The province's Crown liquor corporation is seeking a court order to stop the owners of Wine Kitz Halifax and Water 'n' Wine in New Glasgow from producing wine and beer in their stores.
The Nova Scotia Liquor Corp. says it's merely upholding provincial law, which allows people to brew at home.
But Richard Dunn, a senior policy analyst with the Canadian Federation of Independent Business, said the law is anti-competitive and threatens the underpinnings of a free market.
"It's turf protection for the liquor corporation," he said. "And it comes at the expense of private enterprise."
Regulatory changes introduced by the provincial government in 2011 give the liquor corporation the authority to seek a court order to prevent businesses from allowing customers to use brew kits on their premises.
The owners of Wine Kitz Halifax and Water 'n' Wine in New Glasgow are contesting the injunction. The matter is scheduled to return to Nova Scotia Supreme Court next month.
According to the Nova Scotia government, in-store wine and beer production is permitted in five provinces: Prince Edward Island, New Brunswick, Ontario, Saskatchewan and British Columbia.
Nova Scotia's distinction as the only Maritime province to ban the practice has unleashed frustration and disbelief in newspaper columns and letters to the editor.
"Cannot Finance Minister Maureen MacDonald see what is clearly unacceptable police-state harassment by NSLC of small business owners?" David Young of Lunenburg, N.S., wrote in a letter to the Halifax Chronicle Herald.
Another reader, Michael Pierce of Pictou, N.S., denounced the liquor corporation's actions as "Gestapo-like tactics."
"The mom and pop stores which allow the average person to brew beer and wine at a modest cost should not only be lauded, but promoted," he wrote.
Dunn said he's not surprised by the public outcry.
"When you create that imbalance or unlevel playing field, it puts people's backs up," he said in an interview from Moncton, N.B.
MacDonald, the minister responsible for the Liquor Control Act, declined repeated requests for comment as the matter is before the courts.
Terri Mosher, a spokeswoman for Nova Scotia Liquor, said the corporation was upholding the interests of law-abiding businesses that wanted action taken against so-called U-vints and U-brews.
"For us, it really comes down to enforcing the act," she said.
Mosher said the court action was launched after the corporation hired investigators to pose as customers and make wine on-site last year. She declined to comment on any ongoing undercover efforts.
She said one of the corporation's main objections to in-store brewing was safety, not potential revenue loss.
"They're manufacturing unregulated product in a retail environment," she said.
Wine Kitz owner Ross Harrington defended his product, saying the corporation is simply flaunting its power.
He said the NDP government's reputation among entrepreneurs is being strained as a result.
"I think the public outcry is obvious," said Harrington. "The optics for the government are bad."
Liberal Opposition Leader Stephen McNeil said his party has repeatedly introduced bills in the legislature to protect businesses that offer in-store brewing, but to no avail.
"This is a heavy-handed approach being used by a Crown corporation to stamp out the entrepreneurial spirit of these Nova Scotians," McNeil said.
Progressive Conservative Leader Jamie Baillie has called for an overhaul of the province's liquor laws, starting with in-store brewing — or "regulation gone crazy," as he put it.
"With all the issues our province has, I can't believe the NDP has decided that squashing small independent business people and hobbyists ... is an important priority," Baillie said.
Dunn said Nova Scotia has lost the momentum it gained in recent years in cutting red tape for small businesses. He said the U-vint and U-brew "nonsense" is only compounding the province's economic woes.
The federation recently gave the province a grade of D for its efforts to slash red tape in an annual report card.
Dunn said heaping the bureaucratic burden on small enterprises could scare off potential entrepreneurs if it continues to happen.
"You're not building the confidence of the business community by coming out with these barriers," he said.
"If it becomes a pattern ... you're going to have people thinking twice about either relocating to Nova Scotia or perhaps trying to start up a business of their own."