Welcome to the 21st Century: The BC Government Finally Releases Parliamentary Secretary Yap’s Full Report

On Friday, a little over three months after the end of public consultation, and two months after it was submitted to the Attorney General, the Province released Parliamentary Secretary John Yap’s Final Report on BC Liquor Policy Review (“Report”).  Find it here. For those of us wondering if the Province would be endorsing all of its recommendations, the Ministry of Justice sent out a press release shortly after the Report  was made public announcing the government’s full support for all 73.  

Back when the Report was submitted to the Attorney General on November 25th, many liquor law reform advocates thought that it would be immediately released to the public.  However, in a bid to avoid the embarrassment of releasing the Report and then having to explain why it didn’t support all of its recommendations, the Province waited a few months to review (and possibly modify) its contents.  As discussed in greater detail below, during this time the Province released a number of the Report’s recommendations, and apart from its ill-conceived grocery store liquor sale model, these were generally well-received by the public and industry alike. They included:    

• permitting licensees to offer time-limited drink specials (aka ‘happy hour’), subject to government prescribed minimum prices (Recommendation 16);  
• permitting liquor sales in grocery stores (Recommendations 19-22);
• improving marketing and product placement for craft beer in LDB outlets (Recommendation 23); 
• working with industry and tourism authorities to create promotional materials to assist with the development of craft beer tourism (Recommendation 24);
• discussing the establishment of a quality assurance program for BC craft beer (Recommendation 26);
• reviewing the minimum requirements to obtain a brewery license with industry and considering how these requirements are regulated by the Liquor Control and Licensing Branch (“LCLB”) and the Liquor Distribution Branch (“LDB”) (Recommendation 30); 
• permitting manufacturers to offer their products for sample and sale at temporary off-site locations such as farmers’ markets (Recommendation 31); 
• allowing accompanied minors in certain liquor primary establishments (Recommendation 34); 
• permitting patrons to order a drink without ordering food in establishments with a food primary license (Recommendation 36); and
• permitting patrons to carry liquor between adjoining licensed establishments (Recommendation 63).

While there was little surprise at the inclusion of these recommendations in the Report, I’m disappointed by the way that several are characterized.  Specifically, I would have liked to see a firmer commitment on BC craft beer product placement and marketing in LDB outlets, the development of craft beer tourism, and the establishment of a quality assurance program for BC craft beer. These three recommendations were the direct result of lobbying efforts made by the BC Craft Beer Guild and CAMRA, and as I mention below, they would go a long way to helping our craft beer industry grow and flourish. I’m hopeful that, despite the way the government chose to characterize these recommendations in the Report, it will continue to work with industry to see them get implemented.

The Report contains a total of 49 new recommendations, and not surprisingly, most of the media’s attention has been focussed on the two that were highlighted in the Ministry of Justice’s press release: ‘beer gardens’ and special occasion licenses (“SOLs”).  To this end, the government has indicated that it hopes to have new rules in place this summer to permit ‘whole site licensing’ at festivals so that festival goers will no longer have to be segregated behind a fence if they want to enjoy a drink (Recommendation 51).  The rules surrounding SOLs will also be simplified, creating an annual SOL for organizations that hold multiple events throughout the year, and license holders will now be permitted to store unconsumed liquor for future events (Recommendation 45).  There’s also good news for BC’s home brewers, as the Report recommends permitting the issuance of SOLs for homebrew competitions where homemade beer can be sampled by both judges and the public (Recommendation 50).  

Considering its recent growth in popularity, it wasn’t too surprising to see that the humble growler managed to make it into the Report.  As several people in the industry had predicted, Licensee Retail Stores (“LRSs”) and LDB outlets will soon be permitted to sell and refill growlers (Recommendation 68).  While the benefit to consumers of this change to our distribution model is clear, I’m slightly concerned by the effect that it could have on the many craft brewers who rely on revenue generated by growler fills.  If, for example, LRSs and LDB outlets start offering out-of-province beer for growler fills, it’s not unreasonable to expect a decline in direct sales at breweries, lounges and tasting rooms. Indeed, over the last few years, tasting rooms and lounges have become important local meeting places in many of BC’s communities, and catching up with your neighbour while filling your growler have become synonymous.  Personally, I hope that LRSs and LDB outlets will focus on BC craft beer for their growler programs so that these sales augment industry revenues and don’t threaten the important role that lounges and tasting rooms play in many of our communities.  Regardless, I’d be surprised if we see growler stations in LDB outlets any time soon. Considering what will be required to install stations (from water lines and cold storage, to counters and the towers themselves), and the bureaucracy that will need to be navigated to get these kinds of leasehold improvements done in multiple LDB outlets, my guess is that they’ll be coming to LRSs first, but that we probably won’t see them for some time.  

