[F Eh Q is a feature where we answer your questions about Canadian topics. In this installment: BOOZE!]


Dear Plaidspin,

On a recent business trip to Toronto, I couldn't get over how weird Canadian liquor laws were.


I wanted to pick up some beer, only to be told that it was illegal to sell alcohol in grocery or convenience stores. There weren't even any regular liquor stores - I was told to either go to something called an LCBO, the government-owned liquor distribution store, or a place called The Beer Store where they roll the beer out for you on a conveyer belt - except it was after 5 PM on a Sunday, so both were closed, making it impossible to buy beer anywhere in the city. When I tried to buy beer again the next day, the prices were also much higher than I'm used to in the States - even swill like Bud Light was $13 for a 6-pack, and the good local beer was nearly twice that.

What's the deal, Canada? I thought you were a liberal, beer-loving democracy, and here you are with the strictest liquor laws this side of Saudi Arabia.


Sincerely,

Liquor Lover in Louisiana



Dear Liquor Lover in Louisiana,

I know this is going to sound very Canadian of me, but it's really all that I can say:

Sorry.

You've hit upon something that's fairly embarrassing for us as a country. We know, we know - our liquor laws are bizarre, unnecessarily restrictive and designed as a monopolistic government scam. It's not our fault! We still like booze a lot in Canada - just in most provinces, we make it very hard for ourselves to acquire it.


Whenever I hear people complain about how restrictive the liquor-buying laws are in their home state of Pennsylvania or Kentucky or New Jersey, I just scoff a hearty scoff. Oh, you can only buy certain types of beer in your grocery stores? If I want beer I can only buy it from either a highly-taxed government-controlled monopoly, or from an antiquated result of collusion between foreign-owned brewing conglomerates.

Laws regarding retail liquor sales are left up to the jurisdiction of individual provinces, and as you might have seen last week, I made a map breaking down liquor laws by province. Here it is one more time. Hit "Expand" to embiggen.


A few quick takeaways: Alberta, considered the Texas of Canada both politically and economically, is the only province to have fully embraced free-market economics. Everywhere else, the main source of alcohol is at government-owned retail chains, where, benefiting from a monopoly-like lack of competition, governments can jack up the retail price of booze at will and pocket the extra taxes as government revenue.


When Americans talk about Canadian healthcare being free, they never mention that the beer costs twice as much. Sure, when I inevitably need a liver transplant in my 60s I won't end up paying a nickel, but on the other hand, I've already paid enough into the province's coffers through a lifetime of liquor sales to pay for that surgery. Consider it an installment-based down-payment system.



For now, since a full discussion of liquor laws across Canada would take up a lot of your valuable time, let's focus on Canada's largest province, the one in which I'm most familiar with getting shitfaced: Ontario.


Where Did The LCBO Come From?


Ontario is fairly representative of a lot of provinces, in that liquor sales are regulated by a provincial liquor control board. In Ontario, that's the Liquor Control Board of Ontario (LCBO, pronounced by college-aged kids as the lick-bow - as in, "hey Gordie, wanna grab a two-sixer o' rye from the lick-bow and a two-liter ginger ale before the World Juniors game, bud?")

In Ontario, the government-owned LCBO operates retail outlets throughout the province, and they're the only legal place for 13-million odd Ontarians to buy liquor.


Nowadays the LCBO is more of a brandname than an actual abbreviation (in fact, they recently paid an upmarket advertising firm $500,000 to redesign their logo - an unnecessary expense, you'd think, for a company with no legal competition), but back when it was founded under the Ontario Liquor Control Act of 1927, they took the "C" for "Control" part of their name seriously.

The LCBO was created as a measured response to the temperance movement of the 1920s. Canada experimented with prohibition in a regional, off-and-on way throughout the 1920s, with powerful religious temperance movements leading the charge. (Far from the free-wheeling cosmopolitan city it is today, Toronto in the early 20th century was so buttoned-up and pious it earned the nickname "Methodist Rome.") Still, Canada's flirtations with prohibition were nowhere near as severe as the US, where the taps were turned off from 1920 until 1933.


