Bobbi-Jean MacKinnon: Tracadie man’s beer case before Supreme Court overflows with potential interveners

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The Supreme Court case of a New Brunswick man who loaded 14 cases of beer and three bottles of liquor into his car and drove home from Quebec has a wide range of businesses, organizations and associations across the country jostling to have a say at the hearing later this year.

At least a dozen requests to intervene in the cross-border alcohol limits case of Gerard Comeau have been filed with the country’s highest court in Ottawa. Some indicate they’re acting on behalf of dozens of others.

Not surprisingly, most of the applicants are alcohol industry-related and side with Comeau, seeking freer interprovincial trade. A group of small wineries in B.C. says their survival depends on it.

Other applicants include a marijuana advocacy group, business and consumer organizations, a courier service, a think tank and agriculture supply management associations.

They contend the case is about much more than provincial monopolies on alcohol. The court’s decision could have far-reaching constitutional and economic implications, they say.

At issue in the appeal is whether Section 121 prohibits all trade barriers, whether they’re federal, provincial, tariffs or non-tariff restrictions that make importing and exporting products difficult or costly.

The attorneys general of Canada, Ontario, Quebec, Newfoundland and Labrador, Alberta, Nova Scotia, Saskatchewan, British Columbia, Prince Edward Island and Northwest Territories, and the minister of justice of Nunavut all previously filed notices of intervention in the case.

They are automatically granted the right to make submissions to the court on the constitutional issue.

But the other proposed interveners have to persuade the court to accept written and oral arguments from them at the hearing, set for Dec. 5 and 6.

Each contends that it has a vested interest in the appeal and that its perspective is different from the other parties.

There is no deadline for the court to decide on the applications.

The majority of the applicants say fewer barriers would be better for them, consumers or the country as a whole.

But five national organizations that administer or support agricultural supply management systems, known jointly as the SM-5 Organizations, are arguing against a loosening of restrictions.

The Dairy Farmers of Canada, Egg Farmers of Canada, Chicken Farmers of Canada, Turkey Farmers of Canada, and the Canadian Hatching Egg Producers say they have a “profound interest” in the appeal.

Their supply-managed sectors are built on three pillars — production, pricing and import controls, which they say are designed to enable farmers to get a reasonable return while stabilizing the supply of agricultural products to Canadian consumers.

Comeau’s position “could result in the destruction of supply management — a regulatory system in place for generations, on which the livelihood of thousands of farmers across the country depends,” their application says.

Small wineries, beer giants weigh in

The industry-related applicants, however, want fewer restrictions. These groups include:

Liquidity Wines Ltd., Painted Rock Estate Winery Ltd., 50th Parallel Estate Limited Partnership, Okanagan Crush Pad Winery Ltd., and Noble Ridge Vineyard and Winery Limited Partnership — all small British Columbia-based wineries that say they represent the interests of a coalition of another 99 small wineries in the province.
Artisan Ales Consulting Inc., a Calgary-based company that purchases beer from out-of-province brewers it represents, then sells the beer to wholesale purchasers, such as restaurants and retailers.
Canadian Vintners Association, which advocates on public policy initiatives to benefit the Canadian wine industry.
Association of Canadian Distillers, operating as Spirits Canada, a national, non-profit trade association representing Canadian manufacturers, marketers, exporters and importers of distilled spirits.
Canada’s National Brewers, advocates for Canada’s largest and oldest brewers, Molson and Labatt, at the provincial, federal and international levels.
Alberta Small Brewers Association, a not-for-profit organization that represents more than 50 small and independent brewers in the province.

The small B.C. wineries say Comeau’s case is the first court case that has provided an opportunity for them to address the barriers to shipping wine between provinces.

The New Brunswick Liquor Control Act provisions at issue in the Comeau case directly impact them, they say, by preventing them from shipping directly to consumers in New Brunswick.

Because of increased competition and market saturation, the wineries need to look to the rest of Canada for new markets and increase their direct to consumer sales, which are more profitable, “in order to survive,” according to Ian MacDonald, president and owner of Liquidity.

“However, interprovincial trade barriers have prevented us from doing so and are an existential threat to the entire industry,” MacDonald states in an affidavit filed with the court.

“The future financial sustainability of small wineries is at severe risk.”

Could impact Alberta subsidies

Artisan Ales says the Supreme Court’s ruling on the Comeau case could “significantly impact” its legal and financial interests.

The company challenged an Alberta subsidy program for local craft brewers last year, arguing the mark-up on out-of-province beers is discriminatory and puts them at a competitive disadvantage.

