Court ruling protects liquor monopolies

We’re told that the path to hell is paved with good intentions. On Thursday, the Supreme Court of Canada sped down this road in upholding archaic restrictions on inter-provincial trade.

Section 134(b) of New Brunswick’s Liquor Control Act makes it illegal for residents to possess large amounts of alcohol not purchased from the New Brunswick Liquor Corporation. Gerard Comeau was in violation of this law when an RCMP stakeout caught him driving back from Quebec with a trunk full of beer, resulting in a $240 fine.

Comeau could have crossed nearly any Canadian border and faced a similar penalty due to a slew of post-prohibition regulations found in every province and territory.

He claimed the Act was in violation of Section 121 of the BNA Act, 1867, which guarantees the freedom to trade across the dominion. The Fathers of Confederation intended to create a nation unhampered by tariffs, his legal team argued.

In R. v. Comeau, the Supreme Court disagreed with Comeau’s interpretation. They agreed that s. 121 prohibits any restriction on the free flow of goods across the country. But in a bout of creativity, the unanimous bench found a second interpretation.

You see, section 134(b) was never intended to restrict trade – its main purpose is to “enable public supervision of the production, movement, sale, and use of alcohol within New Brunswick…. While one effect of s. 134(b) is to impede inter-provincial trade, this effect is only incidental in light of the objective of the provincial scheme in general.”

Section 134(b) does indeed violate the constitution, but the good intention of regulating alcohol as a protective measure is within the purview of provincial rights. Because the means were not intended to cause the ends, a law that would be unconstitutional, through a literal and historical interpretation, is now not.

This justification would be unacceptable if applied in other societal contexts. Chronic gamblers never intend to lose money and drunk drivers never plan to ruin lives – yet responsibility for the end results do not magically fade away because of it.

Similarly, a reasonable person cannot separate current provincial liquor laws from their antithetical effect on free trade.

Most Canadians don’t concern themselves with jurisprudence. The bottom line for them is that beer, wine, spirits and other goods – the dairy and poultry lobbies intervened in this case to defend supply management’s trade barriers – will continue to be limited in variety and priced to hurt consumers, all under dubious pretexts.

An Ipsos poll last year, commissioned by the Montreal Economic Institute, found that 78 per cent of Canadians agree they should be allowed to bring any amount of beer or wine from one province to another. Additionally, only 15 per cent agreed state liquor monopolies should be kept in place.

A census-weighted sample of 1,103 Canadians were interviewed for the study, including 100 New Brunswickers, between Oct. 26 to Nov. 1, 2017. The margin of error was plus or minus 3.4 percentage points, 19 times out of 20.

With the legal route now closed, self-imposed trade sanctions will need to be brought down on the political level. Many opposition leaders have promised to do just that, only to change their minds after forming a government. It’s not that their morals change. The taxes and markups generated by liquor monopolies help governments to fund compulsive spending. Loosening border restrictions would threaten that revenue.

It has been estimated that Quebec, for example, loses $90 million per year from out-of-province alcohol purchases. Their interests only lie in tightening the screws on consumers. Nothing will change in the future unless voters make it happen.

Gerard Comeau’s battle brought light to unfair practices that continue to proliferate all across Canada. For this, he has done Canada a great service.

Tom Kott is a consultant at HATLEY Strategy Advisors, a Montreal-based public affairs firm.

Originally published in the Telegraph-Journal HERE.


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