Oct 11, 2017

R v Comeau: Reflections from the Perspective of Health

R v Comeau, 2016 NBPC 3 (CanLII)

Rob Cunningham, B.A., LL.B., M.B.A., is a lawyer and Senior Policy Analyst for the Canadian Cancer Society who has been involved in tobacco control for almost 30 years, since 1988.

Introduction

In R. v. Comeau,[1] Gérard Comeau, a New Brunswick resident living in Tracadie near the Quebec border, purchased 15 cases of beer and 3 bottles of liquor just inside Quebec (in Pointe-à-la-Croix and on the Listuguj First Nation reserve). He brought the alcohol back into New Brunswick. He was taking advantage of a lower pricing system in Quebec compared to what the New Brunswick government requires, and was doing just as many other New Brunswick residents do,[2] at least those living near the Quebec border.

As in most other provinces, New Brunswick legislation provides for a government monopoly on alcohol wholesaling (all provinces) and retailing (most provinces). Subsection 134(b) of the New Brunswick Liquor Control Act[3] (“s. 134(b)”) is at issue in Comeau. Subsection 134 provides:

134 Except as provided by this Act or the regulations, no person, within the Province, by himself, his clerk, employee, servant or agent shall

(a) attempt to purchase, or directly or indirectly or upon any pretence, or upon any device, purchase liquor, nor

(b) have or keep liquor,

not purchased from the Corporation.

This section is longstanding and has been in place since 1927 with similar wording.[4] The “Corporation” is the New Brunswick Liquor Corporation (NBLC), also known as Alcool New Brunswick Liquor (ANBL). The result of s. 134(b) is that consumers/restaurants/bars and others in New Brunswick can only have alcohol purchased through NBLC.

Mr. Comeau was charged under s. 134(b). He admitted that his actions infringed s. 134(b), but argued that he could not be convicted because the section was a non-tariff barrier that infringed s. 121 of the Constitution Act, 1867[5] (“s. 121”), and was thus unenforceable. Section 121 provides:

121. All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.

The New Brunswick Provincial Court, in a 2016 judgment of the Honourable Judge Ronald LeBlanc, concluded that s. 134(b) was an unconstitutional infringement of s. 121. The case is now on appeal to the Supreme Court of Canada.

At its core, Comeau is a beer smuggling case. If today it is 15 cases of beer, why not 15 truckloads tomorrow, or 1500 truckloads the month after? There is no constitutional right to smuggle beer. Subsection 134(b) is essential to ensure there is a controlled distribution system for a harmful product, and to ensure that the objectives of higher alcohol prices and taxes are met, namely decreased alcohol consumption and increased government revenue.

Comeau has been mischaracterized by some as being a case about allowing beer brewed in one province to be able to be sold in another province. That is not what the case is about. In fact the trial judgment itself described this issue as a “collateral issue” that “does not deal directly with the issue of the interpretation of the impugned legislation.”[6]

Comeau has serious implications not only for alcohol, but also for the smuggling of tobacco and cannabis, among other products. The case also has serious implications for the ability of provincial governments to adopt legislation for products such as alcohol, tobacco, and cannabis, including to control the retail distribution system for such products.

If the Comeau trial judgment is sustained as is, it would also provide a mechanism for companies to get around provincial (and municipal) health, safety, environment and other legislation, resulting in a race to the bottom for provincial standards protecting the public. A single province with a weak standard could have products manufactured and exported to other provinces, regardless of more stringent standards (non-tariff barriers) in those other provinces.

With respect, the trial judgment is in error. Subsection 134(b) is fully constitutional.

