Bo Vitanov of Artisan Ales recounts how Alberta’s NDP, elected in 2015, hiked imported beer prices by 525%—from 20¢/L to $1.25—via protectionist policies, violating the 1995 Agreement on Internal Trade (AIT). After losing tribunal rulings in 2017 and May 2018, they delayed compliance until December 2018, reverting to a pre-NDP tax system while costing AGLC $10–20M/year in lost sales. Craft beer prices drop by $3+ per six-pack, but the NDP’s media deflection overshadowed their policy reversal, proving small businesses can outmaneuver government overreach with legal persistence and consumer support. [Automatically generated summary]
Craft beer in Alberta is about to get a whole lot cheaper and tonight I'm joined by the woman who fought the Alberta government and won and she's saving you a bunch of money.
I'm Sheila Gunn-Reed and you're watching The Gunn Show.
We've been covering the story of how the NDP started tinkering with the liquor prices in Alberta from the very beginning.
Right after they got elected, they started enacting protectionist policies against beer imports and then they started subsidizing Alberta micro brewers every single month with Alberta tax dollars.
It was a poorly thought out plan to bolster Alberta's brewers that had the unintended consequences of harming Alberta beer importers.
The protectionist policies and tax hikes spawned trade disputes between provinces and legal challenges from Alberta small businesses against the government.
And instead of backing off and admitting that they were wrong and that they made a mistake, the NDP government persisted, even trying to punish those Alberta small businesses who dared challenge their bad policies with frivolous appeals after trade tribunal and trade tribunal ruled against the NDP's policies.
But now those small businesses have utterly defeated the NDP government, forcing the government to go back to how things were in the beginning before the NDP.
And a six-pack of beer is about to get a whole lot cheaper in Alberta in 2019.
Joining me tonight to tell her side of the story about how she fought the behemoth of government and won is Beau Vittinoff from Artisan Ales.
Joining me now from Calgary via Skype is Beau Vittinoff from Artisan Ales.
Bo, I wanted to have you on at the end of the year because you've been engaged in this ongoing David and Goliath battle with the Alberta government and you just scored yet another major victory.
Why don't you give us a Cole's notes version of your battle and then we'll talk a little bit about your victory.
Be happy to.
Hi, Sheila.
Merry Christmas.
So three years ago, almost three years ago exactly, the NDP government changed the way the beer tax or the beer markup worked.
Before that, just like pretty much every other jurisdiction in Canada, Alberta had a graduated beer tax.
So the tax that was charged on beer from really small micro breweries was substantially lower than the markup that was charged on the beer from the big guys.
And what the Alberta government did was they completely upended this.
They left a graduated beer markup for beer from Alberta, Saskatchewan, and BC because they said they were honoring the New West partnership trade agreement.
But of course, that meant they weren't honoring any other trade agreement.
We bring beer in from Belgium and Quebec.
So the markup on our beers went up 525% overnight from 20 cents a liter to $1.25.
So our products became really expensive and uncompetitive in the market.
We, along with some other agencies and breweries, contacted the government, explained what they were, you know, how this was impacting us, and basically they didn't care.
So we knew that we couldn't afford to take them to court.
So we took a different route.
We fought them through a tribunal system that's attached to the AIT, which is the Agreement on Internal Trade, which is a free trade agreement that all the provinces and the federal government of Canada signed in the mid-90s.
And so we took them to a tribunal.
They lost to us over a year ago.
They being the way they are.
In the meantime, they were also sued by Steam Whistle, who were also successful against them.
In both cases, they appealed.
So we went to appeal very early this year.
They lost to us again.
That ruling came out in, it came out in May, and they were given six months to, so the way that it works with the AIT is once they lost that, they, you know, they were done.
They had no more recourse.
And they were given six months to become compliant with the trade agreement.
And so that compliance date was November 29th.
They actually were not compliant on November 29th, but three days prior to that, they announced that they were changing the policy and they became compliant a couple of days back on basically on December 18th.
The system went back pretty much to where it was three years ago.
In fact, we, being Mike and I, the owners of Artisan Ales, while we've been fighting this, have said several times in the media when we were asked what we wanted from the government, we wanted them to go back to a graduated system, which they've done.
Fees and the Step Process00:06:27
And we also said that if because their reasoning for what they had done in the past was that Alberta beer was being treated unfairly in other jurisdictions, we had said at the time that they should spend their time fighting what they thought was wrong in other provinces through the AIT because it's really set up more for government to government.
And that's in fact what they are now going to do.
They are launching a complaint against Ontario.
So we feel fully vindicated.
It's kind of bittersweet because our business has been devastated in the meantime.
But yeah, we kicked their butts.
You know, it really was a David and Goliath story because you're just this little beer importer in Calgary and you found yourself taking on the whole of the Alberta government just for free trade, something that the provinces are supposed to do.
That's why we exist as a confederation.
Now, something else was happening in the middle of all of this.
While they were forcing a markup on imported beers, they were also cycling that money back to Alberta micro brewers and giving them a grant every single month to produce beer in Alberta, which again put you at an even greater disadvantage.
Yeah, so what happened was, and I kind of failed to mention it before, so they realized after we filed our complaint and after Steam Whistle filed for the injunction in court that they really were offside by giving, you know, special treatment to Alberta, BC, and Saskatchewan breweries.
So what they did about a year, actually less than a year after they instituted that, you know, the change that I talked about, they made a second change and they jacked up the markup of all beer to $1.25 a liter.
So where the big guys were and where everybody from outside of the New West Partnership was.
But as you mentioned, they basically set up a grant program through the Ministry of Agriculture where they were in effect getting the Alberta breweries back to the 10 cents a liter or the 15 cents a liter, wherever they were.
So we were successful in our complaint in basically saying that what you can't do directly, you also can't do indirectly.
So just because you've made it a two-step process instead of a one-step process, it really amounts to the same thing.
And obviously, the tribunal agreed with us because they ruled in our favor twice.
And then subsequently, that was reinforced in court through the Steam Whistle decision.
Yeah, they just ended that program.
I believe it was the Small Brewers Development Program, which was basically a monthly welfare check to micro brewers in Alberta with money taken from everybody else.
I mean, it's just unreal.
Now, the Alberta government tried to do something else to you.
They instituted an unconstitutional beer markup.
You appealed it in one, then you appealed it, or then they appealed it, and you won again.
But in the meantime, the Alberta government tried to put you on the hook for their legal fees, even though their law was unconstitutional.
Yeah, I mean, throughout this process, because this isn't court, when you go through the AIT, it works slightly differently.
Like, you know, in court, if you win, I think you can basically have the opposite side have to repay your legal fees.
So it doesn't work quite that way through the AIT.
The fees, the lawyers for both sides basically submit their perspective on how the fees should be allocated.
And yeah, they tried to pretty much stick us with most of the fees in the original tribunal.
But the one that was particularly ridiculous was after they lost the original complaint and filed the appeal, they basically said, even if we lose this appeal, you should stick Artisan Ales with costs from this tribunal.
Because We're not just filing a frivolous appeal, which they actually were because they had no new evidence or arguments to make.
So, yeah, it was pretty frustrating, irritating.
I could go on.
I'd call it sleazy because it sounds like the government was hoping that you would run out of money and help.
And they obviously have the deep pockets of the Alberta taxpayer to help them.
Absolutely.
I don't doubt for a moment that that was part of the approach.
And, you know, they just the fact that they've still appealed the decision with respect to steam whistle.
So they, yeah, they're, you know, they're using taxpayer money.
They don't care.
They're using when they, their representatives at the AIT are from basically an internationally known law firm.
So they're top end, very expensive lawyers.
So yeah, no expenses spared to keep fighting and, you know, try and basically just run out the clock and stomp us into the dirt.
Thank You for Saving Craft Beer00:10:01
It's true.
I think they were trying to ruin you.
Now, all this beer markup business and these tinkering with Alberta liquor laws, it's had some real consequences, unintended ones maybe, for government revenues from the AGLC, the Alberta Gaming and Liquor Commission.
That's right.
I've actually done a fairly extensive because this is my background.
I'm an accountant.
I used to kind of run financial analysis in the oil and gas industry.
So the geek in me went through the last six years worth of financial statements from the AGLC.
And basically, the AGLC year end is March 31st.
So it's really interesting if you look at what's happened since March 31st, 2015, because that's kind of the, you know, two months later the NDP took over government.
So since that time, beer volumes are down almost 10%.
Beer volumes are less than 91% of where they were on.
So on March 31st, 2018, the volumes were down to 90.9% of where they were on March 31st, 2015.
So all of this jimmying and all the money that they've spent on the grants, on lawyers, on bureaucrats, and they're actually further behind than when they started.
