The Notley government will have to revamp its beer markup regime after it was declared unconstitutional on Tuesday.
The Court of Queen’s Bench sided with two breweries — Steam Whistle in Toronto and Great Western in Saskatoon — that argued that Alberta’s policy discriminated against out-of-province beer, violating the Constitution.
The decision comes two years after Alberta raised beer markups at the same time that it began offering a rebate program for small Alberta breweries.
“The grant program being repealed — it’s substantial,” said Robert Oeming, the founder of Edmonton-based Polar Park Brewing.
For Oeming, the court decision means a lot of uncertainty for his business and its growth. Polar Park is currently under construction with hopes of opening late this summer.
“I think it’s going to filter through on the actual price of beer if we’re not able to receive some sort of benefit,” he said.
“It doesn’t feel good when I would tell an investor just two weeks ago that we got this grant program and the government has our back entirely and now, it’s looking like they do have our back but we’re going to have to change the program content.”
Critics argued the province’s markups were effectively the same as putting tariffs on out-of-province products.
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“We are pleased the court ruled in favour of free and open trade between provinces,” said Michael Brennan, president and CEO of Great Western Brewing Company.
“This is good news for our brewery, it’s good news for our employees and it’s good news for Alberta consumers who will ultimately benefit from lower beer prices and greater selection.”
READ MORE: Change in Alberta beer markup ‘bad news’ for Saskatchewan brewers
The province tried to argue in court that the two policies should be considered separately, but the judge found that the markup and the grant program “cannot be considered in isolation from one another,” especially considering they were both announced on the same day in the same government news release.
“The 2016 (markup) creates a trade barrier that in ‘essence and purpose’ relates to a provincial border,” reads the decision. “Therefore it offends s. 121 of the Constitution.”
This is the second recent setback for the province’s beer policy, following the release of a trade panel decision a week ago that found Alberta violated interprovincial trade rules. Both rulings give the province six months to come back with a new regime.
READ MORE: Trade panel ruling slams Alberta’s craft beer subsidy program
Finance Minister Joe Ceci said he is still reviewing the decision and will consider his options.
“We know that other provinces put barriers in place for our beer and alcohol getting into those provinces with tasting panels and onerous application processes… and limited shelf space,” he said.
“That’s not fair. That’s not right. We’re going to be taking a look at that to see if we want to challenge those provinces and their discriminatory actions.”
“I hear from the industry and they say they cannot get their beer labels into other provinces, even as close as B.C. and Saskatchewan.”
Oeming said it’s easier to get Polar Park beer south of the border than to other provinces.
“There’s all these protectionist views towards our beer making it out of the province,” he said.
He vows to keep going, “trucking ahead” and trusts Ceci to build something equal to the grant program.
Ceci said Alberta will take its time to revise the program to continue “having the backs of brewers in this province.”
“We believe that diversification is critical and they’re part of that whole initiative to see Alberta get off the oil and gas roller coaster and diversify its industries.”
Critics say the policies effectively hiked beer prices across the board: higher markups on out-of-province beer mean retailers have to raise sticker prices to keep up, and that gives local breweries room to increase their margins and still beat their competitors.
The judge has ordered the province to pay Steam Whistle and Great Western more than $2 million in restitution.
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