Newspaper article The Canadian Press

Ontario Craft Distillers Say New Rules Hamper Small Business Growth

Newspaper article The Canadian Press

Ontario Craft Distillers Say New Rules Hamper Small Business Growth

Article excerpt

Ontario distillers take issue with new rules

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TORONTO - New rules for distillers in Ontario will allow some to keep a bit more money from their own sales, but are otherwise stifling what could be a burgeoning industry in the province, some producers say.

Contained in an omnibus piece of legislation that passed on the last day of sitting for the legislature this year are changes to revenue margins for distillers with on-site retail stores. The government says the move from a Liquor Control Board of Ontario mark-up and comission to a tax structure will let those distillers keep more of their sales.

Under the mark-up structure, distillers kept about 39 per cent from their on-site sales -- about $15.58 on a bottle that retails for $39.95 -- and the tax structure allows them to keep about 45 per cent, amounting to roughly $2.46 more on that $39.95 bottle.

But, says Charles Benoit of the Ontario Craft Distillers Association, only a small number of distillers in the province are operating on-site retail stores.

"I don't want to let (the government) say this is somehow better than it was before," Benoit said recently.

"The handful that already operated retail stores will lose a bit less money on each sale but...this is about what we're not going to have in Ontario going forward, which is the same kind of diverse, spread-out, small distilling community that's able to be a funcitoning business on a small community level (like craft brewers)."

Benoit -- who says his Toronto Distillery Co. is closing next month -- had been calling for the government to instead implement a graduated tax. He points to the model of British Columbia, where the first 50,000 litres produced by a craft distillery are exempt from provincial tax.

"There's dozens and dozens of prospective distillers who have been waiting on seeing the reform in Ontario like we've seen in other provinces before entering, so those will never get off the ground," Benoit said.

Justin Frape, of Frape and Sons Boutique Bitters in Thunder Bay, said the government's changes -- plus the high cost of electricity -- have prompted him to open a distillery in Minnesota.

"While we will maintain our cocktail bitters distillery in Thunder Bay for now, the investment -- it's about $2. …

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