The Decibel - How alcohol sales explain Canada’s internal trade problem

Episode Date: June 3, 2026

Interprovincial trade within Canada is complicated. Existing barriers mean that many goods, like alcohol, often can’t be sold across provincial and territorial lines. Prime Minister Mark Carney has been pushing for ‘one Canadian economy’ in the wake of attempts to diversify away from the U.S. Opening up interprovincial alcohol sales, especially direct to consumer sales, have been a litmus test for this vision. But last week, the provinces and territories missed the deadline for an agreement on reducing those barriers.  Jason Kirby is a staff reporter for The Globe’s Report on Business. He’s on the show to walk us through how alcohol sales work in Canada, what the barriers are preventing interprovincial trade and what it means that Canada hasn’t been able to resolve this issue.  Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

If you walk around your local liquor store, like the LCBO in Ontario or the BCL and British Columbia, you'll see wines from France, South Africa, Italy, whiskey from Ireland, Japan, or local distilleries. What you're not likely to see is bottles from other provinces. And if you want to order alcohol yourself from a producer in another province, you might actually be breaking the law. That's because we have a complicated system in Canada that means a lot of goods, including alcohol, often can't be sold across provincial or territorial boundaries. This all comes back to interprovincial trade and the many barriers that exist between provinces and territories. Canada has been trying to move away from economic dependence on the U.S.,

and politicians have been trying to make it easier to sell within Canada. Alcohol sales, especially ones going directly to consumers, were supposed to be a bit of a litmus test for Prime Minister Mark Carney's vision of having one Canadian economy. But the provinces and territories missed their deadline for an agreement over the weekend. Today we have Jason Kirby on the show. He's a staff reporter for the Globe's report on business. He'll explain how alcohol sales work in Canada,

why it's been so hard to get bottles moving across the country, and what it means for our economy, that governments haven't been able to solve this one small issue around interprovincial trade. I'm Cheryl Sutherland, and this is the decibel from The Globe and Mail. Hi, Jason, welcome back to the show. Hi, thanks for having me on. So I want to start pretty basic and talk about how exactly alcohol sales work here in Canada. Yeah, I mean, it's extremely fragmented.

It's a provincial thing. It's regulated by each province, the provincial liquor boards are kind of the gatekeepers to what gets sold in each province. They decide what gets put on. store shelves and really what crosses into the province from the next province over, if anything. And so, as you pointed out in the intro, it's why you go in and you often can't find any BC if you're in Ontario. You can't find easy access to BC wine or Nova Scotia wine.

All the provinces do this, but in Ontario, you know, there are markups that the LCBO will put on those imports from other provinces. And so you end up with a situation where some people, I've talked to have said, it's easier for me to sell if I'm in BC as a winery to sell to the U.S. than it is to sell to Ontario. That's fascinating. And also, I'm sure very frustrating for a lot of these distilleries and winemakers across the country. What is it like, though, trying to sell in other parts of the country? Like, if you're a winery in BC, for instance, what is it like trying to sell your wine in Ontario? Like, what kind of hoops do you have to jump through? Sure. Well, I mean, if you're talking first just about getting on to the store.

You have to get the LCBO to agree to put you on store shelves. You have to be big enough to attract their attention for them to make one of those big bulk purchases. You're going to have to make sure that your product meets the various labeling requirements in different provinces. You might have to do lab tests and things like that to just ensure that it meets provincial requirements or quality standards. And so it's extremely fragmented. And it almost treats the provinces like they're foreign countries, except that foreign countries sometimes obviously have easier access to selling their products in Canada. And so that's kind of like at the store level, you know, what this deadline that was missed

had to do with kind of the direct-to-consumer wine sales or wine and beer and spirits. And basically that would be a situation where someone in BC, you know, has some wine that someone in Ontario would like to buy. they can go on that winery's website, make the order. But really in the past, in order to buy from another province, you would have to go through the LCBO and put in that request through them if you as an individual consumer wanted to, you know, import something that wasn't already approved and on store shelves. And then there would be a big markup or a fee on top of that, you know, in some cases, like 70% that you'd be facing. So it just made it really impossible, whether it's the kind of the wholesale alcohol sales or even just these individual purchases, you know, if you just wanted to buy a few bottles from a winery in Nova Scotia or British Columbia. So this direct-to-consumer purchasing of wines or just spirits, for example, if you were to do that, is that legal?