The LCBO, then, was created as a compromise. Since total prohibition proved to be unpopular (and not very lucrative for the Canadian economy, as Canadian distillers like Seagram's, Wiser's and Canadian Club were reaping in huge profits bootlegging bottles to the States), it was repealed in favour of a centralized government monopoly that would distribute, regulate and tax all sales of alcohol in the province. The LCBO would sell beer, wine and spirits, while a separate operating body also set up in 1927, the Brewer's Retail coalition, would sell only beer.

Early on, through the 30s, 40s and 50s, the LCBO took their temperance responsibilities seriously. If you wanted to get your buzz on, you'd have to be a card-carrying LCBO member, with a passport-sized permit allowing you to purchase liquor. You'd walk into this government office-type establishment, and ask for a bottle of rum. You'd fill out your order form and they'd fetch you a bottle from the back. If they checked your membership log and you'd already had two bottles of rum that week, though, they might just stamp a big red "DRUNKARD" label on your record and refuse to serve you.


By the 60s and 70s, things had loosened up a little bit, but you still needed to sign your name each time you made a liquor purchase. That's because up until 1975, the LCBO administered its own list of known drunks that they distributed to each store. For that reason, people often signed a phony name when they bought liquor. Rumour has it that for a while in the 70s, the single biggest liquor buyer in Ontario was the head of the United Church of Canada - as a bit of a prank, people had been conspiring to use his name whenever they made an LCBO purchase.

Today, despite what seems like government promises every single year to introduce reforms, the LCBO continues to operate as a retailing behemoth across the province. Restaurants and bars can't buy booze directly from manufacturers, either - everything has to go through the LCBO, with the taxes per bottle usually costing more than the contents of the bottle.


Consider this: today, the LCBO is the largest purchaser of alcoholic beverages in the world.

Where Did The Beer Store Come From?

In the early 20th century, brewing in Canada was more of a cottage industry. Temperance advocates were on the brewers' case as prohibition in Ontario was repealed in 1927, arguing that beers shouldn't be sold in grocery stores. The government, realizing that their own Liquor Control Board stores wouldn't be able to meet the demands of a thirsty, beer-loving public, made a concession to the brewers: you can start your own store, as long as you own it.


In 1927 there were 36 brewers in Ontario, mostly small regional brands forgotten to history. In an unlikely alliance between rivals, they formed the Brewers Warehousing Ltd. (later renamed Brewers Retail Inc.), better known today as The Beer Store.


Eventually, these breweries started amalgamating as a handful of tycoons bought up smaller breweries, and by 1960, the emergent "big three" of Molson, Labatt and Carling-O'Keefe controlled 94% of beer sales in Canada. (Carling-O'Keefe is mostly a ghost these days, save for the sold-off Carling Black Label brandname still popular in foreign markets.)

As the brewing industry become more consolidated, so too did ownership shares over the Beer Store. And if you were Molson or Labatt, this was great news - not only could you control the entire supply chain from production to retail, but you could also aggressively promote your own products at the retail store, putting up big eye-catching displays for Molson Canadian and Labatt Blue while bullying small craft breweries out of shelf space. Or rather, conveyer belt space.


The conveyer belt part might be the weirdest thing about the Beer Store for Americans. If you've ever seen Strange Brew, the scene where they walk into a place just called "Beer Store" and have cases of beer sliding out from a conveyer belt isn't a joke - it's how we buy beer.

Today, ownership of the Beer Store is split between the three largest brewers in Canada - 49% owned by Molson, 49% by Labatt, and 2% by Sleeman. The Beer Store accounts for around 85% of the beer sales in Ontario, largely owing to the fact that they're the only store that can legally sell 12-packs or 24-packs (or, as every single person in Canada calls them, "two-fours") while the LCBO can only sell in 6-packs.


Practically all beer in Ontario is sold by a monopoly owned by three massive brewing companies. Already, if you're a fan of craft or foreign beer, you can see how this is a problem.

Now, it would be one thing if this were a protectionist scheme to prop up Canadian breweries, but the owners of the Beer Store aren't even Canadian-owned anymore.




Labatt is owned by the Belgian/Brazilian mega-conglomerate Anheuser-Busch-InBev. Molson merged with Coors in 2005. And in 2006, Sleeman was bought out by Japanese brand Sapporo.

