Colonel McGugan is alive and well in Victoria

Photo: An example of a wine Belfry Theatre can't auction

The Belfry Theatre in Victoria is taking a massive financial hit after a fund raiser planned for Sunday was derailed by the Liquor Control and Licensing Branch.

If the outrageous ruling that blindsided the Belfry is allowed to stand, all organizations in B.C. that rely on wine auctions to help raise money for charitable causes are in trouble.

The now bankrupt Vancouver Playhouse Theatre Company used to get about $300,000 a year from the Vancouver International Wine Festival. Most of that money was raised at Festival’s glittering Bacchanalia which includes the auctioning of donated wine. Just last month, the Bard on the Beach Shakespeare Festival signed on to succeed the Playhouse as the wine festival beneficiary.

What do you think Bard’s artistic director, Christopher Gage, might the thinking now? “Is this a dagger I see before me?”

Here is what happened to the Belfry. The theatre has been raising funds for several years now with an annual wine auction, selling wines donated by wineries and presumably by individuals. It has raised at least $20,000.

This year, when Belfry applied for a special occasion license, the LCLB refused. It seems the regulators decided it is illegal to auction donated wines.

The Victoria Times Colonist, in its report this week, said: “On Monday, a ministry spokesman said the branch was ‘unaware’ the Belfry was auctioning privately donated wine on past occasions. ‘When we became aware of this situation, we advised the licensee that their event would not be eligible for a special-occasion licence’.”

According to the newspaper, the LCLB in an October 19 letter advised the Belfry that all liquor for such an event "must be purchased from a government liquor store or other appropriate outlet."

The LCLB's letter to a consultant used by The Belfrey asserted that "Provincial liquor laws and policies expressly prohibit organizations from soliciting bottles of liquor from individuals to be auctioned for charity."

This will come as a great and devastating surprise to the many charities which benefit from donated wine, and have been doing so for years and years. I have sometimes donated wine. Just 10 days, I donated some to a fund raiser at my church’s new school. A few years ago, I donated wine along with a tutored tasting to the CBC’s annual food bank fundraiser. That little donation raised $400 for the food bank.

There is not a winery in the province that does not give wine to charity, either to be auctioned or to attract ticket sales for tastings. One example: in the past year, CedarCreek Estate Wine has given away 686 bottles of wine to charity. If you wonder at the exact number, remember that wineries have to account to the tax collectors for virtually ever bottle of their wine.

The rule against auctioning donated wine obviously has not been enforced (nor should it have been). Perhaps it is one of those ambiguous rules that moulder happily out of sight until some blue stocking liquor regulator breathes life into it.

“I don't understand their reasoning,” says Vancouver lawyer Mark Hicken. “They have issued licenses to hundreds, if not thousands, of these events over the last 25 years and have never raised the issue before. I find it difficult to understand how they could not have been aware that privately donated wine was being auctioned. It has been going on for years with so many charities, and has raised huge amounts of money for charity. There are really only two possible conclusions to draw from this: either they were not doing their job for the last 25 years and issued all those licenses improperly, or their current interpretation of the law is wrong and the auctions are ok.”

Hicken, in fact, does not agree with the LCLB’s interpretation of the regulations. “I think they can be interpreted to permit private wine at charitable wine auctions,” he says.

The rationale for demanding that charities buy wines at liquor stores is, presumably, so that the government maximizes tax collection. As well, no one is allowed to sell wine unless he or she is licensed. Just try re-selling your wine cellar.

One suspects that Rich Coleman, the minister responsible for the LCLB, has also been blindsided by this, given that Coleman has been involved in pushing forward some recent positive changes in liquor regulation. It took pressure from the minister to get the LCLB to come up with a license that permits liquor to be served in movie theatres (on a very restrictive basis). It may also have been the minister that opened the door for patrons to bring their own wine to restaurants.

The LCLB now has managed to create a huge mess that will land on the minister’s desk once charities around the province get over their shock.

This is another example of how convoluted and antediluvian liquor regulation is in British Columbia. There still are pre-Prohibition rules: for example, the tied house rule that prohibited breweries from owning hotel is still on the books. As a result, at least three wineries have been prevented from selling their wines in offsite lodges and restaurants they owned.

The rule came in to stop brewers from monopolizing chains of hotels. There has been no need for that prohibition for at least 75 years. When I pointed that out to a former minister in charge of the LCLB, he agreed with me but he did not have the brass to get the rule dropped.