You know, it depends on which province you're in. But, you know, if you're in Manitoba, someone in Manitoba for quite a number. of years has been able to import alcohol directly to them, order it from another province and have it brought in. But for most provinces, it is illegal. You'd be kind of like flouting the law if you were to do this, whether you're a producer shipping it into another province. And Ontario is an example of that. They have specific regulation that says you can't be in possession of alcohol that has not been purchased or are brought into the province through kind of an authorized channel, the LCBO or, you know, it's the same in almost all provinces. There are exceptions. There are exceptions

to this in March, Nova Scotia and Ontario signed a bilateral deal on beer, wine, and spirits. British Columbia and Nova Scotia allow Canadian-made wine from all other provinces, but, you know, BC limits spirits shipments except from Saskatchewan, Alberta allows BC wine only, Saskatchewan lets in shipments of wine and spirits from BC only. So it's this real fragmented patchwork that consumers are dealing with. But, you know, I spoke with one of winery owner in BC, we're on Quebec. And he won an award for one of his wines last year, woke up. There was a whole bunch of orders coming in from Ontario. People wanted to try this wine. He just went ahead and he just shipped it. And technically, that makes him an outlaw. You're breaking those rules. Now,

he just went ahead and did it. And people in Ontario got that wine. But technically that is illegal. this whole move on DTC, direct to consumer alcohol, was to basically bring that into the realm of the legal and to encourage more of that because, frankly, Canadians consume very little domestic. You know, domestic wine only accounts for like a quarter of the wine consumed in Canada, whereas if you go to the United States, it's like 75% of the wine that Americans consume is American wine. And if you go to France, it's like 90% or 85% or something like that. And so one of the reasons is that as a wine producer, you're basically limited to your province. You can't sell to anywhere else. And one of the hopes was that DTC would allow those smaller players to kind of be able to, where possible, increase their sales, just set the margin and get those extra consumers and other parts of the country excited about them. And then maybe that's a stepping stone to getting onto the actual store shelves.

So this, we're talking about direct-to-consumer purchases and how it, depending on where you're at, but most of the places it's still illegal to do this. But how common is it for consumers to buy directly from producers? That's the funny thing. It's not really all that common. We're not talking about a really big market that would suddenly threaten the monopolies of the liquor boards. And, you know, like the liquor boards want to have got control over what comes into the province because then they get to charge fees on it, big hefty markups.

And, you know, and then they'll say that money gets given to the province that goes to support programs. and things like that. So that's kind of the argument that they make for maintaining the status quo. But it's really a small amount of alcohol that would be crossing the border because it's expensive to ship a crate of wine, you know, across the province. It's not cheap, you know, but even though it's not cheap, there are certain circumstances where producers in one province and consumers in another province kind of want to get together. And there are people who do want to, are willing to pay that premium.

for that experience because they want those bottles of wine or that, you know, boutique distillery from out west or in Nova Scotia or wherever. And we just can't do that at this point. Given though that this is not a particularly common practice right now, why is this an important issue when it comes to interprovincial trade? It's really a symbolic one. Alcohol has always had this symbolic place in trade discussions. Even though it's a small amount, going back quite a number of years, there were situations of people crossing the border with like a case of craft brewery beer from one province to another and then being arrested.

And, you know, cases like that went all the way up to the Supreme Court. It's a very symbolic thing. So to be able to just tear down these barriers that are kind of meaningless at this point and don't do anything would be just like that step in the direction, that we're trying to go in a country of reducing internal trade barriers and being able to, you know, chalk up a simple win that really doesn't cost anybody anything. It would be a symbolic win. And it's why it got so much attention. Okay, we're really finally going to do this. And then kind of a year ago, the provinces signed this memorandum of understanding saying that, you know, by May they would have some sort of agreement for direct to consumer sales.

And then lo and behold, here we are in June, May came and went. So there were a couple of small bilateral agreements made, but nothing comprehensive like what was envisioned at the outset. Okay. So this was meant to be a symbol of here we're trying to do something on interprovincial trade and we're making progress. And yet it's not, we're not seeing this progress yet. I'm curious. So this is a big question. But why is it like this?

