Breweries vs. Alberta

Another shot has been fired in Canada’s struggle to eliminate the self-defeating barriers on trade erected by the provinces, and once again the focus is beer. Saskatoon’s Great Western Brewing Co. has announced it is taking Alberta to court, alleging that the province’s new beer markup scheme violates the constitutional protection of free inter-provincial trade.

The scheme taxes outof-province craft beer at a significantly higher rate than craft beer brewed in Alberta, making the out-ofprovince beer significantly more expensive. (Technically the beers are all taxed at the same rate, but small Alberta brewers get major rebates on those taxes.)

Great Western says the structure has already had a dramatic effect on its sales, which is little wonder given that the cost of a 24-case of Great Western beer went up $6.67 when the change took effect in the summer. The Saskatchewan brewery is not the first to take Alberta to court over beer protectionism. Toronto’s Steam Whistle Brewery won an injunction already have many unfair provisions, which presumably means she sees no harm in adding another.

Section 121 of the Constitution Act, 1867 provides that: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.” In other words, you can’t impose a tax on out-of-province goods that you don’t impose on the same in-province goods, no matter how much you might want to assist local craft brewers.

Notley’s office should take note of a well-publicized beer conflict in New Brunswick, where a retiree named Gérard Comeau was pulled over in an RCMP sting operation and fined for having made a beer run to neighbouring Quebec. New Brunswick strictly limits the amount of booze that can be brought into the province for personal use. Nonetheless, prices are so high that shopping trips like that taken by Comeau are a regular practice.

Just as in Alberta, New Brunswick leaders justify the restrictions on the need to protect provincial beer and wine businesses, as well as protecting their own tax revenue from beer sales.

Comeau challenged the charges and won: a New Brunswick judge ruled that cross-border beer limits violate Sec. 121’s protection of free trade, which is actually much broader than it has been interpreted in the past. The ruling is being appealed by the New Brunswick government, and will likely work its way up to the Supreme Court of Canada. If upheld, it could be the beginning of the end of Canada’s archaic liquor-control systems.

The Comeau case was actually trickier to win than the argument against Alberta. Comeau had to convince the court that Sec. 121 has been misinterpreted by the Supreme Court for decades and is actually a bar on all limits to inter-provincial trade, not just tariffs — a tough job that he nonetheless accomplished. In contrast, there’s never been any question that inter-provincial tariffs themselves are unconstitutional. All that is required is for Great North and Steam Whistle to prove that Alberta is imposing such taxes on their out-of-province beers, and the breweries win.

We wish the brewers much luck. At this point, every provincial government in Canada should consider itself on notice: protectionist liquor laws are not likely to be long for this world.