The former leader of the Progressive Conservatives wants to change Ontario's "antiquated" liquor laws so small distillers are treated the same as craft brewers and wineries.
Tim Hudak says there are dozens of wineries in his Niagara-area riding that can sell a glass of VQA wine to people who visit for a tour, and craft breweries have the same option for their customers.
But Ontario's "backwards and outdated" liquor laws prohibit distillers from selling customers a drink on site, even though they can sell them bottles of their alcoholic products at the on-site store, said Hudak.
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"You can pull off the highway and buy some of the products, but if you want to get a Manhattan with one of those local ryes, they are prohibited by law from doing so," he said in an interview.
"When it comes to brew pubs and wineries, of course you can buy a glass."
Hudak said he was surprised to learn distillers can't sell customers a mixed drink.
"They can add in some local products to make it a very interesting experience for the guest, and spin off sales for local farmers through the mixed drinks," he said.
Hudak said Canadian distillers are the third-largest purchasers of food-quality grain, buying 225,000 tones a year, along with 105 million bushels of corn — about 2.2 per cent of Canada's total annual output — for the production of distilled spirits.
Provincial law also forces small distillers to ship their products to the Liquor Control Board of Ontario for distribution to bars and restaurants, but wineries and breweries can deliver directly to bars without going through the LCBO.
Hudak said a friend with a restaurant about five minutes' drive from the Dillon's Distillery in his riding can't get direct delivery of their products for his customers.
"They have to ship it to Toronto to the LCBO warehouse which then delivers it to the restaurant, and that's an anachronism," he said.
A distiller keeps about $10 from a bottle of gin that retails for $33.50 at the LCBO, and Hudak said there should be a "stepped" taxation system that lowers what he calls the "punishing government mark ups" for the smaller distillers.
A 'punishing tax'
There's been an explosion of small distillers in the United States, and Hudak is worried Ontario's liquor laws are discouraging a similar growth in the sector here.
"It's a punishing tax and the result is small ones won't grow and hire more people, and other start-ups will never happen," he said. "We made changes that allowed direct delivery of wine to restaurants. Why can't we do the same for distillers?"
The LCBO said it expects the "emerging trend of craft distillers" to attract more consumer interest and sales of local Ontario products, and is looking for opportunities to highlight their products.
"We are also working on enhancing the on-shelf presentation and visibility for Ontario craft spirits in addition to incorporating education on this emerging industry to our staff and customers, said LCBO spokeswoman Christine Bujold.
"The LCBO further supports local craft distilleries through programs designed to help small Ontario distillers sell their products to bars and restaurants."
The Ministry of Finance declined comment on Hudak's proposed changes because of an ongoing court case involving a Toronto distiller and the LCBO.