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O. Reg. 260/16: SALE OF LIQUOR IN GOVERNMENT STORES

filed July 20, 2016 under Liquor Control Act, R.S.O. 1990, c. L.18

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ontario regulation 260/16

made under the

liquor control act

Made: July 20, 2016
Filed: July 20, 2016
Published on e-Laws: July 21, 2016
Printed in The Ontario Gazette: August 6, 2016

Amending O. Reg. 232/16

(SALE OF Liquor IN GOVERNMENT STORES)

1. (1) The definition of “supply agreement” in subsection 1 (1) of Ontario Regulation 232/16 is revoked.

(2) Subsection 1 (1) of the Regulation is amended by adding the following definitions:

“wine boutique” means a winery retail store,

(a) that is located inside the shopping area of a grocery store, and

(b) at which the winery is authorized to sell wine to the public under a supplementary wine authorization described in Part III.1;

“wine boutique agreement” means an agreement described in section 28.6;

“winery retail store” means a private wine store owned and operated by a winery at which the winery is authorized under clause 3 (1) (e) of the Act to sell wine to the public.

2. Section 2 of the Regulation is amended by striking out “section 9” at the end and substituting “sections 9 and 28.1”.

3. Section 16 of the Regulation is amended by adding the following subsections:

(3) Despite subsection 17 (1), if the operator of a grocery store has a beer and cider authorization that was issued in connection with a wine boutique agreement, the Board shall enter into a supply agreement with the operator of the grocery store that provides for the sale of beer and cider to the operator at a discount of 3 per cent off the basic price, plus HST and container deposits.

(4) For the purposes of subsection (3), the basic price for beer and cider is the retail price stipulated by the Board for the beer or cider respectively, net of HST and container deposits.

4. Subsection 17 (3) of the Regulation is amended by adding “and not replaced with a new agreement” after “terminated”.

5. Subsection 22 (1) of the Regulation is amended by striking out “apply with respect to” in the portion before paragraph 1 and substituting “apply to the sale of wine under”.

6. Subsection 28 (2) of the Regulation is amended by striking out “on display are containers” and substituting “on display, excluding any cider on display in a wine boutique, are containers”.

7. The Regulation is amended by adding the following Part:

part iII.1
sale of wine in wine boutiques

Classes of authorization for sales in wine boutiques

28.1 The following classes of authorization are established in connection with the sale of wine in wine boutiques:

1. Supplementary wine authorization: a single authorization that permits a winery to sell, at a wine boutique operated by the winery, VQA wine manufactured by another winery that owns fewer than three winery retail stores (excluding on-site retail stores).

2. Authorization as a wine boutique sales agent: a single authorization that permits the operator of a grocery store to sell, as agent of a winery that operates a wine boutique inside the store, wine offered for sale in the boutique.

Supplementary wine authorizations

28.2 (1) If a winery has a supplementary wine authorization for a wine boutique, the Board shall enter into a supply agreement with the winery on the terms the Board considers reasonable, and the agreement shall provide for the sale of the wine that is permitted to be sold under the authorization to the winery at a discount of 6.99 per cent off the basic price, plus HST and container deposits.

(2) For the purposes of subsection (1), the basic price for wine is the retail price stipulated by the Board for the wine, net of HST and container deposits.

(3) A winery must post its supplementary wine authorization in a conspicuous place in the wine boutique or grocery store.

Sales to the public

28.3 (1) A winery that is authorized to sell wine in a wine boutique must begin to offer the wine for sale to the public under the authorization within 12 months after receiving the authorization, and must continue to offer the wine for sale in the boutique thereafter.

(2) All sales to the public of wine from the wine boutique must be conducted by the operator of the grocery store in which the wine boutique is located as agent for the winery.

(3) A winery shall not operate a wine boutique unless,

(a) it has been issued a supplementary wine authorization in respect of the boutique; and

(b) the operator of the grocery store at which the boutique is located has been issued a wine boutique sales agent authorization in respect of the boutique.

