The LCBO, SAQ, And All Other Liquor Monopolies Are Technically Illegal

A house of crime, technically. Photo via.

Over the past year, I’ve noticed a conspicuous increase in the number of op-eds in Canadian newspapers calling for the privatization of alcohol sales in Ontario. For those who have never had the pleasure of living in Midwestern America’s yarmulke, this would allow for beer, wine, and spirits to be sold in grocery, specialty, and corner stores. Like most Canadians, Ontarians must purchase their inebriates through stores run by a government-controlled liquor board. Those stores, known to the kids as "the LCBO," has transferred $13.7 billion dollars to the Ontario government (excluding taxes) over the last 10 years, and employed 3,366 Ontarians on a permanent, full-time basis who can make up to $52,000 per year with pension benefits.

Proponents of private alcohol sales are sure to note the convenience, increased access to foreign distributors, and competitive pricing that would result following de-monopolization. Opponents tend to fall into three camps: prohibitionists who are terrified Ontario will turn into a modern-day Sodom and Gomorrah of underage binge drinking and drunk driving, along with left-leaners who favour bureaucracy and crave an economy driven by the public sector, and then there’s the people who think that abolishing the LCBO will lead to a smaller selection of booze due to smaller shelf space in corner stores. Some industry insiders are convinced privitazation is around the corner and there's nothing to fear. In an interview with the Globe & Mail last October, the Vice President of Operations at Mac's, Tom Moher, argued against charges that convenience stores are less likely than the government to properly police liquor sales. "In a study completed in 2011, the Beer Stores, LCBO and convenience stores were checked on the sale of age-restricted products, and when it came to that study, the pass rate for the LCBO was in the mid 70s. It was in the low to mid 80s for the Beer Store," he said. "Convenience stores across the province actually scored in the low 90s."

If you happen to fall on the opposing side, it turns out any stance you take to support the LCBO is legally moot—because publicly run alcohol vending is technically illegal. According to a paper published by Toronto lawyer Ian Blue in 2009, the “Importation of Intoxicating Liquors Act,” which enabled the formation of Provincial Liquor Boards almost a century ago, is entirely unconstitutional. Ian’s article “On the Rocks” was initially published in Advocates Quarterly and serves as a worthy substitute for Ambien for those of us who never studied Canadian Constitutional Law. As the paper was penned for a legal academic audience with a highly esoteric knowledge of constitutional nuances, it isn’t any surprise its implications failed to reach the mainstream public.

As somebody who finds the LCBO, and most of Ontario’s liquor laws for that matter, to be austere and a hangover from Upper Canada’s rigidly protestant beginnings, the prospect of de-monopolization is a welcome development. But, if Blue’s findings are true and have been verified by peers and academics (they have), then why has nothing happened and why is no one taking steps to make de-monopolization a reality? Well, that’s why I sat down with Ian on a recent visit to Toronto to get to the bottom of why, almost four years later, Provincial Liquor Boards are as incumbent as ever.

VICE: You claim the LCBO and other public liquor monopolies like it are illegal. How can that be?
Ian Blue: Because its monopoly is based solely on an unconstitutional federal law, the Importation of Intoxicating Liquors Act (IILA) passed almost 90 years ago. The law is unconstitutional because it violates section 121 of the Constitution Act, 1867 that requires items of growth, produce, and manufacture to be admitted free from one province into another. A law that requires breweries, wineries, and distillers to sell their products to the LCBO is clearly contrary to that principle.

Wait, so if I buy booze in Ontario and bring it to Quebec I’m technically breaking the law?
You’re only allowed to take two bottles of wine, one bottle of booze, or a dozen beers, and that has only been since the 2012 amendment. Any more than that and you’re breaking the law.

How was your article received? Why haven’t I heard anything about it from anyone but you?
No law review article is ever commented on a great deal. When it was published, the National Post asked me to do an Op Ed piece, which I did. There were no letters about it. Sun TV interviewed me about it a couple of times. I received about ten e-mails from lawyers who read it, most of which agreed. Government constitutional lawyers are all aware of it and I have been told and have seen that they view it with some disquiet.

Why has nobody formally presented this argument to the government and petitioned them make open alcohol sales legal?
Dan Albas, an M.P. from BC, used my argument to obtain an amendment to the IILA to allow individuals to carry a limited amount of liquor across provincial borders. Big Wineries and breweries like the present system because it gives them free distribution. Small breweries and wineries are afraid to challenge the system for fear of being delisted in LCBO stores.

From a legal perspective, what needs to happen before Ontarians can legally buy beer and wine at the corner store?
The IILA must fall or provincial governments must be sufficiently concerned that it will fall  before they will agree to a deal with retailers.  In order for the IILA to fall, there must be a final court order declaring it unconstitutional, which would require someone to challenge it in court.

Illicit behaviour at Maple Leaf Gardens. Photo via.

If someone were to challenge the ILLA, is the government likely to put up a big fight?
You bet. For the government of Ontario and any other province, this will be a hill to die on. It’s not about money because studies show that the government would increase tax revenues if beer and wine were sold by private stores. It can’t be about social responsibility because the Alcohol & Gaming Board of Ontario can create safeguards just as it does today. It's about control. The LCBO, for one, is a huge public sector employer and generates a lot of revenue for the province. De-monopolization threatens that contro and, in the government's mind, has uncertain implications. Change is a scary thing for big governments.

Is the government more likely to declare the IILA unconstitutional or to amend the constitution to allow Provincial Liquor Monopolies?
It would be the courts, not the government, who would declare the IILA unconstitutional. As for amending the constitution, this would never happen. Canada’s formula for amending the Constitution requires consent of seven provinces having at least 50% of the Canadian population. Each province would want something in return so the Federal government would not be even interested in trying.

Aside from the end consumer, who stands to benefit the most from private liquor sales? Who stands to lose the most?
Obviously the winners will include retailers, smaller wineries across Canada, artisanal Breweries, and foreign wineries as they can ship to restaurants and liquor stores directly without having to go through the LCBO warehouse system with its attendant costs. The losers will be members of the LCBO locals of the CUPE, wine connoisseurs like me who love Vintages, and of course the LCBO grandees.

As somebody who just wants to be able to buy an Old E at his corner store, what can I do to help?
Give this issue as much publicity as you can in all social media! The government is likely to put up less of a fight in defending the IILA if public opinion is strongly against it.