Alberta appeals trade ruling, defends rebate program for craft brewers
A panel has agreed but can’t force the government to change its policies.

“If a constitutional remedy were found to be available [through the Comeau case] in relation to policies that discriminate against interprovincial trade, Artisan Ales or another affected party could bring an action seeking to strike down the …policies,” its application states.

Cost to economy, consumer choice

The Canadian Vintners Association argues current interprovincial trade barriers come at a cost to both the economy and consumer choice.

The barriers limit the availability of Canadian wines to Canadian consumers, encouraging them to purchase foreign wines, impeding the growth of Canadian wineries and discouraging wine tourism, its application states.

“Direct to consumer wine delivery would satisfy consumer demand, help local wineries grow their business, and augment liquor sales,” the association contends.

The inconsistent legislation among provinces also makes it difficult for consumers to understand what they are legally entitled to buy and possess in their own country, according to the association.

‘Protectionism’ targeted

Spirits Canada contends the alcohol industry is “replete” with barriers to interprovincial trade. Some are the incidental consequence of governments exercising their legitimate regulatory roles, but others are “predominantly protectionist in their design or effects.”

The group cites British Columbia, Quebec and Ontario as all having preferential marketing for local wine producers.

If granted leave, Spirits Canada will argue the central concern of Section 121 is to curtail protectionism.

Canada’s National Brewers takes a similar view, contending the objective of Section 121 is to facilitate interprovincial free trade.

Since the brewers produce beer in certain provinces and distribute it in all provinces and territories, their interest in the appeal is “overwhelming,” according to president Jeff Newton.

The potential impact of the Comeau decision on them is “so great,” they would be “severely prejudiced” if the court does not hear their perspective, the application states.

Non-tariffs also costly

The Alberta Small Brewers Association argues provincial regulations across the country act as non-tariff barriers that “have the same or greater monetary effect as provincial tariff barriers would.”

They are complex and costly, affecting everything from distribution to charges for services, access points of sale and pricing, the association says.

Cannabis Culture, which also wants an opportunity to address the court, describes itself as a cannabis media and advocacy company. It says it operates cannabis lounges and either operates and licenses or allows its trademarks to be used in relation to the operation of cannabis dispensaries across Canada.

It is representing 28 other corporations, non-profits or other entities that collectively operate about 100 cannabis dispensaries, according to its application.

The Comeau decision will govern how dispensaries and licensed producers operate for the foreseeable future, the company says.

Under ‘guise of public interest’

The Canadian Chamber of Commerce, the largest business association in the country, representing more than 200,000 commerce members, and the Canadian Federation of Independent Business, which represents 109,000 members, mostly small and medium-sized businesses, are acting jointly in a request to intervene.

They contend the current interpretation of Section 121 is “unduly narrow,” and a competitive national economy requires the free flow of people, goods and services.

“Unfortunately, provincial rules and regulations impose slightly different standards that effectively serve as protectionist barriers under the guise of public interest.”

Consumer rights involved

Consumers Council of Canada says trade barriers affect consumer rights in many areas beyond alcoholic beverages, such as agricultural products, consumer services, electronic commerce, energy, financial services and housing.

The reduction or elimination of interprovincial trade barriers is one aim of the advocacy group, it says.

On the other hand, it’s also concerned with preserving the ability of provinces to legislate to protect consumers against dangerous products, misleading advertising or unscrupulous lenders.

“CCC’s goal in intervening in this appeal is to give voice to both concerns, and to encourage the Court to find a pragmatic solution.”

Shipping rules unclear

Federal Express Canada Corp. contends the Comeau decision will inevitably have repercussions for transport of a wide range of goods within Canada and directly affect its operations.

The courier company says it has already been subjected to “repeated threats” by provincial regulators related to interprovincial wine shipments and has been prosecuted by Newfoundland and Labrador for the transportation of wine from B.C. into Newfoundland.

FedEx loses bid to have costs covered by NLC in wine shipping case
A Newfoundland charge against FedEx was withdrawn before the matter got to trial, so the constitutional validity of provincial laws restricting the transport of liquor by a common carrier was never determined. FedEx says it now refrains from providing interprovincial transport of wine — despite demand.

Foreign trade often easier

The Montreal Economic Institute, an independent not-for-profit research organization, wants to argue that removing interprovincial barriers could “lead to a more prosperous country.”

President and CEO Michel Kelly-Gagnon argues the drafters of the Constitution Act of 1867 sought to “pull down” the internal barriers that restricted movement of goods.

Yet free trade agreements with other counties sometimes make it easier for foreign businesses to trade with Canada than for Canadian businesses between provinces, the application says.