Tom Fletcher has covered BC politics and business as a journalist since 1984.VICTORIA — There’s “not a chance in Hell” American booze is going back on liquor store shelves, BC Premier David Eby insisted at the recent Council of the Federation meeting in Charlottetown. At least not until some unspecified resolution of Donald Trump’s chaotic trade war on Canada, presumably one that also ends the four-decade shakedown of Canadian lumber producers that started long before Trump was a reality TV show host.The premiers were meeting July 21, when Trump unveiled his latest round of 50% tariffs to take effect in late August, including on Canadian alcohol. That’s in response to the ban on US alcohol put in place by provincial governments in early 2025, when “elbows up” retaliation was in style. Alberta and Saskatchewan have since dropped the US booze ban, preferring a non-confrontational path to an eventual return to trade peace. There are even suggestions that provincial liquor bans may violate the Canada-US-Mexico trade agreement that Mark Carney’s government is attempting to salvage.This isn’t to defend in any way Trump’s schoolyard extraction of other countries’ lunch money. But it’s useful to understand the behaviour of premiers such as Eby. How does he still have complete authority over liquor retailing, and why is it so jealously guarded?Most people are aware of sales taxes on alcohol. In BC that’s not the usual 7% PST, but 10% on alcoholic beverages, with another 5% for GST. And that’s not where the big money is..BC, Alberta, and other provinces have allowed private retail stores but retain a monopoly on wholesale distribution, with what is rebranded as a wholesale markup. On a bottle of rum or vodka sold in BC, that markup is a whopping 124% on the first $21 per litre. On higher prices, the rate declines to 93%, then 62%, including imports and domestic products over a certain volume, with sales tax charged on that, of course. Alberta goes with a flat rate markup, $13.76 per litre for most hard liquor. There are lower rates for wine, beer, and other beverages with less alcohol content. The wholesale monopoly model has been extended to cannabis as well.BC’s liquor distribution branch was hit by an eight-week government employee strike last fall, freezing supplies to private as well as government stores. A local liquor distribution expert explained the issues on a radio show at the time, starting with the historical origin of government liquor monopolies.They came about as prohibition was lifted in the 1920s. BC and other provinces established strict state distribution, ostensibly to protect the public from the hazards of “bathtub gin” or other moonshine. Government liquor stores would check off an order from a list, bringing the purchase from a secure back room for cash. Hotel bars had to have a men’s entrance and a “ladies and escorts” entrance, with only men allowed to buy alcohol.These things changed, but what didn’t was the ironclad rule that the markup had to be paid to cover the government’s costs, you know. To this day, when a Victoria pub places an order from the popular Phillips Brewery a few kilometres away, the order is sent to an LDB warehouse in Vancouver, packaged, and shipped back, with the markup and trucking costs billed to the buyer..Cover the cost, it certainly does. In 2024, BC’s LDB sold $3.9 billion, with a gross profit of $1.7 billion and a net of $1.1 billion. Ontario, whose LDB is the biggest liquor buyer in the world, had a net profit of $2.4 billion that year, essentially a hidden tax.The US liquor ban has been a grandstanding opportunity, particularly for Eby and Ontario Premier Doug Ford. You may recall Ford’s theatrical effort to pour out a large bottle of Crown Royal to protest the European owner’s decision to consolidate distribution to a US facility to serve its largest market.This showed two things. Ford didn’t understand that larger bottles have a flow controller that slows to a trickle if you turn it upside down, and he didn’t understand that Crown Royal is made in Gimli, Manitoba.For his part, Eby took a uniquely partisan approach to the US liquor ban, applying it to “red states” only to target places like Kentucky where the state government is Republican. The BC wine industry objected to a pass being given to California, its largest foreign competitor, and the ban was soon amended to cover all US states.At their Charlottetown meeting, premiers grappled once again with freeing up interprovincial trade. Nine provinces (not Quebec) finally agreed to allow consumers to buy alcohol products directly from out-of-province producers.Naturally, all provincial markups and taxes still have to be paid.Tom Fletcher has covered BC politics and business as a journalist since 1984.tomfletcherbc@gmail.comX: @tomfletcherbc