The proceedings to date

Mr. Comeau made his cross-border purchases on Oct. 6, 2012, and was given a ticket of $292.50 stating that he “did have or keep liquor not purchased from the Corporation.” The alcohol he purchased, totalling 354 bottles or cans of beer (15 cases), and 3 bottles of liquor, was seized. This was part of a two-day active enforcement initiative.[7]

The trial in New Brunswick Provincial Court was held August 25-28, 2015. There was an agreed statement of facts.[8] The only real issue was that of constitutionality and s. 121. At trial, the Crown called as witnesses the Senior Vice President and Chief Financial Officer of NBLC, the police officer who made the seizure, an expert regarding s. 121, and the Chief Financial Officer of Moosehead Breweries. The defence called an expert regarding s. 121, as well as a private investigator regarding cross-border alcohol purchases.[9]

The trial judgment was rendered April 29, 2016. The judgment prompted legal commentary[10] as well as extensive media coverage.

Instead of appealing to the New Brunswick Court of Queen’s Bench, the Attorney General of New Brunswick sought leave to appeal directly to the New Brunswick Court of Appeal. Counsel for Mr. Comeau did not oppose the leave application, stating the trial judgment “raises important legal questions of public importance. The respondent is unable to deny that these questions are deserving of consideration by an appellate court.”[11] On October 20, 2016, Larlee JA dismissed, without reasons, the application for leave to appeal.[12]

On May 4, 2017, the Supreme Court of Canada granted New Brunswick’s application for leave to appeal.[13] Mr. Comeau had consented to the application.[14]

The trial judgment and s. 121

The Comeau trial judgment concludes that s. 121 precludes all tariff and non-tariff barriers being adopted by provinces and by the federal Parliament, with non-tariff barriers being defined very broadly in scope. The trial judgment stated:

75. For the purposes of the trial in this matter, a “tariff barrier” was defined as a tax or a payment of money assessed on the basis of the weight or volume of the product or as a percentage of the value of the product entering the jurisdiction in question. It adds to the cost of imported goods and is one of several trade policies that a country can enact. A “non-tariff barrier” was not specifically defined but examples were given. They can come in a variety of forms, all of which refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products more difficult or more costly. Government action in the form of laws, regulations, policies or restrictions can effectively increase costs and form non-tariff barriers to trade.

78. US Customs officials began what has been described as the “search and detain” protocols. These had the effect of delaying the transporting of goods across the US border. Increased paperwork, assertive inspections, passport requirements and other means were used to delay the crossing of goods, all of which resulted in increased costs to the exportation of goods to the US market, thereby constituting non-tariff barriers to trade.

90. The strong and harmonious economic union envisaged by our Fathers of Confederation had to have been based on free trade, not on punishing internal non-tariff trade barriers, such as had been put in place by the Americans. The benefits to be realized by opening up the markets of each province to the products of the others would have been curtailed by allowing non-tariff barriers to be imposed by each of them.

152. Dr. Bateman listed examples of barriers which either intentionally or in effect obstructed internal free trade. These include:

• Differential tax rates and other tax policies […]

•[…]

• Differential product standards, labelling requirements, and grading schemes;

157. In my opinion, this is a very compelling argument. A robust interpretation of section 121 would create conflict with the exercise of provincial powers under section 92 of the Constitution Act, 1867. Dr. Bateman gave the example of a province which, for purposes related to their internal needs, imposes restrictions on imports of any particular product from other provinces. This would be an impediment to free trade in that commodity. A robust interpretation of “admitted free” in section 121 would tear down those restrictions as being impediments to free trade, which weakens the ability of that province to protect its own interests.

158. The interpretation of section 121 sought by the defence amounts to a request to this Court to dismantle a regime that has been in place since the inception of the Constitution in 1867.

161. The effect on section 92 of the Constitution Act, 1867 of defining “admitted free” as requiring free trade among provinces without any trade barriers, tariff or non-tariff, whether found in federal or provincial legislation, such as advanced by the defence, would eliminate any scheme that would interfere with the free movement of goods inter-provincially, whether for agricultural products, produce, manufactured goods, liquor or any other product regardless of whether or not such regulated scheme was enacted for the benefit or the protection of the residents of that province. It would likely only allow for the regulation by the provinces of matters that would not interfere with inter-provincial movement of these goods. Justice Rand in the Murphy case called these “subsidiary features”. How exactly this would play out would no doubt be the subject of much political maneuvering and court interpretations.

