Charles Patton is the owner of Water ‘N’ Wine, a store in New Glasgow, N.S. that sells wine-making kits and rents storage space that customers can use during the fermentation process. But this small business owner may soon be forced to put a cork in it, if the provincial government has its way.

Stores that sell wine kits are common in most provinces, but fall into a legal grey area in Nova Scotia. Police and prosecutors have, so far, been unwilling to go after the industry, which provides much-needed employment and really doesn’t hurt anyone. But the government plans to change all that by introducing a bill that would give the Nova Scotia Liquor Corporation (NSLC) — the provincial crown corporation that has a monopoly on alcohol sales — the ability to directly petition judges to grant injunctions against businesses that violate the Liquor Control Act.

“The Nova Scotia Liquor Corporation wants to close us down,” Patton told the New Glasgow News. And from the government’s perspective, this makes perfect sense. What’s the point of having a monopoly on liquor sales, if people can just make their own? Never mind the lost tax revenues that result from home brewing kits being classified as food, rather than alcohol.

Nova Scotia’s Attorney General and Minister of Justice, Ross Landry, argues that provincial control over alcohol sales is required to cut down on binge drinking — as if kids looking to go on a bender have the patience to wait eight weeks for their wine to ferment. But this is a common argument made by people who believe the state needs to maintain control over alcohol sales, in order to prevent social ills. The only problem they have is the serious lack of evidence to support this contention.

After Prohibition ended in the United States, most states opted to regulate, tax and “license” the sale of alcohol, but 18 “control” states created publicly-owned monopolies to manage alcohol distribution. Numerous studies comparing the two models have found no evidence that government control cuts down on drinking problems.

A 2009 Commonwealth Foundation study found that rates of “underage drinking and underage binge drinking are virtually identical in license and control states,” and that there is “no difference in alcohol-related traffic deaths in license versus control states.” The comparison of the control states, however, is where the findings become particularly interesting. The states that excerpt more control have higher rates of consumption and alcohol-related deaths on the road.

Liberal MLA Diane Whalen criticized the Government of Nova Scotia for allowing the NSLC to circumvent the police in order to get an injunction. “I’m not a lawyer, but I call that [giving] quasi-police rights to the retail organization; I think it’s wrong,” said Whalen. And she’s not the only one who has expressed this grievance. Ross Harrington, who owns a Wine Kitz location in Halifax told The Chronicle Herald that “putting legal power in a non-elected body” was a “scary thought.”

A scary thought indeed. And with recent reports of less-than-efficient business practices at other provincially-controlled liquor boards, Nova Scotians aren’t the only Canadians left wondering why government is in the business of selling beverages in the first place. Perhaps there was a time when people thought the government needed to sell booze, but we now have plenty of examples of alcohol sales being successfully handled by the private sector — even in our own backyard.

Alberta privatized its liquor retailing and distribution business in 1994. While many argue that alcohol sales provide a valuable source of revenue for cash-strapped provinces, Alberta was able to maintain a revenue-neutral position, as it still maintains control over tax rates and wholesale marketing. The province was even able to lower its wholesale rates because privatization led to increased revenue and lower operating costs.

A 2003 Fraser Institute study found that there were numerous positive benefits for consumers, as well. The number of liquor stores increased from 258 in the early 1990s, to 858 by 2001. On average, prices decreased slightly and selection increased markedly.

In other words: Governments can increase revenue by getting rid of inefficient operations and high-priced public sector union contracts; consumers benefit by getting lower prices, increased selection and the convenience of having more stores with longer operating hours. You’d really have to be drunk not to like the idea of liquor privatization.

Unfortunately, Nova Scotia’s NDP government is going in the opposite direction by increasing the power of the NSLC and driving the few private retailers out of the province entirely.

Photograph courtesy Daniel Hoherd/flickr

Share Link: