Time to end At­lantic Cana­dian liquor mo­nop­o­lies

The Telegram (St. John’s) - - LETTERS -

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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