Like why can't you generally buy alcohol from other parts of the country? And I mean, more broadly, like why do we have? these rules around interprovincial trade. A big part of it continues to be just protectionism of the local market. There's bureaucracy involved. There's the sense of wanting to protect consumers and not sure what you'd be protecting them from. But in the name of protecting consumers, you're also protecting your local winery in your,

you know, the idea, I guess, being that, oh, no, people will stop drinking wine in my province in Ontario, if suddenly they've got access to wine in BC. I don't think any of the people in the industry are advocating for this, but this seems to be the mindset that governments have and the liquor boards have. It's certainly the liquor boards, again, wanting to hold on to that control that they have, a monopoly, basically, of what comes into the province, alcohol-wise, and being able to take their pound of flesh. So it's a mix of that and kind of the protectionism of, of, of, you know, of the protectionism of

of local sectors. We'll be right back. Let's talk about trade across provinces more broadly. What are the biggest barriers? Like, how big of a problem is this in Canada? Yeah, you start hearing a lot of different numbers get thrown around that anywhere from $90 billion to $200 billion a year is the cost of these internal trade barriers. So there are things like regulatory red tape, labor mobility restrictions, government

procurement rules, licensing standards, making it difficult for somebody in one province to move to another province and bring their certification, their occupational certification with them. You know, it adds up. You know, there was, I think it was a 2017 Statscan study that kind of estimated that Canadians could pay at least 7% more for certain consumer goods than they would otherwise as a result of these internal barriers. So it all just starts to add up. So you said when it comes to alcohol, it's about protectionism, right? That's kind of why, or at least this is kind of the reasoning that some of the provinces are putting it forward. Is this the same thing when it comes to other issues? Like when we talk about labor, also food, like are these the same reasons? Is it protectionism?

I think it generally is. Food is another big one. Food is a really big one. And, you know, in November there was a mutual recognition of consumer goods agreement signed. And it basically said that if a. consumer good is available for sale in one province and meets the regulatory standards for that province, then there should be no additional regulatory burden for that product in another province to be sold. But there was a big carve out of both alcohol and food. And there are certain exceptions that might exist between provinces where they don't want certain items sold in terms of food or alcohol. But for the most part, there's not really a lot of food products being.

sold anywhere in Canada in any province that pose any deathly threat to anybody else in another province that could even wildly be justified, used as justification for blocking that product from being sold elsewhere in the country. Ultimately, you know, the federal government can say we want to get rid of interprovincial trade barriers, but all of these real substantive barriers are in place because of the province and would require each province to negotiate with every other problem. And so you need however many memorandums of understanding between, you know, Ontario and Quebec and then Ontario, New Brunswick and reciprocal agreements.

The tale is oldest time. It is. And it's just, you know, with so many other things going on, you know, it seemed like a year ago that there was this, there was enough of a push because of Trump that there was momentum, but it does feel like that momentum is kind of stalled out. Yeah. Yeah. On that.

So this has been a big issue since U.S. President Donald Trump. came back into office and launched a tariff war and threatened to make Canada the 51st state, as we all remember. And there's been all this talk among politicians about fixing interprovincial trade to become less reliant on the U.S., right? What has happened to reduce these barriers? There have been some progress. Ottawa kind of over the last couple of years has basically removed all the barriers to internal trade that were within its jurisdiction. And you have also started to see some bilateral agreements. Ontario signed reciprocal MOUs with most provinces on labor mobility and allowing you to transfer certification for at least non-health care occupations.

So the federal government has done for its parts quite a number of things in removing some of those barriers. The problem is its barriers were never the real barriers to internal trade. It's the mishmash of provincial regulations and red tape and things like that that are the real barriers. And that's where we've we've not seen nearly as much progress. You know, you kind of saw that frustration from Dominic LeBlanc, the minister responsible for internal trade. On Friday, he kind of like put out this statement when it was clear that the provinces weren't going to meet their May deadline for direct-to-consumer alcohol sales. basically said, hey, we've done all we can. This is certain provinces. He didn't name the provinces that are kind of dragging their heels on this, but they want to frame it that we've done

everything we can and, you know, it's up to the provinces now. I don't think that's entirely the case. There's certainly more things that the federal government can do and they're going to have to step up and play a more assertive role in jawboning and guiding the provinces, I think, to some of these agreements because they're not going to get there on their own. Do we have any understanding as to why there was no movement, like why they blew past this deadline? Because it does seem like at one point there was a lot of excitement to do this and then all of a sudden blowing past the deadline. Totally. And it's funny.

I reached out to several provinces and they all kind of came back with the same response saying, well, we're going to, our province is going to continue to be a leader on this. Every province saying that they're a leader on direct-to-consumer alcohol sales. And then, yeah, here we are with no real agreements. I mean, Ontario and Nova Scotia reached their bilateral agreement that would allow for consumers in either province to buy from the other, for beer and spirits and wine. Even that agreement, which is seen by some in the wine industry, at least as a model for other provinces. Even that one's a little, it's got imbalances in it. Can you explain how it works exactly? Sure.

