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As our members will be aware, when the government unveiled the new beer licensing framework during a province wide webinar on September 30th, the LCBO and the Alcohol and Gaming Commission (AGCO) surprised CFIG and our members when they announced that there would be a requirement that those stores, chains and independents, who are successful in winning a beer licence, would have to obtain a $150,000 letter of credit for the LCBO and pay an annual fee of $7000 to the AGCO.
Neither the letter of credit, (which requires the retailer ‘park’ $150,000 of their own money for 10 years, along with paying a ‘parking fee’ to their bank of about $3400 a year) nor the $7000 fee, had been discussed with CFIG over the course of the last few months when confidential negotiations around the beer framework were taking place between the government and CFIG.
The explanation given by the government after the webinar was that AGCO inspection fees have not been increased since 1992 and have to be adjusted to keep pace with the actual cost of providing the service. The LCBO stated that the letter of credit was required because this was a new channel for the agency, and hence they needed safeguards in place to ensure payment on behalf of taxpayers.
As a result of our vigorous representations to the government, we are pleased that the Letter of Credit requirement has been dropped. Retailers who are successful in the bid process, can now make payment arrangements with the LCBO and simply pay for what you receive. If you don’t make those arrangements, the Letter of Credit amount has also been reduced to $50,000. As well, the AGCO fee of $7000 will remain in place for chain stores, but will now be cut to $3000, less than half, for independents. We want to thank the government for responding to our concerns and believe this is a reasonable compromise that will allow more independents to bid for a licence.
We want to again remind our members of our position with respect to the sale of beer and wine. CFIG believes that loosening the rules governing the sale of beer, and soon wine, is a step in the right direction. However, we still are of the view that the government, once it decided to open the sale of these products to the grocery channel, should then open it up to all grocery stores. We believe the current framework will continue to evolve. In any event, it became clear to CFIG in February that the government, at this time, was committed to the particular framework of capping the stores at 450. Therefore our role has been and obviously continues to be, trying to ensure that the rules established as part of their framework, are crafted in a way that is as favourable as possible to CFIG members.
For more information, contact:
Gary Sands, Vice President of Public Policy
Canadian Federation of Independent Grocers
