As the election in Ontario moves along, it is timely to reflect on a policy that Premier Doug Ford delivered on, and that is alcohol retail modernization. Consumers in Ontario can now walk into their local Costco or Circle-K and pick up a 2-4 of beer along with their groceries and gas. That’s a big win for consumers who for so long have been treated like children by the bloated LCBO who continue to believe it is their moral duty to save Ontarians from themselves.
This may sound great, and a win for the Ford government, but there are glaring omissions to alcohol modernization policy that may prove to be big problems as the USA’s’ tariff threat looms. Premier Doug Ford is planning a 22 billion dollar relief program similar to pandemic stimulus to help businesses and Canadians as a result of President Donald Trump’s tariff threat on Canada. It is wise for Premier Ford and all the party leaders to realise that this kind of spending needs to come from somewhere, and that somewhere could be from further modernizing alcohol retail in Ontario.
Despite the increase of ease for Onarians to buy beer, wine, cider, and ready to drink cocktails, liquor can still not be bought anywhere but the LCBO as it maintains a monopoly on those specific items. Want to pick up a bottle of Scotch to enjoy with your friends at a party this weekend? You certainly can’t get one when you’re at the grocery store trying to buy some snacks. Why give consumers partial convenience and then stroke the LCBO’s ego by giving them complete power over one kind of alcohol?
Today, the LCBO boasts 669 bloated and inefficient retail stores in Ontario, all of them with the exclusive right to sell liquor. If it seems like a bizarre concept to Ontario policymakers to perhaps stop selling through retail stores owned and operated by the government, or to stop having this outdated and decrepit crown corporation be the only one to sell liquor, they will be comforted to learn that it is already happening successfully. Alberta privatized all liquor sales in 1993 and the results have been excellent.
Alberta’s model maintains their government agency as the wholesaler and that agency marks up the liquor before selling it to private retailers, and that markup is used for various government programs. The retailer is allowed to set whatever price they choose after having paid for the product plus the markup. The government is no longer in the business of running and maintaining inefficient retail stores and having management in silos decide what they should and should not sell. This type of model is shockingly not on the table currently in Ontario, and never really has been.
The net revenue returned to Alberta from the Alberta Gaming, Liquor and Cannabis (AGLC) has been much higher post-privatization, in case policymakers needed more of an incentive. The net revenue of liquor sales, or the amount of money that the AGLC transferred to the Government of Alberta, was $825,104,000 in 2022/2023, up from $566,690,000 in 2004/2005 and $405 million in 1993 ($662 million when adjusted for inflation).
According to a study by University of Waterloo Professor Anindya Sen, the cost savings of Ontario switching to an “Alberta-style model” of private retail sales of spirits while maintaining the wholesale aspect of the process would be exceptional even without a significant rise in liquor sales. An estimate shows that had the Government of Ontario moved to an Alberta-style system between the years of 2012 to 2022 (with respect to selling spirits in a private model), it would have saved the Ontario government between $4.8-$5.8 billion dollars. His estimates further indicate that increases in net income would have been roughly $300 to $360 million dollars from 2019-2022. That’s almost $360 million that could have gone to government programs in a short three year period.
With a looming tariff threat that has only been kicked down the road for another month, and Premier Ford’s intention to provide Ontarians with COVID-like financial support, the savings from liberalizing alcohol sales in Ontario are getting harder to ignore. These savings will be necessary as Ontario continues to navigate a financial storm, and it is time that the leaders of every party address the further modernization of alcohol and the savings and convenience it brings during this election season.
