Association calling for change on how craft distilleries are taxed in Alberta

The Alberta Craft Distillers Association is calling on the Alberta government to update the way that craft distilleries are taxed in Alberta.

The current structure, which has been in place since 2003, taxes distilleries at a lower rate if they distribute products themselves; however, if they want to use the Alberta Liquor and Gaming distribution, Connect Logistics, that markup can be up to six times the amount that it costs them to do themselves. That tax, combined with inflation, is on the verge of putting many distilleries out of business.

“We’re kind of going into the final quarter of the sales cycle, which is really the Christmas season, and it might the last kind of hurrah for many distilleries that are around if they don’t have a good Christmas season, I think we’re going to start seeing a lot of shutdowns coming into the new year,” explained Bryce Parsons, the president of the Alberta Craft Distillers Association.

Minister of Service and Red Tape Reduction Dale Nally’s office says that they are looking into modernizing the liquor markup system, but do not currently have a plan in place.

According to Parsons, talks with the government have been overall positive, but it’s come to a point where businesses need action.

“We feel paralyzed. We don’t know what way to move. We’d like to hold on, we do believe in this province, but it’s a very uncomfortable place to be right now,” he explained.

Geoff Stewart, president and founder of Rig Hand Distillery, says that there is only a small percentage of craft distilleries in Alberta that are profitable. According to Stewart, if the majority were to go out of business, it would have a ripple effect on the local economies.

“We decided to pick this method of producing, where we’re buying from local farmers. And we pay them a little more than they get at the grain elevator. And we have human beings that do all of our jobs here rather than automate things. I pay a living wage, we’re paying people 22 dollars an hour just to cork some bottles. But the reason we’re doing it, is we’re trying to create some really good economic spinoff for our community,” said Stewart.

Rig Hand Distillery in Leduc has taken a different approach. While they say that an upgraded tax model would greatly help their distribution, they’ve become a tourism destination with a distillery attached, because operating as just a distillery may not have been financially viable in the long term.

“We’ve been in our new building for about a year and four months now. I can make as much on one cocktail as I do on a full bottle that I sell through the liquor system. So now we’re a tourism company that has a distilling problem, basically,” said Stewart.

Parsons added, “We just need the government to look at our industry as hey, there’s a lot of possibility here of growing into an authentic Alberta-owned, creating authentic Alberta-owned brands.”