May 8, 2015 | by Adam Allouba Print

The Liquor Control Board of Ontario (LCBO) controls much of the province’s beer market, sharing its monopoly with a single industry-owned chain.

Ontario’s beer drinkers have something to toast. For the first time since prohibition was repealed, the Canadian province’s government is liberalizing the market for suds. The changes are certainly a step in the right direction, but they do not go nearly far enough. Rather than applaud politicians for tweaking a deeply flawed system, proponents of real reform should instead question whether the sale of alcohol needs to be regulated in such a complex and intrusive manner.

There is vast room for improvement over Ontario’s current liquor regulations. By law, a privately-owned chain, The Beer Store (TBS), holds a near-monopoly on beer sales while a state-owned retailer, the Liquor Control Board of Ontario (LCBO), controls the lion’s share of the market for wine and spirits. Minimum prices are fixed by regulation, and not a drop of alcohol is available in either grocery or convenience stores. In sum, Ontario has among the most tightly regulated alcohol markets in the Western world. Against that backdrop, the government’s recent proposals are a breath of fresh air. Upon closer inspection, though, the changes are smaller than they appear.

Grocery stores will finally be allowed to stock beer, but they cannot sell anything larger than a six-pack. All products must be sold in a designated section of the store, during government-mandated hours, by certified staff who have received “social responsibility” training. Price competition will remain illegal. No more than 450 supermarkets will be authorized to sell beer, and their annual sales will be capped at $1 million each (by comparison, TBS has annual sales of $2.5 billion). For reasons unclear, sales of wine and spirits will remain off-limits — although the government’s website does mention that it is “examining how to modernize” their sale.

The strangest innovation is the creation of the office of the Beer Ombudsman, a TBS appointee who would monitor complaints from brewers and customers. The idea has been widely panned (one observer described it as “the most Canadian job ever”), but it epitomizes the puzzling nature of the reforms. Why grocery stores cannot sell 12-packs or two-fours, why they need to cut off sales at $1 million, why convenience stores are excluded from the scheme, and why the beer industry requires an ombudsman to handle feedback are all questions left unaddressed. Given the arbitrary nature of the limits, it’s as though the need for rules is so deeply ingrained in the minds of Ontario’s policymakers that although they can understand liberalizing the system, they cannot imagine simplifying it.

Ontario’s extensive alcohol regulation is all the more striking because other provinces have long had less restrictive controls. Neighbouring Quebec, for instance, has allowed beer and wine sales in grocery and convenience stores for many years. In 1993, Alberta went even further when it privatized liquor retailing, warehousing, and distribution — after which the number of stores has doubled and product selection skyrocketed ninefold.

TBS and the LCBO justify their monopoly by claiming that they act in a more socially responsible manner than their competitors would in a free market, but neither Quebec nor Alberta shows any sign of grave social instability as compared to Ontario. Going a step further, economist Anthony Davies, in his work on American liquor laws, has found no evidence that states with less restrictive laws have more alcohol-related problems — underage drinking, alcoholism, drunk driving, etc. — than those with tighter controls. States that privatized their liquor markets also did not appear to experience notable adverse consequences.

The freedom to buy and sell alcohol may seem relatively trivial, but the arguments against liberalization are ultimately founded on a conviction that people cannot be trusted to make responsible decisions about what they put in their bodies. That is a notion that needs to be vigorously challenged, because there is no limit to the kinds of restrictions on individual liberties that such an idea could justify.

Instead of reforming its labyrinth of regulations, the Ontario government should bring its legislation closer in line with other North American jurisdictions and massively deregulate the purchase and sale of alcohol. There is no need to treat the sale of alcohol at the corner store as though it were a novel and risky experiment liable to tear the province’s social fabric asunder. The experience both elsewhere in Canada and south of the border provides overwhelming evidence that Ontario’s liquor laws could be rolled back a great deal further without cause for concern.