This discussion summarizes the issues related to starting and operating a winery in BC. Significant topics that are covered and which may affect business plans include:
- Provincial licensing rules governed by the LCRB (Liquor Control & Licensing Act)
- Provincial rules administered by the BC LDB (Winery categorization as land-based or commercial)
- Provincial rules governed by the Agricultural Land Commission (applicable to any wineries located in the Agricultural Land Reserve)
- BC Wine Authority (VQA) rules
- Summary of Additional Federal rules (Excise Tax Act) and Municipal rules
Title: Starting a Winery in BC
Date: June 25, 2020
Author: Mark Hicken, BA JD
This document contains a general discussion of the issues noted which was prepared on the date noted above. It does not constitute legal advice and was not prepared for you specifically. If you or your business needs a legal opinion, you should contact a lawyer for individual and updated advice.
This article is intended to familiarize readers with the most significant issues that commonly arise for those who are thinking about starting a winery in British Columbia (BC) or for those who are in the process of doing so. I note that this is not an exhaustive discussion. There are links below to other articles and resources. It is important to review all of these in order to obtain the full regulatory picture.
Licensing Rules (Liquor & Cannabis Regulation Branch or "LCRB")
The first and perhaps most obvious requirement for a winery in BC is that it will need a liquor license. Any business that produces alcohol for consumption as a beverage requires a liquor license. As such, as soon as grapes ferment into wine, a liquor license is required. I note that a grape grower does not require a license so long as they do not produce wine.
The LCRB’s requirements for winery licensing are as follows:
- The winery must produce at least 4500 litres of wine annually. There is a potential exemption from this requirement upon application (and with a valid reason such as crop failure).
- The winery must ferment at least this amount of wine at the licensed winery and also do at least one of certain other manufacturing steps for this amount of wine at the winery. The other steps are: blending, crushing, filtering, aging wine for at least 3 months, packaging, and (for sparkling wine) secondary fermentation or carbonation.
- The winery must own or lease the necessary winemaking equipment to enable it to meet these production requirements.
- The winery must have a physical location that can be licensed (i.e. unlike some other jurisdictions, BC does not license "virtual wineries" nor does it allow shared space arrangements).
The LCRB process for applying for a winery license is set out here: Manufacturer Licensing (LCRB). Criminal record checks and personal history forms are part of the process. It should be noted that the time for processing such applications can be lengthy: applicants should allow at least 6 months. An on-site physical inspection of the licensed facility is required before the license will be issued.
Liquor Distribution Branch ("LDB") Rules for Wineries
In BC, there are certain important operating rules for wineries which are not administered by the LCRB. The most significant of these are the "manufacturer agreement" categorization rules administered by the LDB. These rules can have significant operational and financial consequences for your winery business. While the LCRB issues the winery license, in order to actually do business in BC as a manufacturer of alcohol, the winery will also have to sign a "Manufacturer Agreement" with the LDB (this is required by virtue of the fact that the LDB has a statutory monopoly over the wholesale distribution of alcohol within the province). The LDB categorizes wineries as either "land-based" or "commercial".
There are some significant differences between these categories, the most important of which are explained in this accompanying article: BC LDB Winery Categorization: Land-Based vs. Commercial. I note that there are important rules for land-based wineries (see the article), the most prominent of which are a requirement for at least 2 acres of producing vineyards at the winery production site, a restriction to use only BC grapes in production, and a requirement to own or lease vineyards that are sufficient to produce at least 25% of the grapes used in the winery's total production. These requirements mean that "urban wineries" will generally have to be categorized as "commercial" rather than "land-based".
The article above includes links to the detailed criteria for land-based wineries as well as samples of the relevant manufacturer agreements.
Agricultural Land Commission ("ALC") Rules for Wineries
If the winery is located on land that is part of the Agricultural Land Reserve ("ALR"), then the winery will also be subject to various rules issued by the ALC including those that relate to alcohol production and development. These are explained in the accompanying article: BC Agricultural Land Commission Rules for Wineries. It should be noted that the ALC imposes rules that are similar to the land-based winery rules but which are not the same (see article). The ability to satisfy both sets of rules can be important and careful attention should be paid to these requirements.
In addition, the ALC has created a recent set of rules that limit the amount of development on ALR land and which may significantly affect the ability to build or expand a winery (see article). It is possible to apply for an exemption to these rules but expert advice should be sought if this is contemplated.
BC Wine Authority
The BC Wine Authority regulates the VQA certification system and the use of geographic indicators in BC. As such, most wineries will need to register with the Authority and comply with its rules for wine where VQA certification is sought. Some of the VQA rules can have important consequences for business operations. For example, under the current rules, VQA wine can only be packaged in conventional glass bottles.
Municipal and Federal Rules
A winery may also be subject to municipal rules or regulation. For example, municipal or city bylaws may apply if the winery is located within a municipality or city. Regional district rules may apply if the winery is located in a rural area that is part of a regional district. These bylaws or rules may vary dramatically from place to place but can be very important. For example, in the City of Vancouver, it is only possible to operate an alcohol manufacturing business on land that is zoned either industrial or light industrial. This will exclude many locations.
Finally, the winery may also be subject to federal requirements. Particularly, all wineries will require an excise tax license from the CRA. The products of the winery will also be subject to various rules administered by the Canadian Food Inspection Agency (which regulates the production and labelling of alcoholic beverages).