Recent Legal Developments Pertaining to the Beer Industry in

Ontario

A Presentation to the Master Brewers’ Association of

CanadaJanuary 28, 2016

Gary M. Gillman

Lawyers, ugh, what are they good for? Absolutely … a lot Lawyers can add value, support/defend the

business Lawyers aid new product development

TAKING CARE OF BUSINESS - EVERY DAY

Current federal regulations are outdated The new Beer Canada beer definition is

flexible “But what about that new wheat beer

everyone is talking about?”  Sugar, sugar and the 4% rule

YOU SAY YOU WANT A NEW BEER DEFINITION?

New Ontario beer deal signed in September, 2015

Maximum 450 food stores to sell 6 packs only

“You mean I can buy stock in The Beer Store”?

A whole lotta independent directors just named

WHY CAN’T WE BE FRIENDS?

Small brewers to have minimum 20% display space at TBS

New provincial regulations require same % for food store displays

Two free listings for small brewers in 7 nearby TBS stores

LET THE CRAFT BEER SHINE IN

Two onsite beer stores now permitted (no cross-selling)

5000L still capacity rule abolished for onsite distillery store

New opportunities to distill and brew at same location (dual licensing still required)

New rules on “swag” merchandising opportunities

ONE BOURBON, ONE SCOTCH, ONE BEER

Revamped listing of non-beer items permitted for onsite beer stores:◦ Items which store, open, carry, serve alcohol◦ Books, magazines, other media related to: (i) food and beverage, (ii)

local history, art and tourism◦ Clothing and accessories which display brewery’s branding◦ Locally-produced artisanal products: “Locally-produced” means

“produced in the Province of Ontario” “Artisanal products” are “products produced in limited quantities using

traditional methods” Note: artisan products would seem to include food products, e.g., maple

syrup, cheese, sausage, bread◦ De-alcoholised wine and beer ◦ Tickets for public events in the community◦ Gift cards and certificates to purchase brewery goods and services 

I’m A Material Guy/Girl

The share capital of TBS has been divided into two classes A non-voting class is reserved for Molson Coors, Labatt and

Sleeman It represents the book and liquidation value of TBS at end

2014 The other class is voting, issuable in series reserved for each

subscriber All breweries qualify to buy such First Equity Shares, for $100 First Equity Shares have a proportional (to sales) liquidation

value based on future increase of TBS net equity TBS to function on a self-funded, break-even basis, any

revenues in excess of annual costs are refunded to First Equity Shareholders pro-rata

Money Changes Everything

Ontario Liquor Control Act was changed to authorize Master Framework Agreement between Province, TBS and the Major Brewers

Two provisions were added of particular interest:◦ 1) Retail licensees can be required to pay a different price for

beer than general public ◦ 2) Retroactive approval given to 2000 framework agreement

(now terminated) between Province and TBS Under the 2000 agreement, Province agreed among

other things TBS would generally have sole right to sell cases of beer (24 units)

Amendments may head off lawsuit filed by Burlington pub arguing violations of competition (anti-trust) laws

I Fought The Law And…

Gary M. GillmanGillman Professional Corporation

Barristers & Solicitors151 Ferrand Drive, Suite 802

Toronto, Ontario M3C 3E5Tel: 416.496.3340

Mobile: 647.273.9943Email: garyg@lawgill.comWebsite: www.lawgill.com

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