Application of certain rules, classes of authorizations

28.4 (1) The following provisions apply, with necessary modifications, with respect to supplementary wine authorizations:

1. Section 12.

2. Subsections 13 (1), (3) and (4).

3. Section 15.

(2) The following provisions apply, with necessary modifications, with respect to authorizations as a wine boutique sales agent:

1. Sections 10 and 12.

2. Subsections 13 (1), (3) and (4).

3. Subsections 14 (1), (2), (6) and (7).

4. Section 15.

Wine boutique operations

28.5 (1) A winery that operates a wine boutique must do so in compliance with all applicable federal, provincial and municipal law.

(2) The winery must not acquire wine for sale under its supplementary wine authorization otherwise than from the Board in accordance with its supply agreement.

(3) The space in which the wine boutique is located must be readily distinguishable from the grocery store, and the name of the wine boutique must be prominently displayed in the boutique and must be distinct from the name of the grocery store.

(4) If wine that is not on display in the wine boutique is stored at the grocery store, the operator of the grocery store must provide a secure storage area for the wine.

(5) The winery must ensure that any employee who handles wine in the wine boutique is at least 18 years of age.

(6) The winery must ensure that any of its employees who deal with customers at the wine boutique and anyone who offers samples of wine to customers in the boutique has successfully completed a server training course.

Wine boutique agreements

28.6 (1) The winery that operates the wine boutique and the operator of the grocery store in which the boutique is located must be parties to an agreement under which,

(a) the winery agrees to lease or license space in the shopping area of the grocery store in which to sell wine; and

(b) the operator of the grocery store agrees to sell, as agent of the winery, wine that is available for sale to the public in the leased or licensed space.

(2) The initial term of the lease or licence must be at least three years.

Wines available for sale

28.7 (1) A winery that is authorized to sell wine in a wine boutique must not offer for sale, or sell, any of the following wines:

1. Wine with an alcohol content greater than 18 per cent by volume.

2. Wine beverages.

3. Cider with an alcohol content greater than 7.1 per cent by volume.

(2) Upon request, the Board shall give the winery a list of the wines that are available for sale to wine boutiques and that,

(a) are permitted for sale under a supplementary wine authorization; and

(b) do not contravene subsection (1).

(3) The winery must ensure that there is a variety of stock-keeping units of wine (excluding cider) offered for sale in the wine boutique, and at a minimum the variety must include the lesser of the following:

1. At least 25 stock-keeping units of wine must be for wine manufactured by other wineries.

2. At least one-half of the stock-keeping units of VQA wine must be for wine manufactured by other wineries.

Packaging, etc.

28.8 (1) A winery that is authorized to sell wine in a wine boutique must not sell wine in containers with a volume of more than four litres.

(2) The winery must not offer for sale, or sell, cider in packages with more than six containers.

(3) The winery must not offer a discount or rebate in respect of the purchase of more than six containers of cider.

Product display

28.9 (1) A winery that is authorized to sell wine in a wine boutique must ensure that the wine offered for sale is displayed in a single contiguous product display area within the boutique and that the boutique does not display for sale merchandise belonging to the grocery store.

(2) The winery must ensure that at least 50 per cent of the containers of wine on display in the wine boutique are containers of VQA wine and that at least one-half of those containers are containers of wine manufactured by other wineries.

(3) The winery must ensure that at least 5 per cent of the containers of wine on display in the wine boutique are containers of wine manufactured by a small winery. 

(4) The display area must contain one or more signs indicating that VQA wines are available for sale.

Target sales levels for VQA wine

28.10 (1) A winery that is authorized to sell wine in a wine boutique must establish a policy describing measures that have the goal of ensuring that at least 25 per cent of the wine sold in any 12-month period in all wine boutiques operated by the winery is VQA wine, and that at least 50 per cent of the VQA wine sold is manufactured by other wineries.