It is as though Col. Donald McGugan’s ghost still stalks the halls in Victoria. The colonel effectively ran what was then called the Liquor Control Board from 1923 to 1969 and he ran it with an authoritarian hand. He was 80 when the government finally managed to get him to retire.

“As far as I am concerned,” he said once, “the Act is only for control.”

Exactly.

This is the text of the October 19, 2012, letter from the Liquor Control and Licensing Branch that outlined the reason for not allowing the Belfry Theatre to auction donated wines.

The Liquor Control and Licensing Act requires all holders of a Special Occasion Licence to purchase or obtain their liquor products from the BC Liquor Distribution Branch or an authorized manufacturer or agent. This requirement includes liquor products which may be donated to SOL events for the purposes of consumption at the event or auctioning for charity. LCLB policy supporting the legislation specifically prohibits any individual, business or liquor retailer from providing liquor to SOL holders for any purpose. The SOL application form clearly states that all liquor for the event must be purchased from a Government Liquor Store or other approved outlet.

A liquor manufacturer or agent may donate liquor that has been purchased from the Liquor Distribution Branch to an organization holding an SOL as long as that organization is registered as a charity with the Canada Revenue Agency and the event is to raise funds for charity. Manufacturers and agents are not permitted to donate liquor to organizations that are not registered with the Canada Revenue Agency. Only liquor which has been purchased by the SOL holder or liquor which has been donated by a manufacturer or agent may be auctioned at a licensed special occasion to raise funds for a registered charity.

It is unfortunate that the Belfry Theatre made plans to accept and auction off wine from individual donors because this is clearly prohibited. Provincial liquor laws and policies expressly prohibit organizations from soliciting bottles of liquor from individuals to be auctioned for charity. The rule applies to anyone who holds a liquor licence. When the matter came to the attention of the branch earlier this week, we contacted the organizers to advise them that they can only accept product from a manufacturer or agent for the purposes of auctioning wine at their event.

I am unable to reconsider the decision to allow donated product by individuals because it is specifically prohibited.

----------------------------------------------------------------------------------------------------

The government is now trying to save face. Here is the latest press release from Victoria.

Liquor laws clarified to help non-profit organizations

Friday, October 26, 2012 8:45 AM

VICTORIA - Minister of Energy, Mines and Natural Gas Rich Coleman today confirmed the Province will take a "common sense" approach that will allow non-profit organizations to conduct fundraising using gift baskets or similar items that have liquor as one of its components. The law will be permanently clarified by legislative changes at a later date.

The approach enables charities and non-profits to conduct certain types of fundraising, such as auctions, using liquor provided it is a part of a gift basket or an equivalent basket of goods. The liquor must have been commercially produced and must not be consumed at the event.

Presently, B.C. law requires anyone who sells liquor to be licensed and for the liquor sold under that licence to be purchased from the Liquor Distribution Branch or another approved outlet, such as a B.C. winery.

Charities that wish to fundraise using only liquor, without other items as a primary component of a basket, will have to wait until new legislation is in place. For those organizations, a special occasion licence will continue to be required and the liquor will have to be purchased through the Liquor Distribution Branch.

Quotes:

Rich Coleman, Minister of Energy, Mines and Natural Gas and Minister Responsible for Liquor -

"From time to time, we find outdated liquor policies that may have been relevant at a particular time in history but don't work today. Our goal is to get rid of these outdated liquor laws that unnecessarily restrict British Columbians and to regulate alcohol responsibly in the process."

Quick Facts:

The B.C. government is modernizing liquor laws in B.C. because many federal and provincial liquor laws have been around since Prohibition. Changes made since February include:

Liquor in Theatres

Provides flexibility to live-event venues and revises liquor laws for movie theatres.

Corkage - Bring Your Own Bottle

Provides opportunities for restaurant customers that want to bring their own wine into a licensed dining establishment.

Penalties for Bootlegging

Police and liquor inspectors now have the ability to issue $575 tickets to people found giving or serving liquor to anyone under the age of 19.

Personal Importation of Liquor into B.C.

Allows B.C. residents to bring back an unlimited amount of 100 per cent Canadian wine if it is for personal consumption and purchased from a recognized winery in another province, or choose to have it shipped from the winery directly to their home.

Allows B.C. residents returning from another Canadian province to bring back on-their-person up to nine litres of wine, three litres of spirits, and a combined total of 25.6 litres of beer, cider or coolers for personal consumption.

Learn More:

To learn more about the rules for liquor licensing in the British Columbia, visit: http://www.pssg.gov.bc.ca/lclb/LLinBC/index.htm.