185. I find that the penalizing non-tariff barriers to trade imposed by the Americans in the years leading up to the repeal of the Reciprocity Treaty shows that the Fathers of Confederation were not simply concerned with eliminating customs duties as between the provinces. Rather, they wanted to avoid all such barriers, tariff or non-tariff. The barriers to trade as between the two countries were based on non-tariff schemes, not taxes or customs duties.

191. I am certain that interpreting section 92 of the Constitution Act, 1867 as permitting the free movement of goods among the provinces without barriers, tariff or non-tariff will have a resounding impact. Indeed, the consequences of this finding could be significant.

As Judge Leblanc states, his judgment overturns “a regime that has been in place since the inception of the Constitution in 1867.”[15] Judge Leblanc states that all non-tariff barriers applying to products crossing provincial borders contravene s. 121 – this would include product taxes, product standards, packaging and labelling measures, and controlled retail sales systems.

The trial judgment is erroneous

With respect, the trial judgment contains a mistaken approach. The trial judgment is purporting to re-write the Canadian Constitution in a way that is radically different than the Constitution has been for the last 150 years. Judge LeBlanc consciously sets aside longstanding jurisprudence regarding s. 121, referring to four cases,[16] but making no reference to other pertinent cases specifically considering s. 121.[17] Further, the trial judgment’s interpretation of s. 121 would negate many provincial powers found in s. 92 of the Constitution Act, 1867.

If there is to be such a fundamental change to the Constitution and to the Canadian federation, then the proper approach should not be through wholesale judicial re-writing of the Constitution, but rather through constitutional amendment, or through cooperative federalism. As Judge Leblanc stated “The very nature of the Canadian federation is at stake.”[18]

In fact, provinces and the federal government have been acting together to advance internal free trade through the Agreement on Internal Trade (1995-2017)[19] and now the Canadian Free Trade Agreement that came into force on July 1, 2017.[20] These agreements have enforceable remedies. For example, a panel ruled in 2017 that lower alcohol taxes for small brewers in Alberta, but not from other provinces, infringed the Agreement on Internal Trade.[21]

The trial judgment would, if sustained, create a constitutional economic right for business, a type of property right, with no notwithstanding clause or exceptions available. This should not be the case.

In 1982, the then framers of the newly-amended Constitution made a clear decision to not include property rights in the Charter, an outcome that has been reiterated by the Supreme Court.[22] The scope of s. 121 could have been expanded as part of the 1982 constitutional renewal, but this was not done. Section 121 should not now be interpreted to become a type of property or economic right for well-situate businesses to overturn a vast array of laws that protect people and advance the public interest.

Contemporary free trade agreements are very complex and take years to negotiate. This is not surprising given the complexity of modern Canada and other countries. The final (2015) Agreement on Internal Trade was 237 pages long (English version), while the Canadian Free Trade Agreement is 345 pages in length (English version). The new Canada-European Union trade agreement taking effect in 2017 is 453 pages in length (English version).[23] Agreements can be updated and amended as circumstances arise, such as technological developments; international developments; arbitral decisions; new products; new economic needs and opportunities; new health, environment, public safety and other issues; the need for new exceptions; and application to not just products, but also to services, energy, investment, government procurement and labour mobility. Canada’s Agreement on Internal Trade was amended 14 times over its 20 year existence.[24] The judiciary simply cannot respond as efficiently or effectively.

All of this context and complexity underlines why s. 121 should not now be re-interpreted to apply to all non-tariff barriers in addition to tariff barriers. Such complex trade matters in a modern society with multi-faceted public interests should be left to elected representatives who are best placed to deal with these matters, including to make modifications. There is no international free trade agreement anywhere that prohibits governments from adopting all non-tariff barriers.

