A proposed wine store slated to open within a downtown Vancouver grocery store has been rejected by the city.

"The province has paved the way for us to have B.C. wine on grocery shelves," said president of the B.C. Wine Institute Miles Prodan. "For whatever reason the City of Vancouver seems to be delaying on the decision."

The Urban Fare grocery store on Alberni Street built a wine store within its premises shortly after the province announced with much fanfare that B.C. wines would be allowed on grocery store shelves.

But the wine store remains empty, despite a green light from the province.

The specialty B.C. VQA wine stores are a partnership between wineries, the grocery store, and the B.C. Wine Institute, which has 21 provincially-approved licenses it's allowed to transfer into grocery stores.

So far, the only wine store operating as such in the entire province is in the Save-on-Foods in South Surrey.

"The City of Surrey was very accommodating to make it happen and so are other municipalities throughout the province," said Prodan.

Provincial and city laws at odds

But the province's new rules conflict with the City of Vancouver's policy on how close stores can be together.

The province's rules state that specialty B.C. wine stores are exempt from a policy restricting new stores from opening within one kilometre of another liquor store, but under the City of Vancouver's laws, that restriction still applies.

The Urban Fare location is just around the corner from a B.C. Liquor Store at the corner of Bute Streets.

"The province didn't do any work with any of the municipalities around the impact of what they allowed to go forward but it's in conflict of some of our own policies and guidelines," said Vancouver City Manager Penny Ballem at a recent city council meeting.

Ballem told council members the city tried to work with Overwaitea Food Group — which owns Urban Fare — to find a way to approve the license.

"Unfortunately they just don't meet the guidelines," said Ballem. "And if we were to just push it through that would just create a whole lot of chaos in our whole approach to these issues."

She added that the city is currently reviewing its liquor bylaws in light of the province's changes.