The Ontario government has created the Alcohol and Gaming Commission of Ontario (AGCO) to control the production and sale of spirits in Ontario. If that bundle of joy isn’t enough for you, the control of liquor is the responsibility of the Province. Oh, and if you’re thinking about selling your products internationally, the Federal government also regulates and licenses cross-border trade, where a different set of taxes and fees apply, on top of those imposed by the jurisdiction you’re exporting to. The Federal government also regulates the production, and labeling of spirits through the Food and Drugs Act and its Regulations, Consumer Packaging and Labelling Act, C onsumer Packaging and Labelling Regulations, and the Spirit Drinks Trade Act. This tax accrues from the moment a drop of alcohol is manufactured, but only becomes payable when the alcohol is sold. As a luxury item, spirits are subject to Federal tax under the Excise Act. The Federal government’s primary concern with alcohol regulation is tax. Technically, municipal governments are a subset of the Province, but practically speaking, it’s another layer you’ll have to deal with. As with any business, you certainly don’t need a lawyer to help you get it started, but a good lawyer will reduce the time from startup to sale, and deal with a lot of the headaches that can come from dealing with five or six different government departments at once.īooze has the unfortunate distinction of being one of the few market sectors that is regulated by Federal, Provincial, and municipal governments. I imagine that most of the steps are mirrored in many other jurisdictions, but the nuances of the regulations will differ. I’m writing this article as an overview of the major steps involved in starting a distillery in Ontario, Canada. Through their dedicated efforts, some of the barriers to entry were lowered (slightly), and the Ontario distilling renaissance began. It’s only recently that a few dedicated masochists set out to buck the trend. As a result, Ontario had only a handful of big distilleries for nearly 80 years.
For spirits, the government at the end of prohibition wrote the rules in a way that would make it difficult and expensive to start and run a distillery, and impossible to start on a small scale. The time, expense, and expensive advice involved in navigating the system are designed to limit competition. Much like we’re seeing right now with the legalization of marijuana in Ontario, the laws are written by and for established, well-connected, well-funded big businesses. For some strange reason (probably at the behest of the beer lobby), some Scottish Presbyterian politician in Ontario decided that the ethyl alcohol in hard liquor should be treated differently than the ethyl alcohol in wine and beer. This is, of course, because in the inestimable wisdom of successive governments since the end of prohibition, spirits are evil.
The laws on spirits are even more dense and difficult to navigate than the regulations on beer or wine. The first thing you need to know about distilling is that it’s heavily regulated. It’s a long read, but it’s a no bullshit assessment of the challenges you’ll face in getting your distillery off the ground. I’ve also helped several other alcohol producers through the business startup and licensing process, so the contents of this article are hard-won knowledge. I started out as the company’s lawyer, and as with any small business, that role has slowly expanded to a litany of other tasks…. On top of my law practice, I’m also a founder of Last Straw Distillery, an award-winning micro-distillery near Toronto, Ontario. Here’s an article that’s been a long time coming.
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