Yesterday the Alberta Court of Appeal issued its long awaited decision (at least by guys like me) on the appeal of Steam Whistle’s and Great Western Brewing’s lawsuit over the former beer mark-up policies. In short, the justices uphold the initial decision that the 2015 and 2016 mark up policies contravene s. 121 of the constitution (guaranteeing free trade across provinces), but overturns the trial judge’s decision around remedy for the plaintiffs. Read here and here for a history of the case.

The original court decision awarded Steam Whistle a little over $160,000 and Great Western $1.9 million in restitution. The Appeal Court set these penalties aside, meaning the two breweries have nominally won their case but have nothing monetarily to show for it.

Many of you may be saying this is old news as the mark-ups have been changed. Fair enough, but there are still some very significant findings in the decision that beer people must consider. So here is a brief analysis of the decision and its potential impact. I will briefly note that during my hiatus from beer writing, my work for the government included working on aspects of beer policy, including mark-up rates. None of this analysis includes any information gleaned during that time.

First, the decision upholds the notion that mark ups are not a tax, but a regulatory charge. This may seem like legal hair splitting but had the court declared mark-ups a tax, it would have overturned not just the notion of beer mark-ups but the validity of a dozens of fees and charges applied by government. In short, liquor boards are permitted to charge mark-ups to producers.

Second, the 2015 mark up and the 2016 grant program, both of which offered a benefit to Alberta breweries over those located elsewhere have been deemed unconstitutional. It is relevant to note the justices come to that decision by opting to look at the Alberta policies in isolation. At both trial and before the Court of Appeal the government presented evidence of trade barriers of various forms imposed by other provinces, including tasting panels, restricted application processes, preferential shelf placement and so on. The court did not deny these barriers but decided they were not relevant in determining the constitutionality of Alberta’s actions.

What this means, significantly, is that the validity of those barriers remains to be tested by the courts. Should an enterprising Alberta brewery launch a lawsuit against, say, Ontario, there remains a chance they may win.

Third, the justices overturned the remedies to Steam Whistle and Great Western. I must say I always found how the trial judge came to those amounts to be perplexing. They basically took numbers provided by the plaintiffs out of context and applied them as the penalty. The fact is the breweries calculated their numbers differently and did not intend the figures to be their “ask”. It was an odd decision rightfully overturned.

Overall what the decision means is that Steam Whistle and Great Western have won something of a pyrrhic victory. They got a statement that two, now-rescinded, policies were unconstitutional. But they received no remedy. Further, those policies proved to be rather successful in building the Alberta craft beer industry. Both breweries lost market share during that time. This court decision will not help them regain that market share. It is gone for good.

I end up really wondering why the two breweries bothered with this high profile court action in the end? It didn’t stop the policies from having their intended effect. And it soured both companies’ brands in the Alberta market – at least among those who care and pay attention. Both spent possibly hundreds of thousands of dollars on lawyers and what do they have to show for it?

Finally, what is next? Obviously the breweries could appeal to the Supreme Court, but this action seems unlikely. There is little to be gained for the breweries and, given the Comeau decision, the case hardly breaks new ground. Two other lawsuits – one a class action fronted by Artisan Ales and another by a conglomeration of B.C. breweries – are still pending. Both had been put on hold pending this court decision. I cannot know what their lawyers are thinking, but it is unclear how their cases will end up with a different result than this case.

I imagine all parties involved may just want to put this chapter behind them and try to figure out how to sell beer in the new Alberta environment, one with a stronger and more vibrant local industry.

And since I am tying off loose threads here, over the summer the file was closed on Artisan Ales trade complaint through the Agreement on Internal Trade (AIT). A compliance panel called at the behest of Artisan Ales found the Alberta government to be fully in compliance with their order and dismissed Artisan Ale’s case.

It was a fun few years for a beer policy geek in Alberta. With the Court of Appeal decision, I imagine the fun has come to an end for now. At least until someone challenges those stupid tasting panels in other provinces.