If it is so obvious that that the Fathers of Confederation intended s. 121 to apply to all free movement of goods, regardless of any tariff or non-tariff barriers, why was there no apparent litigation on s. 121 until the Gold Seal case (SCC, 1921), more than 50 years later, with no litigation initiated by either Attorneys General or private commercial interests? In those first 50 years, there was certainly no shortage of constitutional litigation regarding federal and provincial alcohol legislation using every possible ground of attack, with ample opportunity to raise s. 121.

Companies should not be able to use s. 121 to overturn provincial and municipal health, safety, environmental and other legislation that applies to products crossing provincial borders (which is most products), and to use the threat of s. 121 litigation to block adoption of laws.

For example, the trial judgment’s interpretation of s. 121 would provide a new basis for pesticide companies to seek to overturn the ban on cosmetic use of pesticides by Hudson, Quebec and by other municipalities, as well as by provinces. A challenge to the Hudson pesticide bylaw was dismissed in 2001, with the Supreme Court holding that the bylaw was intra vires the municipality’s authority (s. 121 was not an issue).[25]

As another example, the trial judgment’s interpretation of s. 121 would be a basis for global tobacco companies operating in Canada to seek to overturn provincial legislative measures, such as bans on menthol cigarettes, initially adopted by Nova Scotia in 2015 and since followed by 6 other provinces.[26]

It is worth noting that tobacco companies have abused international trade agreements as a means to attempt to overturn tobacco legislation. For example, the tobacco industry has brought challenges against plain packaging in Australia[27] and significant packaging restrictions (though not plain packaging) in Uruguay.[28] Though these legal challenges to date have been dismissed, the challenges have been expensive and time-consuming for governments to defend, and they have had a chilling impact on other countries bringing forward their own legislation. For example, New Zealand explicitly stated that it was delaying plain packaging for several years waiting to see the outcome of the legal challenges involving Australia.[29] In Canada, tobacco companies have opposed warnings covering 50% of the front/back of cigarette packages,[30] and later 75%,[31] as well as a ban on flavours in cigarettes[32] and, since 1994, plain packaging,[33] in part on the basis that these measures infringe international trade agreements.

The tobacco industry’s legal challenges to Australia’s plain packaging prompted the 12 signatories (including Canada) to the Trans-Pacific Partnership (TPP) to simply exclude tobacco control measures from investor-state claims under the investment chapter of the TPP.[34] In Canada, tobacco control measures have been excluded from the Canadian Free Trade Agreement.[35]

Further implications of the trial judgment

The impact of the Comeau trial judgment, if sustained as is, would mean that a wide range of provincial measures would be invalid for products brought in from other provinces, even if the measure also applied to products made within the province. For taxation, examples include taxation of not only alcohol, tobacco and cannabis, but also gasoline, carbon, and many other matters.

An important category of provincial regulation is product standards. For alcohol, there may be measures establishing a maximum level of alcohol content, for example. In Ontario, overproof alcohol 94% is not allowed for general sale, and “is restricted solely to those who require ethyl alcohol of that strength for research, experimental, scientific, chemical, therapeutic or commercial manufacturing purposes”.[36]

For provincial product standards specific to tobacco products, examples include:

  • package labelling measures to enforce taxation, such as province-specific tax stamps on packages of tobacco products; here are examples from Ontario (with “ON” and yellow colour) and Manitoba (with “MB” and grey colour);[37]

  • provincially-required tobacco package health warning requirements;[38]

  • minimum quantities per package of cigarettes or other tobacco products;[39]

  • bans on flavoured tobacco products, including menthol, as mentioned; Quebec, New Brunswick and PEI prohibit flavours in all tobacco products; Alberta, Ontario, Nova Scotia and Newfoundland and Labrador have certain exceptions, such as for certain cigars and pipe tobacco;[40]

  • bans on confectionary resembling a tobacco product (e.g. candy cigarettes, chocolate cigars);[41]

  • bans on cigarette vending machines;[42]

Examples of provincial product standards from other areas include:

