My Guesses Re Liquor Law Changes - Part II

A few days ago I wrote a post about some of the "quick win" changes I thought we would see come out of the BC liquor policy review and now I want to look at some of the bigger, more complicated and controversial changes I think will occur down the road.

It seems I am a day late in posting though as Mr Yap has stolen the thunder and announced that he has recommended that booze be sold in BC supermarkets, due to overwhelming public support for the idea. Mainstream media, blogs and and social media are all onto Yap's lone reveal in regards to the 70 recommendations he put in his report to to Attorney General and Justice Minister Suzanne Anton.

It became very apparent to me and others who met with Yap and who followed the #bcliquor review process that the sale of alcohol in BC supermarkets, once thought to be an impossibility, was definitely one the table and being considered. But Yap's announcement does not guarantee anything as the idea has to be approved by Anton and the rest of the Liberal brain trust.

Personally, I think it will happen, but we will only see alcohol sold in larger retail chains, with them having to build a store within a store, to ensure limited access to minors and to segregate the booze from shoppers who may struggle with addictions issues and from those who find the presence of alcohol troubling. As well, the store will have to secure a liquor retail license, which looks like it will be no easy task as Yap has recommended not to increase the number of licenses above what now exists.

I also think you will see the government keep a stranglehold on minimum pricing for booze so that these large retail chains do not sell alcohol at rock bottom prices. It will take the government until 2015 to roll this out, working out the bugs with few trial runs, but I honestly think you will see at least some version of booze in supermarkets, Costco outlets, Walmart,  etc., by the end of 2015.

I also do not think as many outlets will not even bother looking into selling booze as it is going to be a major hassle and expense to build a segregated area for booze, deal with the LDB, put up with liquor inspectors and all the other joys that come with selling booze in this province.

And, of course, they are going to have to obtain a license to sell booze and, as I mentioned, this will not be an easy proposition.

I am going to write another post in the next day or to talk about the whole concept of booze in supermarkets and address some of the ridiculous ideas being floated by those against the idea, like the Alliance of Beverage Licensees (ABLE), health authorities and temperance movements.

Another change I think will be implemented, but that will take a long time to come into play is one that simplifies the liquor license system. I think the government will move towards a one-license system, but will start the move by making changes that will allow food primary licensees apply for endorsements to their existing licenses that would allow them to operate as a liquor primary after a certain hour in the evening and that will allow liquor primary licensees apply for endorsements that will allow them to have minors in their establishments, in the company of responsible, sober adults, up to a certain point in the day.

In the end, I think the Liberals will work towards a license to simply sell booze and the licensee will decide what type of establishment and clientele they want. The restrictions will be listed on the license, an example possibly being "mixed ages until 6 PM, +19 only after", so as to put all licensees on a level playing field. I think you will also see the silly restrictions on dancing in restaurants, music in restaurants, etc., removed.

The lines are so blurred right now as to who is a bar and who is a restaurant. Think about it. The law allows me to take my 3-year-old daughter into a restaurant with dozens of beer taps, a large selection of wines, spirits and hundreds of seats, even when it is packed and happening at 8 PM, yet the law forbids me to take her into a quiet, mellow neighbourhood pub on a Sunday afternoon to enjoy a brunch.

Another major change I think we will see is the process for getting a listing in government liquor stores (GLS) modified to help support small, local manufacturers and to better give BC consumers access to locally produced beers, wines and spirits.

Many local breweries, smaller wineries and artisan distilleries cannot sell via GLS outlets because they do not meet the outdated production thresholds that are in place to get a listing. The current model is based on large production manufacturers, you need to produce enough of a product to supply 40 GLS locations, virtually making it impossible for small, local breweries, wineries and distilleries to sell via the BC Liquor Stores. Some GLS outlets are forced to break the law to put their local products on their shelves.  I think they are going to give the local GLS management more freedom to stock what they want to stock, as opposed to what they are told they can sell by LDB head office, giving the consumers what they want, as opposed to allowing some bureaucrat with little-to-no-knowledge of some products decide what the consumers want.

To compliment this, I think the LDB will be directed to create special areas to highlight BC products, beyond the current BC wine sections, and put more emphasis on promoting BC products. I think local manufacturers will also be able to deliver directly to GLS locations.

Lastly, I think you will see the LCLB and their liquor inspectors be stripped of some of their current powers. The LCLB and their enforcement folks have long been the law, END of STORY. Liquor inspectors now have huge discretionary powers to interpret the often ambiguous and poorly worded liquor policies as they see fit and to enforce as they see fit. There is no current appeal process if a liquor inspector nails a licensee with an infraction and only through an expensive judicial review can a licensee defend themselves.

Because the liquor inspectors operate without fear of being held accountable for their often bizarre and random rulings, there is a fear amongst licensees in regards to getting on the wrong side of the LCLB and their inspectors. I think you will see an independent review board set up that will be relatively inexpensive to access and which will deal with licensee appeals to decisions made by inspectors. Yap seemed very interested in the subject of curtailing LCLB powers and increasing training and knowledge among liquor inspectors to help rid the province of this culture of fear among business owners selling booze in regards to their often random and arbitrary liquor inspectors who can currently shut them down with no recourse by the licensee.

These ideas are not based in fact, just my thoughts and they are just a drop in the bucket compared to what may be in Yap's recommendations. As I mentioned, there have been 70 recommendations put forward and no one but Yap, his team and the office of the Justice Minister and Attorney General know exactly what they are. I hope they make the report public soon so we can have some real debate and discussion about what may happen in the next few years in regards to liquor policies in this province.

