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Comeau decision leaves mixed business reaction

Canadian Supreme Court says provincial government monopolies may exist, although they cannot explicitly prohibit another province’s goods
Coulson Litigation lawyer Shea Coulson represented five wineries as interveners at the Supreme Court of Canada | Chung Chow

B.C. business owners who want to sell products to all Canadians had mixed reactions after the Supreme Court of Canada, on April 19, ruled in a case involving Gerard Comeau – the New Brunswick man who bought beer in Quebec and was nabbed by police as he re-entered his home province.

The cops confiscated Comeau’s 14 cases of brew, as well as a few bottles of spirits, and fined him $292.50.

His successful appeal of that fine wound its way to the country’s top court, where lawyers argued for clients that included all provincial liquor boards and interveners, such as B.C. wineries and cannabis sellers.

Many business owners were hoping for a simple judgment declaring that unfettered free trade could exist throughout Canada, while lawyers were largely expecting a nuanced ruling.

Those who focused on the big picture tended to be disappointed about the prospect for greater free trade within Canada while those who looked more closely at the minor precedents saw rays of hope.

“It was not necessarily a surprising decision,” Tousaw Law Corp. lawyer Kirk Tousaw told Business in Vancouver.

He called the judgement a “disappointing loss” and said that the judgment will prompt people to continue breaking the law by buying products illegally.

Tousaw represented the intervener Cannabis Culture in the case and he said that cannabis buyers will undoubtedly continue to purchase their products online from “dozens and dozens” of illegal sellers.

While licensed producers of medical marijuana, such as Canopy Growth Corp. (TSX:WEED), are legally able to sell across Canada via e-commerce, countless non-licensed producers are also selling online, he said.

A different decision, Tousaw said, may have had a “ripple effect” and undone some of the government monopolies’ power.

“Now we have to rely on the market to do that,” he said.

British Columbia Wine Institute CEO Miles Prodan also called the ruling “disappointing” for the B.C. wine industry, and he added that his organization will work with the Canadian Vinters Association as well as the federal, provincial and territorial governments’ Alcoholic Beverages Working Group to try to remove barriers to direct shipping to customers across the country.

Some hope, however, was expressed by Painted Rock Estate Winery Ltd. owner John Skinner, who spoke with BIV minutes after the judgment.

Skinner had read an email from his lawyer, Coulson Litigation lawyer Shea Coulson, and he said that the email informed him that, “this isn’t actually bad news. This is a very good decision.”

Skinner’s winery later tweeted “we are disappointed by the loss,” but Skinner told BIV that there was reason for hope.

“I’m going to look at it at face value right now and try to discern where there are windows for us to be able to do what we want, which is basically to sell wine direct to consumers,” he said.

When BIV spoke with Coulson, he explained that the court ruled that provincial monopolies are constitutional because they exist as part of a larger regulatory scheme that could exist for a purpose other than to restrict trade – to protect health and safety, for example.

The court also ruled – significantly, Coulson said – that it is unconstitutional for a province to have laws that have “as their primary purpose the creation of a trade barrier.”

That is the part of the judgment that would make Alberta Premier Rachel Notley’s legislation to give the province’s energy minister the power to limit oil, gasoline and natural gas shipments to B.C. unconstitutional, he said.

Ontario, Coulson added, has a policy that expressly states that Ontarians are not allowed to buy B.C. wine.

The existence of that policy statement is evidence that Ontario’s restriction is motivated by the intent to have a trade barrier and protect Ontario wineries, and not simply to protect the health of Ontarians, Coulson said.

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