I did a calculation and basically if the volumes were where they were in 2015 and the markups were distributed the same way as they were in 2015, they'd be making $10 to $20 million more in beer markup than they made this last year.
Unbelievable.
You know, from a consumer standpoint, if you make something more expensive, we'll naturally buy less of it.
But I think people need to realize that The Alberta Gaming and Liquor Commission, they control the beer and booze sales in the province.
And, you know, those are government revenues at the end of the day.
So not only have they spent likely millions of dollars fighting Alberta small businesses in court, but they've also managed to cost the government anywhere from $10 to $20 million in their own revenue from liquor sales.
It is absolutely unbelievable.
Yeah, I don't actually think that anybody's kind of, or I don't know, maybe they've looked at it, but it's a little difficult to figure this stuff out because of the way that the numbers are presented, but it's the volume issue is completely obvious.
And I actually think that maybe they have realized it and that's why they've gone back to the graduated system.
And if I could, one of the things that I want to point out that I think is kind of disappointing is this win that we've had and the changes that they've made are going to make a significant difference in the price of craft beer products.
Basically, craft, a craft beer six-pack is going to go down by a good $3, maybe even more than $3 in the store once, you know, this lower price inventory carries through.
And it's really interesting to me that I think that's really significant.
And there's almost been like nothing about that in the media or the press.
And I think that the government has been very successful in announcing, you know, to me, this complaint that they're filing against Ontario is kind of like, hey, look, a squirrel over there.
And the fact that they had to completely revamp the beer markup seems to not be the predominant thing that's talked about in the media.
But we feel like we've managed to make craft beer affordable for everybody, for all consumers in this province.
And it's not just our beer, it's all craft beer.
All craft beer from, you know, eligible breweries is going to go down significantly in price.
And so, and we have said all along that that was one of our goals.
So we, you know, we feel really pretty chuffed about that.
I think you should be really proud of that.
And I think it, I mean, it's ridiculous, but it seems as though the government is pretty effective in selling it right now, or at least playing the politics of distraction that you must be a good Albertan if you're willing to spend $3 extra on a six-pack of beer.
I mean, it's crazy, but it is, it's working.
It's working because nobody is talking about the fact that you guys nearly lost your business and were dragged through legislative purgatory for three years just to save everybody a bunch of money on beer.
And like you said, make craft beer more affordable for everybody who wants to buy it.
Yeah.
So I will say that if I can, that I really want to thank Ben Grant, who was our lawyer, who represented us in these tribunals.
And I think he did a fantastic job and is maybe the main reason why we won.
And I'd also like to thank the Canadian Constitution Foundation, in particular, Derek Frum, who supported us in this endeavor.
And frankly, I really don't know that we could have soldiered on for the three years without their support.
And also to Steam Whistle for, you know, fighting the fight as well in a different venue.
Bo, how do people find out more about the tribunal decision or how do they support Artisan Ales or find out what you guys are up to?
Well, they can certainly visit our Facebook page and our website.
It's artisan-ales.com.
And we would love it if they would particularly buy our beer now that it's much more affordable because we're really a very beer geeky agency.
So we're all about representing some really incredible microbreweries.
And I'm really hoping that, you know, with these price changes, that that means that people who are interested in beer have an opportunity to really sample a much wider array of craft beer.
Well, Bo, I want to thank you for coming on the show today.
I want to thank you for fighting this fight to make beer more affordable for all Albertans in 2019.
When taxes go up, they're very, very seldom repealed or lowered.
And somehow you did manage to do that.
So I want to thank you on behalf of all Alberta beer drinkers for what you've put yourself through for the last three years.
Cheers.
We're as happy as you are.
Happier, probably.
Well, Bo, I want to thank you for coming on the show.
And I want to wish you and yours a very Merry Christmas.
Same to you, Sheila.
Thank you.
I'm going to do my best to find out exactly how much money the Alberta government spent fighting Bo in court, hiring themselves the best, most expensive lawyers to try to crush Bo and her business.
Thank goodness Bo had the support of the Canadian Constitution Foundation who took on her case because there is no way a small business owner in this Alberta economy could afford to fight with the finance minister for three long years.
In the end of it all, Bo saved her own business, but she's also saving Albertans a pile of money because we no longer have to pay those small brewers anymore government welfare.
And a bottle of craft beer just got a whole lot cheaper for the rest of us.
Well, Merry Christmas, everybody.
Thanks so much for taking the time this year to tune into the show.
I'll see everybody back here at the same time in the same place next week in 2019.