their feet?

Let's hope the LCLB inspector does the right thing and either expedites the application process so that Walton can get back to running his business,  paying his bills and selling beer, or allows Storm to carry on selling kegs to non-licensees, while his application for the proper license is being processed.

Get this sorted before you lose a one of the iconic businesses in the city, one that has helped spark a vibrant and thriving craft beer community in Vancouver!

This is an established business whose very existence is being threatened because it is conducting business as it has been allowed to do for almost 20 years by the same government bureaucracies that are now threatening to close them down.

6 comments:

  1. Unfortunately James became a victim of being grandfathered in as the Craft Beer industry developed in BC. James is a local pioneer for craft beer and deserves a lot of credit for where we are today. I 100% support him in his local business but we should try to understand why this was done. No decision is made on a whim.

    The issue though is the the LDB exists as a means of controlling the distribution and consumption of liquor. That is their sole reason for existing... When kegs are sold do consumers, I see the justification by the LDB being that this would be for a wedding, party or event that would require an SOL license that would be issued by the LDB. This. (Technically it should still be purchased from the LDB though). Through this process they are able to control, regulate and track the consumption.

    When we start talking about growlers this is for immediate consumption and there is likely liquor being consumed on site as well. For this, health codes, fire codes, and of course liquor regulation comes into effect as it is a different nature of business. Regrettably from a diplomatic point of view these actions make sense. Serving beer on site changes the nature of business which requires different permits. This is no different than an industrial vs. retail type situation outside of craft beer. The addition of growler fills changes grey to black and white and that is why the issue has come up.

    If the LDB was to turn another blind eye then any brewery in BC that was not currently selling direct could jump on board and do so. Canadian law is based on precedent so this is dangerous territory for municipal and provincial laws.

    Yes, Storm should be able to sell their beer, Yes the LDB has done wrong in revoking past exceptions but every business regardless of industry should have the proper licensing to conduct their daily operations. The LDB and local government should expedite the process given the circumstances but there is logic behind their madness.

    This event highlights many of the issues with current liquor laws in BC and with any luck it will be dealt with swiftly and the lesson will be used to improve the laws moving forward. In the meantime, next time you see Storm Beer on tap have a few pints and Support James until this whole ordeal is over with.

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  2. Thank you for your well-thought out comments.

    No one, including James, is denying he holds some of the blame but this issue is one where blame lies on both sides of the fence.

    The issue I specifically have is that he not only had growler sales shut down, but his keg sales to non-licensees, which he has been doing for almost 20 years, as well.

    The heavy-handed, "cease immediately or lose your ability to do any business" is, in my humble opinion, an abuse of power and let us face it, liquor inspectors have absolute power, with little-to-no recourse for appeal by those they target. He is now at the mercy the bureaucrat whose desk his application falls on and if they choose to drag their heels, James and his business are in jeopardy.

    If the LCLB have issue with the growler sales, then shut those down. As far as I know, Storm's ability to sell kegs to the general public, while collecting $$$s for the LDB and reporting the sales, have not posed a risk to public safety.

    You are right in saying that this does highlight many issues that need to be addressed in the current liquor policy review. It is the LCLB that has hammered down on him while the LDB have been happy taking his money and gouging out their share after approving the sales. I would be willing to bet that the LDB had nothing to do with this and this was all on the LCLB wielding a stick far too big for the situation as they are want to do.

    And if the LDB did complain, shame on them for allowing James a sku for his growlers with the knowledge he should not be selling them with the license he has. When they grant skus, do the LDB do it without vetting at all who is applying and what their licensing situation is? Or do they just grant skus to sell product with no responsibility. It is abhorrent, in my opinion, that one bureaucratic government branch grants permission to sell a product while another says no, that is illegal.

    Yes, James is partially to blame, but others need to take responsibility here and do the right thing. I, like yourself, hope this is resolved quickly, as in today, so James can get back to what he loves doing, getting great beer out to his customers.

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  3. And just a side note to all, James did not reach out to me, whining about the situation...I was contacted in Powell River and advised about the situation and followed up on my own as I wanted to know what had happened and thought others should know.

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  4. All great points. I have no arguments and my sympathy goes out to James. The LDB is playing a how grey is too grey game here and James is stuck in the middle. I hope that the consumer reaction and articles like this are able to expedite the process of getting delicious Storm Beer in the hands of thirsty consumers as quickly as possible!

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  5. Thanks again Dustan

    Just so you know, John Yap tweeted that the LCLB are "expediting" the process and it should be cleared up in 3 days. I really hope for James's sake it is. I have friends coming to Powell River to visit soon and would for them to be able to bring me a growler of Black Plague Stout :)

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