Halifax craft brewery Unfiltered files lawsuit against the NSLC

Unfiltered Brewing is challenging a mandatory 50-cent fee on every litre of beer it sells, arguing the Crown corporation is not authorized to collect it.

Unfiltered Brewing says mandatory fee imposed by liquor distributor is unconstitutional

Andrew Murphy is one of the partners in Unfiltered Brewing Inc. The brewery is taking the NSLC to court to challenge a fee it says the Crown corporation doesn't have the power to collect. (Paul Poirier/CBC)

A Halifax brewery is taking the Nova Scotia Liquor Corporation to court over a fee it says is unconstitutional.

Unfiltered Brewing Inc. filed papers on Monday in the Supreme Court of Nova Scotia suing the NSLC over a markup fee of 50 cents for every litre of beer it sells or gives away as a sample.

According to the filing, that fee cost the brewery about $24,000 in its first year of operation.

'The NSLC doesn't have the power'

The brewery says the fee equates to a tax or levy the NSLC is not authorized through legislation to be able to collect.

"The NSLC doesn't have the power, [it] has never been given the power by the legislature to tax anyone," Richard Norman, the company's lawyer, said in an interview.

"They have the power to regulate certain things and do certain things, but taxation is not one of them."

Andrew Murphy, one of the partners in Unfiltered, said his company gets no benefit from the markup because they don't sell their beer in NSLC commercial outlets. While the company has good relations with the corporation, it offers them no services, he said.

Money could be better spent

When Unfiltered first started operating about a year ago, Murphy said he and his partners took it for granted they had to pay the fee. But they researched the issue and it wasn't long before they decided to challenge the fee.

Earlier this month the province's attorney general gave Unfiltered consent to begin the proceeding against the NSLC. Murphy said he wants the fee gone and the money collected so far to be returned.

Margins aren't big for microbreweries and that money could be put to better uses, he said. The money currently going to the NSLC would be enough for them to buy more equipment to increase capacity by 20 to 25 per cent, said Murphy.

"And we need to make more beer. We're selling it all, quickly."

NSLC offers lots of industry support

Denise Corra, a spokeswoman for the NSLC, said she wouldn't comment on the lawsuit because it's before the courts.

But Corra said the money raised from the markup fee goes into NSLC's general revenue. The fee for craft beer brought in about $954,000 during the last fiscal year, and the fees paid by local wine and spirits producers brought in nearly a million dollars more.

Corra said the corporation supports local industry by putting $50,000 into the craft brewing association each year, along with other efforts. The NSLC pays more for the locally produced beer sold in its stores than they do commercial beer and do "a great deal" of promotion and marketing for the products they sell, she said.

"There are now 37 microbreweries in Nova Scotia, where there were just a handful less than 10 years ago," she said.

An 'outdated' approach

Even with the growth, Murphy said he thinks his industry is over-regulated. He would prefer to see a system similar to the United States, where beer is accessible in grocery stores.

"I think that the NSLC retail store method is outdated and needs to go."

The matter is scheduled to go to court on Sept. 6.

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