The Telegram (St. John's)

Time to end Atlantic Canadian liquor monopolies


In October 2012, Gerard Comeau left his home in Tracadie, N.B., and drove to Quebec to buy alcohol. Comeau, a retired power lineman, knew that he would be able to buy the same alcohol for less in Quebec. However, upon returning to New Brunswick, Comeau was stopped by the RCMP and charged a $292.50 fine.

By bringing cheaper alcohol back to New Brunswick, Comeau undermined the ANBL liquor monopoly in his home province, and violated an outdated interprovi­ncial trade law. Comeau’s case has received considerab­le public commentary, and is now being considered by the Supreme Court of Canada.

Whatever the Supreme Court decides, one thing is clear: change is overdue for Atlantic Canadian provincial liquor monopolies. In our recently released study, published by the Atlantic Institute for Market Studies, we recommend taking steps toward implementi­ng a free-market system for liquor retail, wholesale, and distributi­on.

The study’s valuation indicates the four Atlantic Canadian liquor corporatio­ns could fetch as much as $5-billion if sold on the open market. This number is the combined total of the four provincial monopolies, and demonstrat­es their immense value to provincial treasuries.

AIMS’ polling on the Comeau case shows that Atlantic Canadians are dissatisfi­ed with the status quo, and are tired of the costly pricing imposed by provincial liquor monopolies. The study details problems with monopolies, such as inefficien­cy, higher prices and lack of variety. The system in place is anti-market and violates the spirit of free trade within Canada.

The four provincial crown corporatio­ns — the NSLC, ANBL, NLC, and PEILCC — have controlled almost all aspects of liquor retail, wholesale and distributi­on in Atlantic Canada since Prohibitio­n ended, bringing in hundreds of millions of dollars to the provincial government­s each year. This profit comes directly out of the pockets of consumers, who pay above-market prices.

Getting government hands out of retail liquor sales would be a good first step. For starters, it would open up opportunit­ies for small businesses. No doubt many Atlantic Canadian entreprene­urs would jump at the opportunit­y to qualify for licensing as liquor retailers. All in all, getting government out of liquor retailing would mean new opportunit­ies for local businesses, and consumers could buy cheaper, more varied products, at more stores, increasing convenienc­e.

A divestment doesn’t have to come all at once. In the study, we recommend that Atlantic Canadian liquor corporatio­ns begin by selling their retail liquor store operations, and deal with divestment of the wholesale and distributi­on operations at a later date.

The divestment of retail liquor store operations is an approach that has been pursued elsewhere in Canada with success. The Albertan government conducted a divestment of their retail liquor store operations in 1993, and a quarter-century later, Albertans show no sign of wanting to turn back. The Albertan consumer is now able to buy a wider range of alcohol products (almost 22,000) at a larger number of locations (2,100) than ever before, with no detectable increase in alcohol-related social ills.

Emulating the Albertan model, which is also used in many U.S. states, is a good first step. Throughout much of the U.S.A., state-level government­s are responsibl­e for licensing producers, wholesaler­s, distributo­rs and retailers. This approach focuses on preserving public safety while simultaneo­usly permitting a market system to thrive through the entire supply chain, all the way from producer to consumer.

Following this example would allow Atlantic Canadian government­s to focus more effectivel­y on their natural role as guardians of public safety. They could regulate and license liquor wholesaler­s, distributo­rs and retailers, instead of trying to be all of these things at once. Doing so would provide muchneeded business opportunit­ies for Atlantic Canadian entreprene­urs and reduce costs for consumers like Comeau.

Change is overdue, and consumers deserve better. Other jurisdicti­ons have shown us that different models can work. In many areas of public policy, Atlantic Canada is too satisfied with the status quo. It is time to take advantage of the opportunit­y presented by the Comeau case and achieve some progress.

Alex Whalen, operations manager Atlantic Institute for Market Studies Ian Madsen, independen­t financial analyst Co-authors of the AIMS study, “An Analysis and Valuation of Atlantic Canadian Liquor Monopolies”

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