StateWays - May/June 2016

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays n n May/June 2016 22 In the U.S., control states are significantly outnumbered by open states where beverage sales are entirely in private hands - retail and wholesale. However, total government control of alcohol sales is the norm in Canada, with 9 of 10 provinces operating their own independent alcohol agencies. While far more restrictive than U.S. liquor control systems, these Canadian operations enjoy widespread public support. Despite stricter regulation and pricing con- trols, most are well-run, modern businesses that can provide useful insights for Americans interested in alcohol public policy. Control policies in Canada and the U.S. share many traits due to similar history, demographics and shared North American standards of living, but do differ in significant ways. The federal governments of both nations delegate the regulation and oversight of alcohol to regional jurisdictions – to the states in the U.S. and to the provinces and territories in Canada. However, many of the national functions handled by the American BATF and TTB are handled at the provincial level. For example, spirits or beers made in one province are considered 'imports' when sold in another, and wine labeling laws vary from province to province as well. The most obvious parallel is that liquor control codes on both sides of the border reflect the twentieth-century politics surrounding prohibition and repeal. However, where the U.S. enacted pro- hibition federally via constitutional amend- ment, the Canadian provinces each legislated independently. Some form of alcohol ban was enacted in every province between 1901 and 1921, but there was considerable variation in how these temperance laws were implemented, what products they covered and how long they remained in place. For example, the French-speaking and largely Catholic population of Québec prohibited only distilled spirits, and even that restriction was lifted less than two years later. In con- trast, prohibition of all alcohol lasted 47 years in Prince Edward Island (Canada's smallest province), where teetotalers staved off repeal until 1948. COMPARE AND CONTRAST The key differences between American and Canadian liquor control is that all Canadian provinces but one operate their own retail stores, and that these stores handle all alcohol sales, including beer. As such, they have more in common with Utah and Pennsylvania than Oregon or Michigan. Another notable dis- tinction is that the provinces have always li- censed some private businesses to run 'agency stores' to service remote communities, since many encompass sparsely populated terri- tory. Typically, an outfitter or general store might operate a liquor booth during limited hours, for example, but its prices are set by the government and the wholesale discount offered to agents rarely exceeds 10%. However, simply having the licensed- agent loophole baked into the liquor code has facilitated a slew of public/private arrange- ments to provide greater convenience or more specialization, selection and service in metro markets. Québec has permitted corner stores to stock some beers and wines since 1978, and Ontario launched a similar initiative for grocery stores in 2015. A limited number of private specialty retailers have been al- lowed to compete with government-run stores in British Columbia, Nova Scotia and Manitoba for over a decade, too, but in each case, the government-as-wholesaler structure controls prices. BY MARNIE OLD Liquor Control, Canadian-Style Neighbors North to the

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