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Just a Twelve Ounce Taste For Me, Thanks. Recent Changes to Provincial Liquor Regulations Undermined by Vancouver’s Zoning Bylaw

Carlos Mendes

(Originally Published May 17, 2013 on my BC Beer Law 1.0 blog)

On the same day that the province relaxed its ‘tied house’ rules (see below), another welcome change to the Regulations also came into effect. Prior to March 1st of this year, on-site consumption at breweries was limited to ‘tasting rooms’ where brewers could only sell a maximum of 12 ounces of their products to each customer per day. Consequently, and despite strong community support and a wide array of award-winning products (as most recently illustrated in last week’s impressive showing at the Canadian Beer Awards), Vancouver’s fledgling craft beer industry hasn’t been able to take advantage of a valuable marketing tool that is probably taken for granted in more established markets.

The rules that previously regulated on-site lounges were a constant source of frustration for the province’s craft brewers, who saw them as an impediment that placed their industry in a disadvantaged position to outside competitors. To understand their position, you only need to look about 5 hours to the south, where the contrast with the craft beer mecca of Portland is striking. As a frequent visitor to the Rose City, I can attest to the way that on-site lounges give breweries an invaluable opportunity to directly connect with their customer base and grow their market share. Indeed, it seems like every time I take the I-5 and cross the Columbia River, I find myself casually enjoying a pint or two with a brew master at an on-site lounge. Being able to connect in this way with the maker of my beer often leaves a strong and lasting impression about the passion, creativity and attention to detail that defines their products. As you could expect, the direct marketing and brand loyalty that this kind of experience can create is invaluable, and the craft beer tourism that Portland enjoys due to experiences like these benefits all segments of the local economy.

Thankfully, s. 18.2 of the Regulations now allows the province’s breweries to have an endorsement on their existing Manufacturer's License that permits on-site consumption, and does not impose the kind of strict limits that were in place under the previous regulatory regime. This change has been warmly received by brewers and enthusiasts alike, and has had an immediate impact on the operations of some of the provinces’ craft brewers. Consider the case of Surrey’s Central City Brewing Company, the makers of the popular and award-winning Red Racer line of craft beer. Following the implementation of s. 18.2, the company’s plans to include a small tasting room in their new 65,000 square foot brewing facility were quickly replaced with plans to build a 2,500 square foot lounge in the same facility. Clearly the province got it right here, and the industry and its supporters will soon be reaping the benefits.

Unfortunately, these benefits may not be enjoyed by everyone. In Vancouver, the jurisdictional interplay between the Regulations and the city’s Zoning & Development Bylaw No. 3575 (“Zoning Bylaw”) has created a state of legal limbo for the industry, and a bureaucratic headache for its proponents. Parallel 49’s tasting room is a case in point. Despite the implementation of s. 18.2, the city’s Licenses and Inspections department has advised the brewery’s owners that they will need a Liquor-Primary License from the LCLB to operate an on-site lounge, which they view as akin to a pub. The reason is simple: the Zoning Bylaw only recognizes two types of establishments that are permitted to serve liquor, those with Liquor-Primary Licenses and those with Food-Primary Licenses. A Manufacturer's License with lounge endorsement is thus a kind of 'hybrid license' that is not currently recognized in the Zoning Bylaw.

To make matters worse, Parallel 49’s brewery is located in the northern tip of Hastings Sunrise on lands that are zoned ‘I-2’ under the Zoning Bylaw. ‘I-2’ is an industrial land-use designation that currently permits various types of manufacturing (including brewing and distilling), artists' studios, and even certain types of restaurants. However, businesses with a Liquor-Primary License are not permitted to operate on lands zoned I-2, and businesses with a Manufacturer’s License are not permitted to operate outside of lands that carry an industrial designation, thus leaving the owners of Parallel 49 in their current state of legal limbo. To rectify this situation, the city’s Licensing and Inspections department advised the brewery that their only current option is to make a re-zoning application, a process which could involve extensive community consultation, and which would undoubtedly be costly and time-consuming. Unfortunately, while the city’s position appears to contravene the Regulations, it does have the authority to stop the implementation of s. 18.2 by exercising its licensing powers under the Vancouver Charter and its ability to regulate land use under the Local Government Act.

As expected, the city has received a fair amount of bad press on this issue, and has been on the receiving end of a passionate advocacy campaign spearheaded by the local chapter of the Campaign for Real Ales (“CAMRA”) and CAMRA’s past-president Paddy Treavor (writer of the popular Van East Beer Blog). While the Licenses and Inspection department’s current position on this issue is clear, there have been some strong indications that city council would like to rationalize the Zoning Bylaw with the Regulations. The most promising of these was a recent motion by NPA councillor George Affleck, unanimously supported by city council, ordering city staff to determine what is required to harmonize the Zoning Bylaw with s. 18.2. Since the motion was passed, Alibi Room regular and Vancouver mayor Gregor Robertson used his twitter account to inform his followers that city staff were currently working on new regulations that would allow tasting lounges and offer additional support to the city’s craft brewers, and further, that he expected a report on this matter to come before council in May. Members of the city’s craft beer community are hopeful that amendments to the Zoning Bylaw will soon be in place to rectify their discordance with s. 18.2. You only need to look south to Portland to see what could potentially lie in store for our great city if they do.