This op-ed was published in the Edmonton Journal on Monday, December 7, 2015.

Talk about a quick hangover. As predicted, a craft brewery has now officially pulled out of Alberta after our government made it more expensive for them to sell their craft brew in the province.

Calling the Alberta government’s massive tax hike on out-of-province small beers “a major step back for the craft beer industry,” Ontario-based Muskoka Brewery announced it will “wind down operations” in Alberta by the end of 2015.

The Alberta government’s October budget slipped in the hike in a policy many sold as being good for the craft beer industry. Clearly that wasn’t the truth.

Under the new mark-up scheme, small brewers outside of the ‘New West Partnership’ – an agreement between Alberta, British Columbia and Saskatchewan – faced extreme hikes, as they were now excluded from the small brewers rate. For Muskoka Brewery, the tax rate shifted from 51 cents per litre up to $1.25 per litre, a 145 per cent increase. That’s 24 cents per bottle; a price increase they said makes it “now unsustainable to sell our beer in these provinces.”

The government’s new policy doesn’t hit the large beer producers nearly as hard. Budweiser and Labatt Blue, for example, faced tax hikes of 2 cents per bottle.

The majority of the founding members of the Alberta Small Brewers Association have been lobbying the government for increased fees on their out-of-province competitors for years. In 2013, 12 of 16 of the association’s members asked the then-PC provincial government to impose higher taxes on out-of-province small and medium-sized brewers.

Their argument was that other provinces tax Alberta beers at higher rates than the local brewers, so we should do the same thing here. It’s the policy equivalent of “but he started it!”

Lowering the local tax rate would have been a perfectly fine way to give local breweries an advantage. It would not have raise prices for Albertans or other small brewers, nor would it have limited the selection of craft beers Albertans can enjoy.

The NDP’s October budget did give local producers a boost by changing the graduated mark-up structure. Now tax hikes won’t be retroactively applied if a brewery produces more than a certain amount of beer.

But those lobbying the government wanted to take it further – and the NDP has indulged them. They didn’t just want lower taxes on local small brewers; they wanted higher taxes on out-of-province small brewers. They wanted economic protectionism – a way to unfairly price your competition out of the market.

And now, as expected, it’s worked. Muskoka Brewery has pulled out of the province despite “remarkable customer support and sales momentum in these markets,” and a “growing demand for our beers.” Albertans were drinking Muskoka, enjoying the option of purchasing those craft beers.

Hiking the mark-up on out-of-province craft beer doesn’t just negatively impact small breweries, it means higher prices for Alberta consumers in the short-term, and less selection on Alberta shelves in the longer-term (though the first casualty only took three weeks). Limiting selection doesn’t only impact consumers – Alberta’s liquor retailing small businesses will suffer the loss of those craft beers as well. 

Other craft breweries have expressed concern over the increased mark-up, including Scotland’s Innis & Gunn, which saw an increase of 24 cents per bottle, and Toronto’s Steam Whistle Brewery, which increased by $3.01 per case. 

Artisan brewers in smaller Canadian centres, such as Yukon Brewing (which only employs a dozen or so staff year-round), have been hit hard as well, as they rely more heavily on exports – in Yukon’s case mainly to Alberta and BC.

In mid-November, Alberta Small Import Agencies, which represents about 20 businesses, called for the government to reverse the policy. The group said 77 per cent of the 3,455 beers those businesses bring into the province are now more expensive. Gulp.

In Alberta we value the choice, selection and price advantages that come from privatized liquor sales. This policy reduces those advantages, and that’s a shame for Albertans, especially those who enjoy tasting neat craft beers and supporting small breweries across Canada and abroad. 

Lowering beer taxes and mark-ups across the board would have been the best way to support small brewers. Instead, the NDP craft brew tax hike is a major hiccup in our access to beers in the province. Thanks for the buzz kill, government.