A Pint of Gypsy Tears at St. Augustine’s? The Relaxation of BC’s Tied House Rules Finally Starting to Benefit the Province’s Craft Brewers

(Originally Published May 15, 2013 on my BC Beer Law 1.0 blog)

As part of the provincial government’s ongoing and much needed revitalization of its antiquated liquor laws, on February 8, 2013 the BC Liquor Control and Licensing Brach (“LCLB”) issued Policy Directive No: 13-13 (“Directive”). The Directive, which also concerns certain trade practices such as sponsorship and promotion, outlines several legislative changes to the Liquor Control and Licensing Act Regulations (“Regulations”), including a welcome end to the province’s prohibition on ‘tied houses’ in the craft beer industry.

A phenomenon dating back to the end of prohibition in Canada and the US, ‘tied house rules’ as they are colloquially known were originally intended to stop large commercial breweries from using their financial clout to engage in unfair trade practices by either opening up bars that exclusively sold their products or by providing existing establishments with financial incentives to do the same. While these laws thankfully managed to stop Molson from opening up branded bars that exclusively serve Canadian in every town across the province, they unfortunately also had a detrimental impact on some of the very parties they were intended to protect.

The example of Vancouver’s Parallel 49 Brewing Company and St. Augustine’s Craft Brew House and Kitchen has become well-known. Both operations share common ownership, and although the award-winning beer brewed at Parallel 49’s brewery in Hastings Sunrise is on tap at numerous pubs across the City, under the previous tied house regime, you wouldn’t be able to find it at St. Augustine’s on nearby Commercial Drive. It’s a situation that has caused endless frustration for the common ownership of the two businesses, and has led many of the city’s beer drinkers to shake their heads.

Thankfully, recent changes to the Regulations have changed all of this. Specifically, s. 50(2)(e) of the Regulations now provides an exemption to the tied house rules set out in s. 18 of the Liquor Control and Licensing Act (“Act”). While these changes are unfortunately too recent to be shown on the version of the Regulations posted online, I was provided with the relevant Orders in Council by the LCLB and can confirm that they were approved and ordered on February 7, 2013 and that they effect the changes to Act and the Regulations set out in the Directive. Consequently, and pursuant to s. 50(2)(e) of the Regulations, breweries licensed under s. 57(2) of the Act whose annual production volumes do not exceed 300 hectolitres (30 million litres) can now apply to change the terms of their licenses to permit the sale of their products in up to three establishments licensed under s. 12 of the Act (which includes those with liquor primary and food primary licenses and private liquor stores) that they either own or have an association with. Although the production volume limit will permit brewers that produce on a much larger scale than ‘craft brewers’ to enter into tied house arrangements, considering the fact that, despite the former prohibition, mass produced beer has largely monopolized the taps in most bars (especially in smaller markets), the change to the Regulations has been welcomed by many in the craft beer industry as a step in the right direction that could be of benefit to smaller producers.

Since the change to the Regulations set out in the Directive, the LCLB has received numerous applications from players in the craft beer industry to change the terms of their liquor licenses so as to permit tied house arrangements. As widely expected (and hotly anticipated by many of Vancouver’s craft beer lovers), St. Augustine’s now offers several of Parallel 49’s finest amongst its 40 rotating taps, and I am very happy to report that at the time of writing, it still has 100% remaining of its on-tap supply of one of my personal favourites, Gypsy Tears Ruby Ale.