With the recent ordered repeal of the Alberta Small Brewers Development Grant (ASBDG) there has been a lot of comments made that tax-payer dollar shouldn't go to support small local breweries. We couldn't agree with you more. The thing is though, it doesn't.
The Alberta Small Brewer's Development Grant is essentially a tax refund disguised as a grant -- which is probably why it was repealed. How it worked is that brewers pay a mark-up to the Alberta Government based on how much beer they sell in a given month. When we opened our brewery the tax structure was stepped to give us small brewers a little bit of an advantage: we paid $0.10/L while larger producers who enjoy greater economy of scale paid around $1.25/L. In 2016 it was ruled that the stepped structure was unfair and created a trade barrier, so the government created a level tax for all brewers regardless of size at $1.25/L.
Picture for a moment, you are a small business owner in your first years of operations. Your costs are high, your revenues are depressingly low, and the government announces that your taxes are going up 1150%. Yeah, we basically had a heart-attack too. We were stressed.
Instead of killing our business, the government then develops the ASBDG which will essentially provide a tax refund back to your original tax rate. That's awesome! It's going to come in once a month and be based entirely off the last month's sales. So the more beer you sell, the more you pay, but also the more you get back. That's fine, it's a tax refund, and it means that while it will hurt for 29 days, you will get a lump-sum payment each month that makes you flush with cash and you don't have to pass that tax increase along to your lovely and much-appreciated customers. While some breweries took the opportunity of the tax increase to raise the prices on their beer, we kept our prices the same knowing that the tax refund would make us whole again and was just a few weeks away. The province has been operating this way for almost 2 years when, this week, the grant was deemed unconstitutional and unfair. We find this ruling to be the epitome of ironic comedy and here is why:
1. Alberta enjoys the only open alcohol market in Canada, meaning that anyone in the world can list their product with the AGLC for $75.00 and sell their alcohol here. This has 2 major outcomes: it creates an intensely competitive market for small local producers, and it means an absolutely astounding selection of liquor for consumers.
You would think, then, that other provinces would operate in a similar way, but that isn't the case. With the exception of Saskatchewan, which is slowly making gains in opening its borders (you can even find our beer there!) it is actually easier for small producers like ourselves to list our product in Montana, Idaho, and Washington State in the USA (WHILE NAFTA NEGOTIATIONS ARE ONGOING) than it is to list in any other province or territory in our own country. This is because independent liquor boards and commissions were established at the end of prohibition in the 1920s and they have spawned protectionist policies since then.
As an example: Kel is from BC where she knows a lot of people in the liquor biz. She would love to be able to sell her product in BC but she can't because of BC's prohibitive practices involving liquor imports. Information on how to get product into BC is virtually non-existant but what we have been able to figure out is that: we would need a liquor agent to list the product ($$), ship the product to BC ($$), store the product in a separate warehouse from BC made product where the warehousing fees are up to 4x higher than those the BC manufacturers have to pay ($$$$), pay to ship the product from the warehouse to the retailer ($$), and then rent shelf-space in BC liquor stores for each of our products ($$$$$$$). Ontario and Quebec are even more prohibitive and, well, I don't think anyone really knows about Manitoba...
So what this means is that while Alberta enjoys an open liquor market and anyone producing alcohol all over the world can list here, including the breweries currently in litigation with the Alberta Government over their protectionist policies: Looking at You Steamwhistle & Great Western, Alberta producers are confined to their own home market. If you want to talk about uneven playing fields: BC producers often ship up to 80% of their product into the Alberta market because it is cheaper to sell it here than in their home market, and Alberta producers can ship 0% into BC.
So at this point you might be thinking "that's crazy! We all live in the same country but I can't get Alberta beer outside of Alberta!?" (exception: Big Rock, and Toolshed, and a couple others). The answer to that is, correct: and it doesn't look like it will change any time soon. So while producers in other provinces enjoy the competitive advantage of a restricted market, and often CAPITAL IMPROVEMENT GRANTS FOR BREWERS THAT ARE TAX-PAYER FUNDED *stares at Ontario, where breweries were awarded a $2million grant for improvements*. Instead of these issues being tackled as unconstitutional and providing an unfair advantage, a tax-refund in Alberta that dolls out only a percentage of what the brewery itself puts into it is repealed instead.
That makes total sense. Sarcasm intended.