And that's where we stand today. Beer for 13 million Ontarians is controlled by a restrictive monopoly that bullies small Canadian-owned breweries for shelf space, all while being owned by a cartel of Belgian/Brazilian/American/Japanese interests.


In Short, The Whole System's Fucked.

Unless you're lucky enough to live close to an actual winery or brewery where you can buy products on-site (although prices are still subject to government regulation), you've got 3 places to buy booze in Ontario.


1. The LCBO, which is fucked. It's one thing to be a government monopoly, but here we have a government monopoly that does its best to screw small local breweries and wineries. A common complaint from manufacturers is that the LCBO asks for massive quantities of products at a rock-bottom prices - since they're expected to sell a fairly uniform selection with uniform prices everywhere from Ottawa on one side of the province to Dryden on the other (just for a sense of scale, it would be shorter to drive from New York City to Memphis, TN than it would be from Dryden to Ottawa), they can squeeze a winery for a shipment of 50,000 bottles at $8 a pop, only to retail them for $15 across the province and pocket the difference.

That's one of the reasons why things have been very slow to change - even though we all agree the LCBO's an antiquated relic of a bygone era, it's also a cash cow, reaping in $2.5 billion per year for the province's coffers. Even still, economists say that the government could reap in even more money if they kept taxing bottles but let private retailers sell booze.


Not to mention the fact that LCBOs close at 9 PM (or in some cases 10 PM) every day, except on Sunday, where they close at 5. (In fact, it was only in 1985 that the Lord's Day Act of 1906 was fully revoked in Canada, which had previously banned all commerce on Sundays.) All LCBOs are also closed on provincial holidays. If you need some liquor and it's 5:01 PM on a Sunday, or, say, the third Monday in February, your options are to either drive 3 hours to Buffalo or get fucked up on Listerine.


Calling the LCBO "socialist" would do a disservice to the very liberal liquor retailing laws of Cuba and China.

2. The Wine Rack/Wine Shop, which aren't great. A couple Canadian winery conglomerates are allowed to run their own retail chains. The Wine Rack is owned by Constellation Brands (distributors of Jackson-Triggs, Iniskillin, and a few other Canadian wines) and the Wine Shop is owned by Peller winery, and both chains were given an exemption from the LCBO monopoly as long as they only sell their own wines. The selection isn't great, the prices are still higher than in the US, and the stores still close at 10. Still, if you just want to drink shitty Ontario red wine, at least there's a backup option.


3. The Beer Store, which is super fucked. At least the LCBO is, at the end of the day, only evil in a benign-government-bureaucracy sort of way. The Beer Store is evil in a way that only a cold-blooded multinational syndicate can be.

A lot of people hate the Beer Store, but even more people would hate it if they knew who owned it. (In a survey, only around 10% of Ontarians knew that Molson/Labatt/Sleeman owned the Beer Store, and even less know that all 3 are now foreign-owned.) In response to increasing demands to loosen beer laws, either by letting convenience stores sell beer or letting the LCBO sell 12/24-packs, the Beer Store's dug their heels so far into the ground that they've just started flinging around cartoonish, crazy accusations.


Last year they formed something called "Ontario Beer Facts", a lobbying group funded by the Beer Store to brainwash people into thinking that convenience stores are evil and suspicious. Here's a TV ad that Ontario Beer Facts put out:

Look at that evil convenience store clerk! "Have fun tonight, boys!" [OMINOUS MUSICAL STING.] Thank God the Beer Store's out here, thinking of The Children.


Alright, how else can we loosen the laws a bit? Recently, the province discussed a new law that would allow the LCBO to compete directly with the Beer Store by selling 12-packs. The Beer Store's response?


That's right - the Beer Store would respond to increased competition by raising their prices. This is not how basic economics work! This is an entitled, monopolistic line of thinking, designed as a scare tactic.

If the LCBO wanted to sell 12-packs, the Beer Store, if they are as efficient and privatized as they claim, should be able to compete by lowering prices. If Taco Bell decided they wanted to start selling hamburgers, the response from McDonald's wouldn't be to cry poor and warn customers that the price of a Big Mac would go up.


Fuck the Beer Store. Fuck the fact that the myriad of great craft brewers in Ontario can't legally retail their products without going through a supply chain owned by their largest direct competitors.

Again, this is all I can say to you, visitors to Ontario:

Sorry.