OPINION
Re. Supreme Court of Canada “Comeau” Case Decision
On April 19, 2018 the Supreme Court of Canada (SCC) released its unanimous decision in the Comeau appeal.
The SCC decision rejected outright a New Brunswick’s lower court decision that found the Province’s limit on the amount of alcohol its residents may have in their possession that was not legally purchased from the New Brunswick Liquor Corporation as being unconstitutional. Upon a careful reading of the Court’s ruling, one must be struck by the thoughtful, balanced and well-reasoned judgment by Canada’s highest
court.
As an intervener in the proceedings, Spirits Canada supported the right of provinces to regulate the importation, manufacturer, sale, and distribution of alcohol within their respective jurisdictions. By extension this right must include the ability to place reasonable limits on the personal importation of beverage alcohol into a province so as to ensure these are not likely to be diverted to other illegal sales channels (e.g. commonly referred to as bootlegging) with their associated tax avoidance schemes.
The Canadian Spirits Industry also strongly supports the SCC conclusion that provinces have the right and duty to enact measures in regards to beverage alcohol whose purpose is the protection of the health and safety of its citizens. Our brief to the Court argued that what should be deemed unconstitutional are provincial measures that discriminate against alcohol products based on the mere fact the product was made outside the province. We suggested that provincial measures that confer a benefit to products of one province at the expense of those of another should be struck down for the greater economic well being of all
Canadians.
The SCC ruling was perhaps not as definitive as we would have preferred, but it is clear that new disciplines on provincial beverage alcohol measures are now in place moving forward. The Court decided that provincial measures may have an incidental impact on trade but laws, regulations or policies whose primary purpose is to restrict trade across provinces are unconstitutional. The ruling uses the theoretical example of a province imposing a 50% surcharge (or in other words a higher liquor board mark-up) on products made outside the province than on a similar product made inside the province and concluded that such a scheme would be deemed illegal. And, many provinces, in fact, have such pricing, tax or liquor board mark-up policies in place.
Every province will now need to review their beverage alcohol programs and policies, particularly their domestic “support programs”, in light of the SCC ruling that measures whose purpose is the protection of local producers are not consistent with the law of the
land.
We call on provincial Trade Ministers reviewing the interprovincial trade in beverage alcohol under the auspices of the new Canada Free Trade Agreement’s Beverage Alcohol Working Group to take to heart the SCC ruling and make real progress in improving the trade of alcohol within Canada, or face costly litigation in the coming years.