Position Paper: Repeal of British Columbia US Liquor Embargo

2025-06-05

Position Paper: Immediate Repeal of British Columbia Embargo on U.S. Liquor Products

To:

Hon. David Eby

Premier of British Columbia

Government of British Columbia

Hon. Garry Begg

Minister of Public Safety and Solicitor General

Government of British Columbia

Hon. Ravi Kahlon

Minister of Housing and Municipal Affairs

Chair of US Tariff Cabinet Committee

Government of British Columbia

Mr. Blain Lawson

Associate Deputy Minister, Liquor Distribution Branch, Ministry of Public Safety and Solicitor General

BC Liquor Distribution Branch (BCLDB)

From: Import Vintners & Spirits Association (IVSA)

Date: May 30th, 2025

Executive Summary

The Import Vintners & Spirits Association (IVSA) urges the immediate repeal of British Columbia’s embargo on U.S.-made liquor products and the removal of U.S. products from BC Liquor Stores shelves. Originally introduced in response to federal surtaxes under the Canada Border Services Agency’s United States Surtax Order—triggered by U.S. tariffs on Canadian goods—the embargo no longer serves a valid policy objective. With those tariffs now limited to non-USMCA-compliant products, the continued enforcement of BC’s embargo has become economically harmful, operationally disruptive, and politically indefensible. It disproportionately affects small businesses, the hospitality sector, and BC consumers. The time has come to lift this outdated measure, restore market fairness, protect BC jobs, and reaffirm the principle of consumer choice.

1. Background and Policy Context

BC’s liquor embargo was adopted as a provincial response to federal countermeasures against U.S. trade actions. While broader trade tensions persist, BC’s continued enforcement of this narrow and selective ban on U.S. liquor products is both disproportionate and inconsistent with the treatment of other U.S. products. No similar restrictions apply to other categories of U.S. goods.

2. Economic and Employment Impacts

a) Harm to British Columbia’s Wine and Spirits Agents:

BC’s liquor industry is composed primarily of small and medium-sized businesses. These companies—more than 250 licensed agents—are embedded in communities across the province and depend on a broad portfolio of international products. U.S.-made products account for 12% of all wine and 10% of all spirits sold in BC. Blocking these imports undermines their business models and puts British Columbians out of work. In 2024 alone, total U.S. wine & spirits sales in BC reached $232 million, representing 11% of the total wine & spirit alcohol sales in the province. This significant market share underscores the potential for substantial economic disruption and directly impacts the viability of numerous BC businesses. Furthermore, wine is a perishable commodity with a limited shelf life; approximately 90% is made to be consumed within 12 months. Failure to act now will result in significant losses and the destruction of existing inventory.

b) Imminent Layoffs and Business Closures:

An estimated 90+ companies import U.S. wine & spirits into British Columbia. An estimated $16.9M is earned by BC agents through the sale of Wine & Spirits in the province of British Columbia. This revenue pays for overhead, employee salaries and benefits programs for large, medium and small businesses. There are approx. 1,000 people employed in BC’s beverage alcohol agent industry, the loss of this revenue will lead to automatic layoffs and potentially catastrophic results for these companies that have built businesses around the legal importation of beverage alcohol from the United States. Many companies who have been most adversely affected by this policy decision have already begun layoffs of full and part time staff, fear of insolvency is now a very real concern for many locally owned and operated BC Agencies. The ripple effect across the hospitality supply chain could result in thousands more, particularly in restaurants and bars that rely on these products. Nationally, the impact of lost sales translates to an estimated $73 million in lost wages for workers in the beverage alcohol sector. Applying the provincial share, the consequences for BC’s broader economy are significant, with an estimated $18.6 million in broader economic activity loss due to reduced consumer spending.

c) Lost Revenue and Government Income

The U.S. Wine & Spirits category generates significant markup and tax income for the BC Government. An estimated 273 Million Dollars in wholesale sales translates to the following:

$31.8M in lost sales tax revenue (federal and provincial)