The Report also contains a number of promising inclusions for those of us who spend a fair amount of time working within the LCLB’s licensing and the LDB’s distribution systems.  While the vague commitment to ‘reduce red tape’ (Recommendation 73) is encouraging, I was happier to see a handful of practical changes being considered.  The first of these is an end to the requirement to report changes in licensee corporate share ownership to the LCLB when no new shareholders have been added to a company’s share registry (Recommendation 71).  Take, for example, a family-owned brewery where mom, dad, and several siblings own the shares.  If dad wants to retire and transfer his shares to the kids, why should the corporate licensee be in violation of the LCLB’s regulations if they forget to let LCLB know about the change? I was also pleased to see that the government is looking at streamlining local government and First Nations approval in the application processes for  tasting lounge endorsements and liquor primary licenses (Recommendation 39).  While it is rare for a liquor primary license application to be turned down by a local government or First Nation, getting their approval can nonetheless be extremely difficult and time-consuming.  Being able to get the requisite approvals at the same time that an application is submitted to the LCLB would make the licensing process much easier.  Establishing target timelines to resolve applications (Recommendation 42) would also give start-ups a little bit more certainty in the stressful and confusing process of getting licensed.  Finally, the establishment of a new, independent decision-making body for applicants and licensees seeking a review of the LCLB’s decisions (Recommendation 15) would provide comfort to licensees and applicants that they would have some recourse if they feel they are being dealt with in an unfair or arbitrary manner.

Then, of course, there’s the LDB.  The LDB’s labyrinthine warehousing and distribution system is an endless source of frustration for many in the industry, and unfortunately, the rules that regulate it are often unclear and can be hard to get a hold of.   Getting products from a brewery to LRSs or LDB outlets (especially for out-of-province manufacturers) can be an unnecessarily long and costly process. Finding ways to streamline and modernize this system (Recommendation 58) would be welcome, but considering the likelihood of push-back from bureaucrats and the BC Government and Service Employees’ Union, it’s doubtful that we’ll be seeing changes to the LDB any time soon.  

Striking the right balance between harm reduction and liberalization was never going to be an easy task, and there are several noteworthy absences in the Report, chief amongst these being the continued prohibition on public consumption in parks and beaches and on liquor sales in convenience stores. Indeed, for all of its efforts to liberalize our antiquated liquor laws, the Report does contain a number of recommendations that centre on harm reduction.  While many of these are positive, a few caught my eye.  In the section on pricing, the Report recommends that the LDB consider tying minimum alcohol prices to alcohol by volume (“ABV”) (Recommendation 18).  In other words, drinking a 20 oz saison or Russian imperial stout would cost you more than the same amount of kolsch or ISA.  This recommendation was delivered to Parliamentary Secretary Yap by several harm reduction groups, and similar steps in other jurisdictions have been shown to reduce alcohol-related harm.  While I can understand the larger social value of this recommendation, if it were to be implemented it would have a detrimental impact on the sales of numerous styles of craft beer, and could also have negative spinoff effects on the industries that support our craft brewers, such as BC’s fledgling hop farmers.  While ‘beer geeks’ and ‘hop heads’ will continue to order higher ABV beer at places like the Alibi Room and St. Augustine’s, price is a very determinative factor in dictating consumer spending, and should this change be implemented, sales of higher alcohol beer will surely be affected.   Over time, this would undoubtedly have a negative impact on consumer choice, and some of the craft beer industry’s recent growth could be stunted if fewer taps of styles like IPA, eisboch, or imperial red ale are offered at BC’s pubs.  

In the end, notwithstanding this recommendation and a handful of others, our province’s first review of its antiquated liquor laws in over two decades has resulted in a number of positives for consumers and industry.  Obviously, the real test will be in the look of new legislation, policy manuals, and license applications.  In other words:  implementation - how long it will take to see these changes made, and how many of them will actually get put in place.  Unfortunately, the public’s attention span can sometimes be short, and many of the Report’s recommendations could easily be forgotten if there isn’t an honest desire for change in government. Indeed, while certain recommendations will take some time to study and implement (or may never be implemented at all), I’m hopeful that the simpler ones to implement (like direct sales at farmers’ markets, happy hour, and ‘whole site’ licensing for festivals), will be in place this summer.  The immediate implementation of these recommendations would show that the Province is serious about the changes set out in the Report and that the public funds used to facilitate its preparation were well spent.  Let’s hope that the unprecedented public engagement this initiative received is put to good use, and that the modernization of our liquor laws continues to build on the significant momentum it currently enjoys. 

Look out for my upcoming articles in BC Craft Beer News where I’ll be looking at a few of the Report’s recommendations in greater detail.