THE BLOG

Ontario Has a Cross-Border Alcohol Problem

05/25/2015 08:05 EDT | Updated 05/25/2016 05:59 EDT
cmh2315fl/Flickr
1929 Ambassador Bridge over the Detroit River between Detroit and Windsor.

In Fall 2014 a little documentary called Straight Up was released and unexpectedly kick-started a grassroots campaign. By April 2015 this campaign had managed to influence the Ontario government into making changes to beer production and distribution models. These changes are still being implemented and the players with the most to lose are attempting to curtail real change but the ball has begun to roll for the craft brewers and their fans. There are reasons for mild happiness surrounding this news for brewers but craft distillers flew under the radar when it came to considering any changes to their unfortunate situation.

To understand why this is the case it's worth noting Ontario's post-prohibition era laws. Canadian Club whisky has been made in Windsor since the mid-1800's, right along one of the most popular prohibition era border crossings -- the Detroit river. During prohibition, upward of hundreds of boats per day would cross the narrow expanse and bring booze to thirsty Americans, it wasn't always a one way trip either. During Ontario's own provincial prohibition between 1916 and 1927 there were numerous short-circuits of boats turning around and returning to Ontario shores, often at night.

Today, you will find differences in transportation methods but there is a modern short-circuit going in border towns as Ontarians flock to Michigan, New York and Quebec to take advantage of far more liberalized sales and lower taxes, especially when it comes to whisky. Since Canadian Club isn't actually sold at the distillery where it is produced in Walkerville, residents of the neighbourhood must head to the nearest LCBO about a kilometre down the road and pay the 26 bucks and change required to take home a 750 ml bottle of Canadian Club. Or, they could pay five bucks to cross into Detroit, find a liquor store, pay $12 on that same bottle of Canadian Club, pay the $5 to cross back into Canada, add $2 for gas and still be ahead a couple bucks from an LCBO purchase.

It's a weird situation when spirits manufacturers are forced to sell their own product for LCBO prices where it's made (if they're even allowed to thanks to dubious laws) but in the case of Canadian Club a couple scant kilometres away the same alcohol is sold for less than half of the price of the LCBO. It highlights the need for reform in Ontario's alcohol industry across the board if our industries hope to stay competitive with rapidly expanding concerns in America and more small business-friendly provinces.

Consumers in border cities are able to take advantage of considerable price differences, albeit at risk of being caught by a border agent and forced to pay duty tax. The rest of the province should only be so lucky to experience an American liquor store with selection of depth and width far above and beyond what the LCBO offers. Ontarians that have been inside an American liquor store can easily see how tightly Ontario's hands are wrapped around the neck of selection and price.

Toronto Distillery Company's Jesse Razaqpur and Charles Benoit were two of the most outspoken interviewees in Straight Up and helped bring to light the approximate 140 per cent tax that is applied to every bottle of whisky sold in Ontario before it reaches LCBO shelves. This might be a reasonable tax rate if the LCBO's bloat weren't so apparent. Until early in 2015, craft distillers had to go through an 11 step process to sell their whisky to bars, sometimes this could take weeks just to get their product into the mouths of people wishing to try something new. The government recently changed this to a five step process, relief at last until you consider your bank account -- distillers and in this case Toronto Distillery sell a bottle to the LCBO for about 12 bucks and it gets marked up to almost 40.

While names like InBev and Sapporo legally dominate the beer market through the Beer Store, even the big distillers aren't able to take advantage of such commanding marketplace monopoly. They are, however, lucky enough to be multi-generational and international brands with impressive marketing campaigns able to captivate over 95 per cent of the market. Ontario craft distillers have an uphill battle against these businesses and the competition field should be leveled for everyone in this sector to enjoy true competition between colleagues.

From the AGCO to the LCBO the practices that have been in effect for decades are now starting to show their wear more than ever. The post-prohibition era from the 1930's onward have produced farcical results from ideals based in 1860's Victorian Canada that have only reinforced Ontario's position as small-business unfriendly while trusting the government and their best friends to run the candy store while hungry. When filmmakers are finding enough interest in what should be the mundane nature of liquor laws to create uproar across a province of 15 million, it's probably time to admit change is necessary instead of having the populace drag the government out of the 1930's.

ALSO ON HUFFPOST:

Where To Get Booze Outside The LCBO