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Ontario's Soviet-Era Alcohol Quotas Punish Businesses for Profitability

09/23/2015 12:42 EDT | Updated 09/23/2016 05:12 EDT
Péter Gudella via Getty Images
Beer

You will soon be able to walk into an Ontario grocery store and be met with the words: "Sorry sir, we've reached our sales quota, you'll have to wait until next year to buy beer."

Words from a Soviet-era dispensary or a modern day grocery store?

This past week the Ontario government began to detail its bizarre guidelines for any grocer willing to take part in the government's new initiative to allow sales of beer and wine in limited stores. The information released so far would lead you to believe the government finally bought the red tape factory.

In May 2015, when the government first announced it was building a program to allow alcohol sales outside of the traditional methods, it was met with a great sigh of relief from consumers, small-scale producers and everyone that enjoys it when the government lifts legislation from Ontario's post-prohibition era. Unfortunately, the government's sales quota means that any grocer selling higher volumes of six-packs (no singles available) will only be able to sell up to a maximum quota or run the risk of additional charges for meeting consumer demand.

While the province recently found themselves in a fairly ridiculous debate with anti-sex education proponents, a move like limiting how and how much alcohol grocers can sell isn't based along moral lines, it's just bad business.

The province has taken some great small steps like the addition of a growler refill station at the Summerhill LCBO in Toronto, but it's still only one of 650 LCBO locations, and roll-out times at other locations are still awaiting announcement. The old adage is two steps forward and one step back. In alcohol law, the Wynne government seems to be clutching it close to their heart with this strange new quota.

To understand how backward Ontario's attempt to control the smallest and strangest of details, you only have to look south to Michigan where any grocer can sell any type of alcohol without interference from the government. The type of system in Michigan promotes increased selection, negotiable pricing for retailers and actually caters to the end customer. Even taking one full step forward would lead to the slightly more liberalized views of Quebec, where there exists such a thing as a craft beer depanneur. Contrast that with Ontario's single craft-focused LCBO at Summerhill and the head scratching continues.

Once the Ontario system of quotas does come into place, it will be nothing short of a lumbering, giant elephant in the room. Expect nothing less than a greater cost to the taxpayer than necessary and retailers having to focus on a problem specifically created for them by those claiming to help. While the findings from Ed Clark's commission earlier in 2015 were, seemingly, embraced by the Liberal government, they have taken them and created a complicated structure that could easily be much simpler. The Control part of LCBO still seems to be hard for any Ontario government to let go, even as it continues to stifle business growth and consumer satisfaction.

There is relief, though, if a grocer decides they want to sell above quota. All they have to do is pay a one per cent penalty on the cost of the beer, according to the Toronto Star.

If this fee ends up being part of the program, the government has found a new way to charge businesses for profitability. Imagine any other industry where the government could charge a fee for meeting customer demand. This isn't just unethical, it's insane to consider that a modern government in a G7 nation is still throwing punches at its residents like they're the ones that screwed up. And even after all that, 24 packs of beer are still only going to be available at the privately held Beer Store chain.

April 1 has come twice in 2015, and the government has fooled everyone from consumers to small craft breweries with this announcement. While it is unlikely to see any grocery stores pulling their beer stock once they've hit the soft maximum limit, there shouldn't be one at all. But in the words of Finance Minister Charles Sousa about this announcement: "They'll be okay". Hopefully for the consumers and producers in Ontario, he meant the constant scratch marks left on Ontarians' heads, too.

Good luck at the grocery store, Ontario, and remember not to cart-rage if someone else grabs the last six-pack for the year.

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