(2) Subject to subsection (3), the winery must ensure that at least 20 per cent of the wine sold in any 12-month period in all wine boutiques operated by the winery is VQA wine, and that at least 40 per cent of the VQA wine sold is manufactured by other wineries.

(3) The winery must ensure that at least 10 per cent of the wine sold in a wine boutique during its first 12 months of operation is VQA wine, and that at least 20 per cent of the VQA wine sold is manufactured by other wineries.

(4) For the purposes of this section, the percentage of wine sold by a winery is determined with reference to the winery’s total sales receipts, net of container deposits and HST.

Sales information re stock-keeping units

28.11 (1) A winery that is authorized to sell wine in a wine boutique must maintain weekly sales information identifying the stock-keeping units of wine sold in all wine boutiques operated by the winery and must retain that information for at least three years.

(2) It is a condition of an authorization that the winery make available to the Minister of Finance such sales and operational information related to a wine boutique as the Minister may request.

(3) A winery whose wine is sold in a wine boutique may request that the operator of the wine boutique provide it with information respecting the weekly sales of all VQA wine in the wine boutiques the operator operates.

(4) The requesting winery is only entitled to information relating to weeks during which its wine is sold in the wine boutique.

(5) Subsection (3) does not apply with respect to wineries that operate fewer than six wine boutiques.

(6) The wine boutique operator shall provide the information to the requesting winery within a reasonable time and shall identify the information by stock-keeping units attributed to each manufacturer whose VQA wine is sold in the boutique.

(7) The wine boutique operator shall not charge a fee for providing the information described in subsection (3) that exceeds the fee charged by the Board for the provision of similar information.

8. The heading to Part IV of the Regulation is revoked and the following substituted:

Part IV
authorizing sales in grocery stores and wine boutiques

9. (1) Section 29 of the Regulation is amended by striking out “in a grocery store” and substituting “in a grocery store or in a wine boutique” in the portion before paragraph 1.

(2) Subparagraph 2 i of section 29 of the Regulation is amended by adding “or wine boutique” at the end.

10. Section 30 of the Regulation is amended by striking out “beer and wine” and substituting “beer or wine”.

11. Subsection 31 (2) is amended by striking out “wine retail store” and substituting “winery retail store”.

12. The Regulation is amended by adding the following sections:

Restrictions re: wine boutiques

31.1 The Board shall not issue a supplementary wine authorization to a winery in respect of a wine boutique unless all of the following conditions are satisfied:

1. The winery owns and operates at least three winery retail stores (excluding on-site stores).

2. The winery has entered into a wine boutique agreement with the operator of a grocery store with respect to a wine boutique to be located in the grocery store.

3. The operator of the grocery store holds an authorization as a wine boutique sales agent for the grocery store.

Restrictions re: wine boutique sales agents

31.2 (1) The Board shall not issue an authorization as a wine boutique sales agent to the operator of a grocery store unless both of the following conditions are satisfied:

1. The operator has entered into a wine boutique agreement in respect of the store.

2. The operator also holds a beer and cider authorization for the store.

(2) Subject to subsection 40.1 (4), if the operator of a grocery store has entered into a wine boutique agreement in respect of the store before May 1, 2017, the Board shall issue a beer and cider authorization for the store or for a grocery store located in the same geographic region as the store and operated by the same operator.

(3) Subsection (2) does not apply if the operator of the grocery store is ineligible to be authorized to sell beer or wine in a grocery store.

Restrictions re: sale of wine

31.3 The Board shall not transfer an authorization to sell beer or wine at a grocery store, except in accordance with sections 32 and 33.

13. Paragraph 2 of subsection 32 (2) of the Regulation is amended,

(a) by striking out “48” and substituting “118”; and

(b) by striking out “19” and substituting “55”.

14. (1) Subsection 33 (1) of the Regulation is amended by striking out “to another store located in the same geographic region if the store” and substituting “to another grocery store located in the same geographic region if the second store”.

