On December 1, 2017, Artisan Ales filed an appeal factum in support of its ongoing challenge to the Alberta Government’s discriminatory treatment of out-of-province craft beer.
On July 28, 2017, an expert panel convened under the Agreement on Internal Trade (“AIT”) found that the Government of Alberta’s discriminatory tax-and-subsidy regime violated the AIT.
In their report, a majority of the panel wrote that Alberta’s policies act as an impediment to trade within Canada because they discriminate against out-of-province beer, like the beers imported by the Calgary-based beer agency, Artisan Ales. It is this panel report that Alberta is appealing. The appeal hearing date is tentatively set for February 15, 2018.
Background
Prior to October 28, 2015, Alberta imposed a common graduated mark-up on the beer of all small brewers, without regard to the brewer’s location within Canada.
Then, on October 28, 2015, Alberta raised the mark-up on the beer of small brewers located outside of British Columbia, Alberta, and Saskatchewan to $1.25 per litre. The reason the Government gave was that they wanted to protect the local brewing industry by shielding it from competition from the rest of Canada. This policy violated the Constitution’s so-called “free trade” clause and long-established case law from the Supreme Court of Canada that no province is permitted to erect a tariff barrier—a fee assessed by weight, volume, or a percentage of value—with the purpose of inhibiting interprovincial trade.
After the Canadian Constitution Foundation informed the government that this policy was unconstitutional, and Ontario brewer Steam Whistle sought and received injunctive relieve from the Alberta Court of Queen’s Bench, the province devised second policy to achieve its anti-trade objectives.
On August 5, 2016, Alberta began applying a mark-up of $1.25 per litre to all beer while paying Alberta small breweries a new subsidy on the sale of their beer in Alberta. The two elements of the August 2016 policy put small Alberta brewers in the same advantageous economic position vis-à-vis out-of-province small brewers that the October 2015 policy had done.
Measure
AB beer (if sold in AB)
Beer from SK & BC
All other CDN beer
Prior to 2015
$0.20 per litre
$0.20 per litre
$0.20 per litre
2015 policy
$0.20 per litre
$0.20 per litre
$1.25 per litre
2016 policy
$1.25 per litre & offsetting grant of $1.05 per litre.
Net: $0.20 per litre.
$1.25 per litre
$1.25 per litre
Just like the first policy, the intent of the second was to shield the Alberta craft brewing industry from competition by inflating the cost of selling beer brewed elsewhere in Canada. But far from promoting local jobs and business, which was the Government’s justification, these policies have had the opposite effect.
Artisan Ales is small business located in Calgary that imports craft beer into Alberta, Saskatchewan and Manitoba. The majority of Artisan Ales’s sales in Alberta are of beers produced in Quebec. Since November 2015, Artisan Ales has seen nearly a 40 per cent decline in sales as a result of Alberta’s discriminatory policies.
The Agreement on Internal Trade
In April 2015, Artisan Ales initiated a complaint under the AIT against the Government of Alberta.
The AIT is a free-trade agreement which was signed by all Canadian provinces and the federal government in 1994. Under this agreement, Alberta is committed to “reciprocal non-discrimination”—meaning that the province must treat beer produced in any other province no less favourably than how it treats beer produced within Alberta. Although the AIT was superseded earlier this year by the Canadian Free Trade Agreement, the governing principles remain broadly the same and Artisan Ales’s complaint was grandfathered in from the earlier agreement.
Mike Tessier, owner of Artisan Ales, said:
“The Government of Alberta has destroyed my business and is harming the businesses of many other Albertans just like me. We’ve worked hard to grow the craft beer industry in this province, making it the most vibrant and reasonably priced beer market for consumers in all of Canada. It is deeply frustrating that even though I won my trade complaint and the government’s policies were found to violate its trade obligations, the province continues to fight to maintain these harmful, discriminatory policies.”
Derek From, Staff Lawyer for the CCF, said:
“The AIT reflects the same sort of free-trade principles that are enshrined in our constitution. Under the AIT, Alberta is committed to “reciprocal non-discrimination”—meaning that the province must treat beer produced in any other province no less favourably than it treats beer produced within the province. While I am disappointed that Alberta has decided to appeal this decision and perpetuate the harm being done to Alberta’s craft beer market, I am confident that the appellate panel will decide in Artisan Ale’s favour.”
The Canadian Constitution Foundation (“Freedom’s Defence Team”) is a registered charity, independent and non-partisan, whose mission is to defend the constitutional freedoms of Canadians through education, communication and litigation.
