Supreme Court's free-the-beer ruling sparks fears of cannabis trade restrictions

A Supreme Court of Canada ruling on interprovincial beer imports has sparked fears that provinces and territories will be free to impose restrictions on cannabis flowing over their borders at a time the industry is in its early stages of growth.

'What this ruling really is, is a missed opportunity to liberalize trade,' Calgary economist says

A beer is poured into a glass at Banded Peak Brewing Co. in Calgary. (Anis Heydari/CBC)

A Supreme Court of Canada ruling on interprovincial beer imports has sparked fears that provinces and territories will be free to impose restrictions on cannabis flowing over their borders at a time the industry is in its early stages of growth.

In its ruling on the so-called free-the-beer case, the top court said provinces and territories can restrict imports of goods, as long as their intent isn't to impede trade.

Despite that proviso, economists said there is enough wiggle room in the decision allowing provinces to impose restrictions on the legal trade of cannabis.

It has at least one local pot company worried.

"It brings us back to a draconian system that does not rely on free trade or interprovincial free trade," said Jason Kujath, co-founder of 51st Parallel Inc., a Calgary-based startup planning to begin producing cannabis at a Lethbridge facility next year.

Kujath worries other provinces will restrict imports of outside cannabis products and give local growers special advantage.

These concerns were echoed by Jodie Emery, a longtime cannabis activist and spokesperson for Cannabis Culture, a trade magazine that was also an intervenor in the Supreme Court case.

Cannabis activist Jodie Emery said she's disappointed in this week's Supreme Court of Canada ruling on the so-called free-the-beer case. (CBC)

"I"m very disappointed that the Supreme Court of Canada ruled against free trade and against free choice with a very flimsy argument in favour of defending the status quo with the alcohol distribution model throughout Canada that restricts the free movement of goods," Emery said.

The case centred on Gerard Comeau, a New Brunswick man who was fined for bringing home a truck full of cheap alcohol from Quebec. His lawyers argued the constitution was on his side, but the country's highest court took a different view.

"In this case, the federalism principle is vital," the court wrote. "It recognizes the autonomy of provincial governments to develop their societies within their respective spheres of jurisdiction."

Emery worries the decision will negatively affect the flow of cannabis goods across the country.

"I was hoping that a decision in favour of Comeau would allow cannabis grown in B.C. to be sold to people in Ontario and New Brunswick," she said.

Ruling gives provinces authority to control flow of cannabis

The ruling doesn't automatically stop this from happening, but gives provinces authority to control the supply of cannabis across their borders.

With any trade restrictions, there are winners and losers — and consumers typically lose, said Trevor Tombe, an economist at the University of Calgary.

"Prices will be higher; productivity will be lower," Tombe said. "But certain producers in certain provinces will come out ahead.

"What this ruling really is, is a missed opportunity to liberalize trade. And it really kicks the can a little bit further down the road and puts the ball in the court of government" to address trade conflicts.

Andrei Sulzenko, a fellow with the University of Calgary's School of Public Policy, agreed the decision allows provinces to restrict cannabis imports. The only reason he sees that scenario unfolding is to achieve a protectionist agenda.

"As we've seen in the current dispute between B.C. and Alberta, and now Saskatchewan, about the [Trans Mountain] pipeline, protectionism runs deep across the country," Sulzenko said.