(2) Subsection 33 (2) of the Regulation is amended by striking out “shall transfer an authorization with respect to one grocery store to another store” and substituting “shall, under section 3.0.2 of the Act, transfer an authorization with respect to one grocery store to another grocery store”.

15. The heading to Part V of the Regulation is revoked and the following substituted:

part v
availability of authorizations

16. Section 35 of the Regulation is revoked and the following substituted:

Overall maximum number of authorizations: sale of beer, wine, cider

35. (1) Beer and wine may be authorized for sale in a maximum of 200 grocery stores under the following authorizations:

1. A maximum of 70 beer and wine authorizations, including a maximum of 35 restricted beer and wine authorizations.

2. A maximum of 60 beer and cider authorizations (excluding beer and cider authorizations described in paragraph 3).

3. A maximum of 70 beer and cider authorizations that are issued in connection with wine boutique agreements. No more than 20 of these authorizations shall permit sales of beer or cider to occur before May 1, 2017.

(2) No more than the maximum number of authorizations described in subsection (1) shall be in effect at one time.

17. The Regulation is amended by adding the following section:

Number of authorizations

40.1 (1) The Board shall issue supplementary wine authorizations, authorizations as wine boutique sales agents, and beer and cider authorizations mentioned in subsection 31.2 (2), in accordance with the rules set out in this section.

(2) The following is the maximum number of authorizations as wine boutique sales agents that may be issued to a single group of related grocery stores in the regions indicated:

1. For grocery stores in the GTA Region: a maximum of 18 authorizations. 

2. For grocery stores in all of the other regions: a maximum of 18 authorizations.

(3) The following is the maximum number of supplementary wine authorizations that may be issued to the owners of winery retail stores and in the regions indicated:

1. For Andrew Peller Limited: 

i. An overall maximum of 28 authorizations for its wine boutiques in all regions.

ii. Within that overall maximum, a maximum of 14 authorizations for its wine boutiques in grocery stores in the GTA Region and a maximum of 14 authorizations for its wine boutiques outside the GTA Region.

2. For Colio Estate Wines Incorporated:

i. An overall maximum of three authorizations for its wine boutiques in all regions.

ii. Within that overall maximum, a maximum of two authorizations for its wine boutiques in grocery stores in the GTA Region and a maximum of one authorization for its wine boutiques outside the GTA Region.

3. For Constellation Brands Canada, Inc.:

i. An overall maximum of 38 authorizations for its wine boutiques in grocery stores in all regions.

ii. Within that overall maximum, a maximum of 19 authorizations for its wine boutiques in grocery stores in the GTA Region and a maximum of 19 authorizations for its wine boutiques outside the GTA Region.

4. For Magnotta Winery Estates Limited:

i. A maximum of one authorization for a wine boutique in a grocery store in any region, other than the GTA Region.

(4) The following rules apply with respect to beer and cider authorizations mentioned in subsection 31.2 (2):

1. No more than eight beer and cider authorizations issued as a result of wine boutique agreements to which Andrew Peller Limited is a party shall permit sales of beer or cider to occur before May 1, 2017.

2. No more than one beer and cider authorization issued as a result of a wine boutique agreement to which Colio Estate Wines Incorporated is a party shall permit sales of beer or cider to occur before May 1, 2017.

3. No more than 11 beer and cider authorizations issued as a result of wine boutique agreements to which Constellation Brands Canada, Inc. is a party shall permit sales of beer or cider to occur before May 1, 2017.

4. A beer and cider authorization issued as a result of a wine boutique agreement to which Magnotta Winery Estates Limited is a party shall not permit sales of beer or cider to occur before May 1, 2017.

18. Subsection 43 (2) of the Regulation is amended by striking out “all” in the portion before paragraph 1 and substituting “both”.

19. Section 45 of the Regulation is amended by adding the following subsection:

(0.1) This section applies with respect to wine sold under an authorization described in Part III.

Commencement

20. This Regulation comes into force on the day it is filed.