I mean, so if you're a producer in Nova Scotia and you want to sell to individuals, ship to individuals and onto. Ontario, you have to register with the LCBO. You fill in paperwork. You know, the LCBO will, I guess, has to go through a process. And they've approved, you know, there's about 15, I think, or so wineries, for instance, right now in Nova Scotia that have been approved. And each quarter, basically that winery has to report to the LCBO, even if they don't actually have any sales, They have to submit a report saying how many they sold, what they sold, and to remit the fees, both taxes, provincial taxes and the fees that LCBO applies to this because of LCBO, even though it doesn't have any role in this really other than accepting paperwork, they're managing to say, you know, we're going to extract some money out of this. Yeah, so the LCBO is involved even though it's direct to consumer. Even though it's direct to consumer, they're still involved and they still extract their pound of flesh.

Same with the Nova Scotia liquor board. It works the other way as well. It's the exact same. What's different, though, interestingly, Nova Scotia applies like a 5% flat markup or fee regardless of the type of alcohol, whereas the LCBO is implemented kind of like this tiered thing of 1.6% fee for wine, but up to like 32% for. percent for spirits. That's huge. It's huge. I spoke to someone in the craft distillery industry and he was like, who in Nova

Scotia signed this deal that would basically, you know, that's not free trade, that's tariff trade. Even in this agreement that is supposed to be the model for other provinces to follow, you've got kind of like liquor monopolies and liquor boards getting involved and extracting their pound of flesh. The irony is a lot of wineries. and other producers just go ahead and ship stuff anyways. Ron Kuback out at Lightning Rock Winery in BC called it like the dirty little secret of the industry,

that wineries ship across provincial borders all the time. Again, it's not huge numbers, but it happens. All of that is actually not incurring any fees by bringing this into the light and making it legal. Now you've got the liquor board saying, okay, well, now we can start getting a slice of this ourselves. So even as this becomes kind of ideally a legal practice of direct-to-consumer, LCBO, and the others, it's not just them, are making sure that they're in there getting a little bit of the slice of things that is just going to make it that much harder. You know, you're already as a consumer in one province trying to buy from another province facing very steep shipping fees. And now on top of that, you know, there would be the taxes and then these provincial liquor monopoly fees on top of all that.

as well. So really, you know, are you getting any further ahead by having that's structured like that? Probably not. What does it say to you that the provincial and territorial governments haven't been able to sort out this, you know, this small issue of direct-to-consumer alcohol sales? Like, what does that mean for the other more significant trade barriers? The actual significant things that are going to move the economic needle. It says that it's much easier to talk about free trade internal free trade than it is to implement it. You can have premiers doing handshakes and then it goes down to the next level of the bureaucracy trying to implement this. And there's entrenched, you know, fiefdoms and nobody wanting to give up any cloud or potential fees and markups and things like that.

So it just speaks to how difficult this kind of like one Canadian economy mission that the federal government is striving for. I mean, it's been more than a year since the big elbows up movement. And there was a lot of momentum, I think, a lot of kind of pride about bringing Canadian products and breaking down these interprovincial trade barriers. But do you think we might have missed the window of momentum around reducing the trade barriers in Canada? I worry that we have missed a little bit of that momentum. That push that was really strong does seem to have kind of gone away.

We don't hear about it being discussed nearly as much as it was before. On the alcohol front, interestingly, we still, you know, I said earlier that alcohol has this symbolic role in trade. And we see that even with the Canada-U.S. situation, you know, as soon as Trump slapped on his tariffs and started talking about seizing Canada and making us a 51st state, the Canadian liquor boards and provincial liquor boards took alcohol off, U.S. alcohol off the shells. And it's still off. So on the one hand, you know, that should be creating a vacuum, really, that other provinces should be able to fill into.

Space for other provinces on the shelves. And we've not done that. That has not happened. So here we are, you know, all these perfect circumstances in place, perfect storm of circumstances. And yet we can't even harvest the lowest hanging fruit of direct-to-consumer sales. So really, what does that say about our ability to get this done? Jason, thank you so much. This has been a reality check and I really appreciate it. Thank you very much.

That was Jason Kirby, a staff reporter for the Globe's Report on Business. That's it for today. I'm Cheryl Sutherland. Cynthia Jimenez is our associate producer and intern. Ali Graham mixed this episode. Our producers are Madeline White, Rachel Levy McLaughlin and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer and Angela Pichekyllis. Benza is our executive editor. Thanks so much for listening.