Interprovincial trade barriers continue to ‘stifle’ alcohol sales within Canada: report

Beer cans are stacked as props in front a display of ice cream, at a press availability attended by Ontario Premier Doug Ford at a convenience store in Toronto, Thursday, Dec. 14, 2023.

A new report says interprovincial trade barriers remain a serious obstacle to alcohol sales between provinces in Canada, particularly for craft breweries, distilleries and winemakers.

The report, released Monday by the Canadian Federation for Independent Business (CFIB), says many barriers still remain, despite federal and provincial efforts to tear them down.

“Broader, deeply entrenched barriers continue to stifle growth, innovation, and competition in Canada’s domestic alcohol industry,” the report states.

Federal and provincial officials have said that reducing interprovincial trade barriers is one of the key ways that Canada can combat U.S. tariffs. In the summer, Premier Doug Ford signed memoranda of understanding with several provinces with the aim of reducing those barriers.

Just Monday, Prime Minister Mark Carney touted the fact that the government has increased wine sales by tearing down internal trade barriers.

“Our government has eliminated obstacles to internal trade earlier this year, and provinces and territories have begun to eliminate their obstacles as well, which will unlock millions of dollars of trade within our borders,” Carney said in French during a news conference in New Brunswick Monday.

However the CFIB said in its report that those efforts have not yet sufficiently torn down obstacles to internal trade when it comes to alcohol.

“While Canada has begun to take steps to reduce internal trade barriers, alcohol remains one of the most glaring and persistent obstacles,” the report states.

The report says the landscape for alcohol sales in Canada remains “highly fragmented,” with each province and territory maintaining its own regulatory frameworks, licensing requirements, markup structures, and distribution systems. It also sites multiple layers of oversight and control as complicating factors.

“For small producers, this means navigating a patchwork of rules and duplicative paperwork, paying multiple fees, and often waiting months for approval to enter a new province,” the report says.

“The result is a system that favours larger players with more resources, while severely limiting opportunities for growth among smaller craft breweries, wineries, and distilleries.”

The reports says the barriers mean provinces are not poised to help small players when the opportunities arise.

“When American liquor products were pulled from stores’ shelves across Canada as a response to U.S. tariffs, it opened shelf space that could—and should—have been filled by Canadian producers,” the report states.

In a statement, a spokesperson for Ontario Finance Minister Peter Bethlenfalvy said the province is “leading the way in tearing down interprovincial trade barriers” and that sales of Ontario-made alcohol products have increased over the past year.

Bethlenfalvy’s office said Ontario has signed memorandums of understanding with 10 other provinces and territories, and has enabled direct-to-consumer alcohol sales, allowing the purchase of alcohol directly from producers across Canada for personal consumption in reciprocating provinces and territories.

“This builds on the work we have accomplished to deliver historic changes to the alcohol sector, including the largest expansion of consumer choice and convenience in provincial alcohol sales in nearly a century, creating good-paying jobs and new opportunities for small businesses,” wrote Colin Blachar, Bethlenfalvy’s director of communications.

“As a result, over the last year, we have seen sales of Ontario-made alcohol products increase by approximately 33%. This includes an increase of sales of local craft products by 50% and a 79% increase in VQA wine, made from 100% Ontario-grown grapes.

Federal officials did not immediately return a request for comment on the report.