Coleman to give break to distillers in liquor law update

Distillers to get farm-gate status; wineries to be allowed to sell to their own restaurants
Von Albrecht and Associates owner Marcus von Albrecht distills vodka using grain alcohol from outside B.C. so he will not qualify to be able to sell his products direct to customers without paying hefty fees to the provincial government

Deputy Premier Rich Coleman and NDP critics are sparring over what regulatory changes will best boost the emerging B.C. craft distilleries sector, promote agritourism and protect the $911.1 million profit that Victoria annually extracts from liquor sales.

Coleman told Business in Vancouver September 13 that he will allow distillers to sell products direct to customers without having to pay a hefty markup fee that erodes profit.

Within the next two months, he said he’ll also remove “daft” regulations.

Gone will be the so-called tied-house law that forbids makers of wine or other alcoholic beverages from owning a separate business, such as a restaurant, that sells their products.

Coleman suspended the law during the 2010 Olympics to allow sites such as Molson Canadian Hockey House and Holland Heineken House to operate.

Burrowing Owl Estate Winery, for example, is currently allowed to operate a restaurant that sells its wines only because the restaurant is on the same site as the winery.

Were the Wyse family, which owns Burrowing Owl, to open a restaurant in Vancouver, it would be able to sell any wine in that bistro except its own.

“I’m getting rid of all those types of stupid rules,” Coleman said.

Coleman also plans to eliminate a “trade practice” regulation that prevents an alcohol supplier from paying a liquor storeowner to display the supplier’s products prominently in the store.

The NDP is satisfied with those changes.

But NDP agriculture critic Lana Popham told BIV that Coleman is not going far enough with his planned changes to stimulate the craft distillery sector and the agritourism that goes along with it.

Coleman plans to allow craft distillers to sell products directly to customers and restaurants and enjoy what winemakers call “farm gate” status – their most lucrative sales channel.

Distillers can currently sell direct to customers, but they have to pay a series of BCLDB markups, taxes and fees. Coleman’s changes would eliminate the markups.

For example, Okanagan Spirits sells its popular $45 Poire William pear brandy at its Vernon distillery direct to customers and nets back $28.08, according to co-owner Tyler Dyck.

If it sold the same brandy through any other retailer in the province it would net $16.03. Under provincial farm-gate status, it would net $37.80.

Coleman’s stipulation is that distillers must use exclusively B.C. ingredients in each product that they sell under farm-gate status.

Marcus von Albrecht, owner Vancouver’s Von Albrecht and Associates, pays Okanagan Spirits to make a quadruple-distilled vodka. Von Albrecht’s recipe uses neutral grain alcohol that originates outside the province, so he can’t sell his product under farm gate status.

Popham wants Coleman to allow craft distillers who use 51% B.C. ingredients to have their products qualify for farm gate status – but Coleman said that would cut too deeply into provincial revenue because he would have to do the same thing for wineries or for larger distilleries.

“That would possibly cost the taxpayers $100 million or more,” Coleman said.

“That would be no different than if I told wineries that you can now import juice from France or Australia and turn it into a wine, bottle it here and call it a B.C. wine. That will never be the intent of this program.”

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