On February 27th, the Government of Alberta tabled its annual budget, highly anticipated by the Alberta Craft Distillers Association (ACDA) after two years of dedicated advocacy for improvements to Alberta’s liquor system. Initially, industry reactions ranged from confusion to disappointment, with some believing the reforms set the sector back rather than moving it forward.
Following a detailed virtual briefing by Minister Dale Nally and his team on February 28th, frustration intensified within the industry. While aggressive responses began to circulate, ACDA chose to carefully evaluate the changes, mindful of ongoing trade disputes with the United States and significant federal excise tax increases imposed by the Canadian government.
Upon thorough review, the ACDA Board acknowledges modest positive steps alongside substantial shortcomings:
Key Changes in Budget 2025:
1. Increased Small Manufacturer Production Limit
The production threshold for small manufacturers has increased to 240,000 litres of absolute alcohol (LAA), with incremental markups starting at 140,000 LAA. Though this represents progress, it falls short of ACDA's recommended limit of 400,000 LAA, which would better support industry growth.
2. Reduced Markup on Ready-to-Drink (RTD) Beverages
Markup reductions on RTD beverages are modestly beneficial. However, significant pricing disparities remain compared to mass-produced imports. ACDA will continue advocating for more equitable markups.
3. Neutral Grain Spirit (NGS) Regulations
The budget allows continued use of NGS if distilled or re-distilled onsite, preserving flexibility and innovation opportunities for craft producers. This positive decision provides much-needed regulatory clarity.
4. Commitment to Distribution Improvements
Minister Nally has committed to immediate engagement regarding distribution access via Connect Logistics, addressing longstanding barriers for craft distillers. While timelines and specific changes remain undefined, Alberta Gaming, Liquor, and Cannabis (AGLC) has already initiated stakeholder engagement.
Persistent Challenges and Advocacy Priorities
Despite these incremental improvements, significant barriers remain:
Craft distillers face a trade war with the U.S., rising inflation, and prohibitive interprovincial trade barriers.
Canadian craft distillers pay federal excise rates 52 times higher than brewers and 13 times higher than U.S. counterparts, compounded by disproportionately high provincial taxes.
Centralized warehousing and distribution access at affordable markup rates remains the key unresolved issue.
ACDA urges all craft distillers to actively participate in the ongoing AGLC consultation, emphasizing the critical need for reduced markup rates through Connect Logistics, proportionate to the smaller production volumes of craft distillers.
Next Steps
On March 20, 2025, ACDA will host its second Distillers Symposium in Edmonton, focused on advocacy strategy, marketing opportunities, industry updates, and fire and safety code reforms. Space is limited, with 20 slots left.
Distillers' Symposium Information:
Date: Thursday, March 20, 2025
Time: 9:30 am – 3:00 pm
Location: Canadian Icehouse @ Ice District, Downtown Edmonton
Post-Symposium Happy Hour:
Time: 3:00 pm – 4:30 pm
Location: Canadian Icehouse @ Ice District, Downtown Edmonton
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