A “roly” reply

Al, thank you for the thoughtful letter. I’m a fan of both logic and economic development that helps communities, and your reasoning and logic make sense on both fronts to me. As Dave Drought mentions, I still am getting my feet under me (as in, I don’t have a work phone #, or staff, yet!). But this is certainly something that I’ll look forward to discussing further with you and with my new legislative colleagues. I’d like to see us move in many of the same directions you mention, and I just need to get up to speed on the landscape and some of the challenges with such proposals, and then I hope to be able to help move the system in the right direction. I myself have high expectations … I hope we can deliver on those!

Roly Russell, MLA – Boundary Similkameen

 

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Open letter to Roly Russell by Al Hudec

Congratulations on your appointment as Cabinet Secretary for Rural Development. This position gives you a great opportunity to eliminate regulatory barriers to rural economic development in your Boundry-Similkameen riding. In particular, I’d like you to draw your attention to one specific regulatory impediment that is inhibiting the growth of the Okanagan-Similkameen wine industry and the growth a rural communities in your riding.

Farm-based wineries are prohibited from establishing tasting rooms in our local towns and cities. This prohibition is imposed through agreements forced on land-based wineries by the Liquor Distribution Branch. In other near-by jurisdictions (such as Washington, Oregon, Napa and Sonoma) many small towns thrive on wine tourism. Tasting rooms are allowed to cluster in small rural communities, encouraging complementary businesses such as restaurants, tourist shops and arts and entertainment venues to do the same. This attracts tourists looking for a complete tourism experience that includes not only wine but also food, entertainment, shopping and accommodation.

Under current LDB  rules, land-based wineries are required to locate their tasting rooms on agricultural land. Wineries looking to provide customers with a complete tourist experience are building restaurants, guest houses, wedding venues and concert amphitheaters on their vineyard properties while nearby rural towns are starving for economic development opportunities. The law needs to to change to allow more balanced growth of wineries and associated business in our local towns and cities rather than forcing such development into the Agricultural Land Reserve.

At some point forcing development into the Agricultural Land Reserve begins to raise obvious concerns about the loss of cultivatable land, noise, high traffic density and the dangers of tourists consuming alcohol and driving on country roads.  Provincial laws distort sensible decision making by requiring tasting rooms to locate in vineyards. We need to boost economic development in our communities and take the pressure off agricultural lands.  

More generally, your government needs to do more to open up channels for the sale of BC wine. The BC wine industry continues to grow (a 22% increase in licensed wineries since 2015), but it is at a critical juncture. Although BC is producing super premium products that are receiving recognition around the world, the share of BC VQA wine in its own local consumer market is only 18%. Notably, Canada (BC included) is the only wine growing area in the world whose citizens do not drink predominantly their own domestic wines. Inter-provincial trade barriers prevent the direct shipment of BC wine to consumers in most other provinces and have stunted the development of a national market for BC wines.  

Current distribution channels for BC wines are inadequate. The BC Liquor Distribution Branch, which is the dominant player in liquor retailing, does a poor job of selling the wines of small artisan BC producers. Notwithstanding the 18% market share of BC VQA wines, the LDB devotes only 8% of its shelf space to BC wines and also pursues various abusive practices detrimental to the domestic industry. Most consumers around the world prefer to purchase their wine predominantly in grocery stores, but BC has imposed severe limits on wine sales in the grocery channel.

Many of the liquor regulatory changes on your government’s policy agenda are counterproductive to the objective of opening up distribution channels for small local wineries. Examples include extending the moratorium on the licensing of new private liquor stores, wholesale pricing for restaurants and permitting private liquor stores to sell to restaurants, limitations on wine in grocery, potential limits on the sale of winery with restaurant takeout and delivery; and prohibitions on delivery of wine directly to consumers from centralized storage facilities in the Lower Mainland. 

Your government’s liquor policy agenda is directed mostly at helping private liquor stores, restaurants and pubs; with the side effect of negatively impacting sales channels for BC wineries. More has to be done to offset these negative impacts by implementing policies advantageous to BC liquor manufacturers.

Policy-making by the LDB should be eliminated. Hopefully the recent government reorganization which puts the LDB under the authority of the Finance Ministry and the LCRB under the Solicitor-General reflects a realization by your government that the principal purpose of the LDB is revenue generation for the provincial treasury and that liquor regulation should be centralized in the LCRB.      

BC wine is a premium value-added agricultural product in the Province and the key economic driver of our local tourist industry.  We need to regulate it sensibly in a manner that ensures its success. This includes abolishing the LDB rule prohibiting farm-based wineries from clustering their tasting rooms in local communities.

Albert Hudec – Partner at Farris Vaughan, Wills & Murphy LLP
Providing legal advice to the British Columbia wine industry