Halifax craft brewer loses legal battle against NSLC 'tax grab'

Unfiltered Brewing Inc. had opposed a mandatory fee it was being charged to sell or simply give away beer on its own premises in Halifax.

Unfiltered Brewing had opposed mandatory fee to sell beer or give away samples on its own property

Andrew Murphy, one of the partners in Unfiltered Brewing Inc., is shown in August 2016. (Paul Poirier/CBC)

A Halifax craft brewery has failed in its bid to have a judge throw out a mandatory fee it must pay the Nova Scotia Liquor Corp. so it can sell beer on its own premises or even just give away samples.

Unfiltered Brewing Inc. launched the court action in August 2016, arguing the NSLC had no legislative authority to impose a markup fee of 50 cents per litre of beer, an amount that has since been reduced.

Unfiltered has an NSLC permit to sell from its brewery on North Street, but does not sell in NSLC stores. The company has said the fee cost Unfiltered $24,000 in its first year of operation.

But in a decision released this week, Nova Scotia Supreme Court Justice Glen McDougall ultimately sided with the liquor corporation and ruled it had the "statutory mandate" to impose the markup.

Unfiltered had argued the markup amounted to an "unlegislated tax grab," according to the decision, and that it "makes running a small business in Nova Scotia that much more difficult." The company noted the money collected goes into the province's general revenues and argued it doesn't benefit the brewery in any way.

Unfiltered Brewing sells beer from its Halifax location. (Submitted by Andrew Murphy)

Under the Liquor Act, the NSLC has complete control over how alcohol is sold in Nova Scotia. It agreed the fee went into general revenues, but argued in court that it could legally charge the markup and noted Unfiltered was aware of it when it received its permit.

"Clearly, we respect the court's decision in this case and we're pleased with it, but we have just received it so we do need to take some time to review it over the next few days," NSLC spokesperson Bev Ware said Thursday.

The liquor corporation continues to charge alcohol makers who sell or give away their product on their own premises, however the formula changed in December 2016. It now amounts to five per cent of all sales on the premises, which the province predicted at the time would save craft brewers a total of $800,000 a year.

The lawyer representing Unfiltered Brewery declined Wednesday to comment on the outcome of the case.

It's not clear if the company intends to appeal.

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