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.

Is the BC Beer Market About to Become the Wild West?

If the rumours I have been hearing the past few weeks are true the BC beer market may resemble the Wild West by the middle of January.

I have been informed from two completely different sources that the BC Liberals will finally be making an announcement in regards to what course of action they will take two years after the Liquor Control and Licensing Branch.put out a consultation paper requesting industry input in regards to proposed changes to the laws regulating tied house and trade practices.

If the information I am getting is correct, and I do believe it to be so, the changes are to be announced by mid-January and will completely deregulate tied houses and trade practices, leaving the BC market wide open, reminiscent of the Wild West, for the highest bidders to lock down pubs, restaurants and liquor stores by either buying these outlets or offering large amounts of cash, or other inducements, for exclusivity rights (bars/restaurants) and preferential shelf placement (liquor stores).

The original call for input outlined three options for tied house law changes, those being to eliminate tied house prohibitions altogether, permit tied houses between the same corporate entity, but limit the number of tied houses a person can hold to limit risk of market consolidation or to permit tied houses with public interest restrictions.

They also laid out three options in regards to trade practice regulations, those being to eliminate trade practice restrictions altogether,  reduce or eliminate most trade practice restrictions or to streamline some trade practice policies and procedures

For better explanations as to what those options mean, click on the consultation link above.

There has been a great divide among the players in the craft beer industry as to whether deregulating tied house and trade practice restrictions will have a negative impact on the industry or not. You can read in more detail what this is all about here and here.

The biggest fear is that the larger, deep-pocketed, national and multinational breweries will simply buy pubs and restaurants, or pay licensees to favor their products, to stop the growth of the local craft beer industry which has managed to claw their way from 7% to about 15% of the domestic beer market in BC over the past five years. That growth may not sound much, but when you consider that each percentage point represents over $8 million dollars in sales, you can see why the bigger, national macro-breweries do not want the smaller breweries get any stronger. There are also some concerns that the more aggressive and growth-oriented local breweries, willing to incur short-term losses for long term gains, might just try to buy a larger share of the market by stepping on their competition who are more focused on sustainability and producing great beers.

There is also the fear that licensees will begin to demand cash, free product and kickbacks for the right to sell beer in their establishments which will prohibit smaller breweries from being able to sell their beers in those types of establishments.

Many others say that the deregulation of the tied house laws will not impact the major craft beer markets like Greater Vancouver and Victoria and will give craft breweries in smaller markets, where marco-beers dominate, another outlet to sell their beer if they have the means to invest in a pub, restaurant or liquor store. There is also the argument that the practices of bribery by breweries and demanding payment of some type by licensees are alive and well in the beer industry because the laws are impossible to enforce and that deregulating will have little impact.

If the laws are wiped from the books, it will be interesting to see what happens. As a consumer, I would like to see a middle ground approach, where their are some safeguards in place to stop the larger, richer breweries from simply buying tap, fridge and shelf space to the point of restricting their competition similar to what happened in the UK in the 1990's. But I think, at least here in Vancouver, there are too many licensees who are committed to craft beer because it is simply a better product, because selling craft beer is profitable and because there is a great thirst among local beer drinkers for superior craft beer products.

In the end, as a consumer, I can only hope that if there is deregulation, it does not result in restricted access to locally brewed craft beers or higher prices. If so, it will have to be the consumers who rally and demand a further review by which ever political party gains power in the upcoming election as the industry is too divided on these issues.

Craft Beer Drinkers Getting Short Poured Again

About a month ago I wrote about the discussions being held by provincial politicians looking at possibly changing liquor laws to allow for a Bring Your Own Bottle-style program in BC restaurants.

In that post I pointed out that most of the focus was on including wine only to be allowed to be brought by patrons to participating restaurants and I have since had confirmed that the BC craft beer industry is once again being given no support by the Provincial Government while the wine industry is getting preferential treatment.

But this latest snub of the craft beer industry has a lot to do with the fact that the craft beer industry and the craft beer consumers of BC are just not as organized as their counterparts in the wine world.

NDP MLA and critic for the LCLB/LDB, Shane Simpson brought up the subject in the BC Legislature, prompted in part by discussions and email communications with CAMRA Vancouver who are pressing to have beer included in any BYOB discussions. When asked directly by Mr Simpson if beer, particularly craft beer, is being considered as a part of any future law reforms in regards to BYOB, Liberal Cabinet Minister Rich Coleman, the minister responsible for the LCLB/LDB, replied, "No. We (Liberal Government) have not even had any overtures from restaurants or bars in BC, with regards to that."

So, a combination of a lack of organization and desire to lobby on their own behalf by the Craft Brewers Guild combined with a lack of respect for the BC craft beer industry from the Provincial Government has once again placed beer lovers in this province in the role of second fiddle.

Those involved in and who support the craft beer industry and those who love craft beer need to get active and need to do it quickly. Check out what the wine folks have been doing to make sure the government knows they are interested in BYOB.  Sign the CAMRA Vancouver petition to show your support for craft beer and BYOB. Tweet Rich Coleman @colemancountry, email him at rich.coleman.mla@leg.bc.ca or contact LCLB General Manager, Karen Ayers at Karen.Ayers@gov.bc.ca to let them know we want craft beer included in BYOB talks.

If not, we craft beer drinkers are soon going to be crying into our pints about how the government has once again short-poured the craft beer community in BC while local wine lovers are busy enjoying their favourite BYOB wine while out enjoying a meal.