$113.6M in provincial wholesale markup revenue

$32.5M in provincial sales margin from BCL

$12.2M in Excise Tax revenue

TOTAL Loss of $190.1M in provincial tax revenue

c) Strain on the Hospitality Sector:

BC’s hospitality industry, which employs over 344,000 people, depends on a wide and competitive selection of liquor to meet customer expectations. The embargo reduces product diversity, limits revenue opportunities, and threatens front-line employment. Nationally, the beverage alcohol industry contributes significantly to tax revenues, with an estimated $15 million in lost federal tax revenue and $7 million in provincial income tax anticipated due to disruptions like this embargo. These lost revenues could otherwise support vital public services.

d) Broader Labour Market Effects:

BC’s April 2025 unemployment rate of 6.2% underscores the need for policies that promote—not restrict—job creation. A targeted embargo on a key industry weakens the province’s overall labour recovery and could lead to increased costs for social support programs. The estimated $4 million in EI costs annually in BC due to potential job losses further strains the province's social safety net.

3. Disproportionate, Unclear, and Arbitrary

BC’s liquor embargo appears to be the only targeted countermeasure still in place against U.S. goods. There is no clear public rationale for why this sector continues to be singled out, nor are there defined criteria or timelines for lifting the measure. This lack of transparency undermines confidence in government policy and complicates business planning for hundreds of affected companies.

4. Consumer Impact and Market Distortion

Adult British Columbians are being denied access to a significant category of international products. While remaining pre-embargo stock provides a temporary buffer, inventories are dwindling. Without the ability to restock, consumers face fewer choices and less competition, potentially leading to higher prices. The loss of $190 million in provincial tax revenue due to the inability to sell these products ultimately impacts the services that the provincial government can provide to British Columbians.

5. Recommendations

The IVSA urges the Government of British Columbia to:

Immediately repeal the embargo on all U.S.-made liquor products to restore market functionality and limit further economic damage.

Immediately return for sale all U.S.-made liquor products to BC Liquor Stores shelves

Engage with industry stakeholders to ensure future trade responses are fair, transparent, and proportionate.

Explore relief measures to the agent community to ensure local BC Businesses are being supported including:

BCLDB offering Wholesale pricing on Agent Samples

This would result in a net zero loss to the BCLDB, as most agents currently purchase their samples from Private Retailers at negotiated cost plus rate

Financial relief on storage costs of U.S. products at Third Party Warehouses

Agents were provided with no notice when the BC Government decided to impose the embargo and remove U.S. product from BC Liquor Stores shelves. That changed on hand inventory drastically and has created a financial burden for agents who would normally carry 3 months inventory and now have 6-8 months of inventory on hand. Storage costs combined with Supplier payment for goods has created an unnecessary financial burden on BC Agents. The IVSA would request financial support to agents carrying this inventory

Financial Relief on BCL Exclusive Products (Only@BCL)

With the removal of all U.S. products from BC Liquor Stores, agents with Only@BCL products are left with inventory on hand that BC Liquor Stores had previously committed to. While BCL has offered to relinquish these products to Private Retailers, most agents agree there is not a market for these products in private retail at this time and they would need to be discounted at a loss to the agent to deplete. The IVSA is proposing the BCLDB orders this stock from the Agent Warehouse and carries the inventory in the BCLDB DC in reserve for BCL.

Conclusion

The U.S. liquor embargo is no longer an effective or justified trade countermeasure. It harms BC’s economy, jobs, and consumers—without delivering any discernible benefit. The potential loss of at least 100 direct jobs, $7 million in lost wages, and a broader economic ripple effect of $18.6 million annually in BC underscores the urgent need for the immediate repeal of this embargo. Furthermore, the significant loss in provincial revenue, including $40.95 million in sales tax and $146.1 million in lost provincial markup revenue (BCLDB & BCL), necessitates a policy reversal to protect British Columbia’s fiscal health and the livelihoods of its citizens