Artisan Ales hearing scheduled to fight Alberta government’s unconstitutional barrier to trade
Calgary, AB—Artisan Ales’s trade complaint against the Government of Alberta under the Agreement on Internal Trade (AIT) is scheduled for a hearing before an independent, expert panel at 9:00 am on June 1, 2017.
The Government of Saskatchewan is intervening in the complaint in support of the position of Artisan Ales, while the Canadian Constitution Foundation (CCF) is also supporting Artisan Ales in the complaint. Read our factum here.
This dispute concerns the Government of Alberta’s discriminatory beer tax policies, which violate both section 121 of the Constitution Act, 1867 and the province’s trade obligations under the AIT. Alberta is fully entitled to promote its own industries, but when it does so by erecting barriers to out-of-province competition, it not only hurts consumers, it violates the constitution and the AIT.
Albertans used to enjoy the best market for craft beer in all of Canada. Although it was by no means perfect, Albertans had a far greater selection of products from around the world at much more competitive prices than other consumers in any other province.
Then, in October of 2015, Alberta imposed a tax on craft beers brewed outside of the New West Partnership (British Columbia, Alberta and Saskatchewan). This tax 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 tax assessed by weight, volume, or a percentage of value—that obstructs interprovincial trade.
The second major overhaul was announced on July 28, 2016. As of August 2016, all beers in Alberta have been taxed at the new higher rate regardless of their place of origin, but a tax rebate equivalent to the old mark-up is now given to Alberta brewers under a new program called the Alberta Small Brewers Development Program.
The intent of these policies was to shield the provincial craft brewing industry from competition by driving up prices on beer from outside the Alberta. But far from promoting economic development and diversifying the economy, these policies have had the opposite effect for many businesses.
Artisan Ales is Calgary-based small business that imports craft beer into the Alberta, Saskatchewan and Manitoba markets. The majority of the sales of Artisan Ales in Alberta are beers produced in Quebec. Artisan Ales has seen nearly a 40 per cent decline in sales as a result of Alberta’s discriminatory beer tax.
Bottlescrew Bill’s is a popular Calgary pub specializing in craft beer. Owner, Geoff Allan, has been forced to adapt his business to Alberta’s discriminatory policies by raising prices and reducing the selection of out of province beers available to his customers. This has resulted in a year-over-year decrease of 14.5 per cent in sales of beers from outside of Alberta, and the removal of popular Ontario, Maritime, and British Columbia craft beers from the restaurant.
Two Ontario brewers, Lake of Bays Brewing Company and Muskoka Brewery, have withdrawn from the Alberta market rather than face the inevitable loss of sales. Two other breweries, Saskatchewan’s Great Western Brewing and Ontario’s Steam Whistle, were granted injunctions to protect them from these policy changes until a date when they could challenge Alberta’s discriminatory treatment as unconstitutional in court.
Mike Tessier, the owner of Artisan Ales, said:
“The Government of Alberta has devastated my business. For the fiscal year ending in November 30, 2016, sales decreased by nearly 40 per cent relative to the previous year, and net profits decreased by 86 per cent. As long as current beer policies are in place, I will continue to suffer a loss of sales and profit making my business unsustainable. And even if these policies were reversed today, it would take me years to rebuild my business.”
And Derek From, staff lawyer at the Canadian Constitution Foundation, said:
“Provincial governments are not permitted to erect tariff barriers that obstruct interprovincial trade. The free movement of legal goods is a right that belongs to all Canadians under the Constitution Act, 1867, and it is an obligation that the Government of Alberta willingly agreed to in the Agreement on Internal Trade. By discriminating against craft beers from outside of the province, Alberta is acting illegally and we look forward to having the an independent and impartial panel hear this case.”
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.
