As the Alberta-BC wine dispute drags on, wine merchants and retailers are outraged.

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The dispute between BC wineries and the Alberta government is heating up as it enters its fifth calendar month, impacting bottom lines for some winemakers and retailers and limiting Albertans' access to certain specialty products.

In January, Alberta Gaming, Liquor and Cannabis told B.C.'s wineries that its direct-to-consumer sales bypass regular taxation channels and violate provincial legislation. Wineries have been told to plug sales and shipments to Albertans' doorsteps, or the AGLC will refuse wholesale shipments and stop stocking products purchased by local retailers and restaurants.

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The crisis has forced the hand of many producers, who are struggling through many tough years, including Dirty Laundry Vineyard in Summerland, B.C.

Winery Vice President Paul Sowler said: “Given other things that have been going on in the industry this year – we've really had zero production – the industry is trying to figure out how we're going to stay in business.” – sales and marketing president. “To add one more thing like that. . . it's another punch in the boxing match.”

According to Sawler, Dirty Laundry's direct sales are largely based on wine clubs — a popular business model for small wineries where customers sign up to be sent small-batch, craft wines at regular intervals. Those who join the club are mostly tourists who discover the winery while vacationing in the Okanagan, many of them from Alberta.

Dirty Laundry ended the program after the AGLC ultimatum, but Sauler said selling directly to Albertans is a significant part of the vineyard's business, and its approach may change if the issue drags on.

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“It really affected us,” Soler said. “It could bring us about a quarter of a million dollars in sales a year.”

AGLC said dDirect-to-consumer shipping has never been allowed in Alberta's liquor model.

Direct selling creates a “double standard”: the retailer

Calgary wine retailer Tax-free direct sales from BC wineries limit buying at a local store, often at unbeatable prices. Andrew Ferguson, owner of the Kensington Wine Market, says: “The middleman” allows wineries to sell their wines at a lower price than they would in local liquor stores.

“Consumers can buy wine from BC wineries at wholesale prices,” he said, adding that this is a problem. “A bit of a double standard.”

“(Wineries) want to see their wine on restaurant lists, so they wait for importers to work hard and get on restaurant lists, but then they basically take out retail by shipping directly around them. . . We are mostly being bypassed.”

According to Ferguson, claims of the disaster as a total boycott of the Alberta government are incorrect; his store and others still stock several offerings from smaller and larger BC wineries.

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“It's not as simple as Alberta rejecting B.C.,” he said. “I think there are issues like free trade between the provinces and fairness in terms of what does BC do for Alberta businesses to level the playing field if BC wineries can deliver here?”

Wineries 'happy to collect and pay tax'

Al Hudek, co-lawyer BC Wine Growers Industry Group, Alberta says the impact of direct sales to retailers is limited. If full bloom is allowed, it would account for only three percent of the province's wine sales, he said.

However, for low-volume, high-priced products, direct sales is the best business model for many wineries, Hudek said.

“Public warehouses don't work well as a way to transport wines because they're too specialized,” he said. “It is inefficient to send them through the public warehouse mode and through the retail mode.”

BC wineries are open to paying Alberta tax on direct-to-consumer sales, but there is currently no system in place to collect it. Soler says the industry is pushing the Alberta government to introduce a tax regime that would allow direct sales to consumers.

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“We are happy to collect and pay taxes, but there is no mechanism to do so,” he said.

Hudek's service drew attention to a mandate letter from Alberta and Red Tape Reduction Minister Dale Nally, whose ministry oversees the AGLC. The letter outlines priorities for increasing state revenues from the AGLC and removing its bureaucratic hurdles — both of which Gudek says could be accomplished by taxing direct sales instead of banning them.

“Get rid of all the red tape; establish a tax collection procedure,” said Hudek. “(Nally's) has now got the worst of both worlds, because it collects no tax on direct-to-consumer shipments, and by blocking wholesale shipments, it loses tax revenue it would otherwise receive.”

If the issue isn't resolved, Hudek said the wine industry has a case to challenge the AGLC's decision in court and could end up going to trial.

“The day the wineries received the letter — without detailing what they had violated and without an opportunity to respond — they imposed an immediate sanction that they had no authority to impose,” he said. “If we can't get more traction politically, we may have to go down this road.”

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The provincial governments of Alberta and BC are still negotiating

BC Public Safety Minister Mike Farnworth said Alberta's measures have hampered Albertans' ability to enjoy BC wine, and he said he “stands in support of our province's winemakers.”

“I've asked (Nally's) staff and our staff to sit down and find a way to resolve this issue, and I look forward to that,” Farnworth said. “As we continue to protect BC's interests, our government has built constructive relationships with provinces and territories across the country. Our relationship with Alberta is important.”

Alberta's government says it's working with its western neighbor to improve alcohol trade.

“Alberta is open to further discussions and is optimistic that we can find opportunities that are beneficial and work for both provinces,” Nally's office said in a written statement.

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