  • energy and water efficiency requirements for appliances and other products;[43]

  • energy efficiency requirements for light bulbs, including bans on incandescent light bulbs;[44]

  • motor vehicle emission standards;[45]

  • motor vehicle safety standards;[46]

  • traceability systems for animals, animal products and animal by-products;[47]

  • safety requirements for elevators;[48]

  • safety and labelling requirements for upholstered and stuffed articles;[49]

  • safety and labelling requirements for farm implements;[50]

  • safety requirements for amusement devices, such as those used for rides at fairs and exhibitions;[51]

  • Quebec’s restrictions on marketing to children, which apply in various respects to packaging;[52]

  • countless other measures.

The trial judgment leads to an indefensible constitutional result. Provinces could adopt health, safety, environmental, taxation and other measures that apply to products manufactured within the province, but the measures could not apply to products manufactured in other provinces. The trial judgment stated that s. 121 “would eliminate any scheme that would interfere with the free movement of goods inter-provincially” including regulations “enacted for the benefit or the protection of the residents of that province” and “would likely only allow for the regulation by the provinces of matters that would not interfere with inter-provincial movement of these goods.”[53] Such a result would decimate a province’s ability to protect the public interest as well as a province’s ability to legislate pursuant to s. 92 of the Constitution Act, 1867. It would mean that goods originating from within the province would be subject to receiving more stringent regulatory treatment than goods from other provinces. This is not sustainable.

Section 121 only applies to interprovincial trade, and does not apply to goods entering a province through international trade. The trial judgment’s interpretation of s. 121 means provincial taxes and regulatory measures could thus apply to goods originating from within the province and from foreign countries, but not from other provinces. This is also not sustainable. One could anticipate that foreign companies and governments would strongly object that goods exported to a province would be subject to more stringent regulation than goods from other Canadian provinces. Companies within the province would also seek to have provincial measures weakened.

In coming to his conclusion about the interpretation of s. 121, Judge LeBlanc cited the deliberately protectionist measures at US customs houses regarding entry of goods from British North America into the US.[54] It is quite a leap, however, to go from these deliberately protectionist and comparatively narrow non-tariff actions to say that s.121 applies to prohibit all non-tariff barriers.

Subsection 134(b) falls within provincial responsibility under s. 92 of the Constitution Act, 1867. Retail sales and the regulation of a retail sales system fall within s. 92(13) (property and civil rights) and s. 92(16) (matters of a merely local or private nature in the province). Direct taxation is a provincial responsibility under s. 92(2). Price regulation is within provincial responsibility, as has been recognized in many cases.[55] It may be that commercial interests do not like the higher alcohol prices that result from provincial alcohol taxes and administrative pricing systems, but that does not mean that the higher prices are unconstitutional. Commercial interests may not like a controlled wholesale and retail distribution system that helps to prevent contraband, to ensure revenue collection, and to reduce demand, but that does not mean that the distribution system is unconstitutional. It should not be the role of the courts to evaluate the merits of a taxation/pricing policy and a retail distribution policy that applies to all products, regardless of the jurisdiction of origin.

Malcolm Lavoie has proposed that every provincial or municipal law that affects a product originating from another province would need to be newly subject to constitutional review and justification in court, even if the law applied equally to out-of-province and to in-province companies.[56] He proposes that for any such measure (and there are thousands of them), there should be a demonstration that there is “a rational and functional relationship to the achievement of a valid, non-protectionist objective”.[57] This would not be a good constitutional approach. This would be a significant expansion of the scope of s. 121. Every technical regulation would become subject to constitutional scrutiny. This would establish a new mechanism to overturn, or to threaten to overturn, laws that advance the public interest. It would have a chilling impact on many sound provincial and municipal laws resulting in delays and non-adoption, especially for smaller provinces and municipalities. Further, it would shift ultimate decision-making from democratically elected legislatures and municipal councils to the judiciary.

Ian Blue, counsel for Mr. Comeau, has stated that s. 121 does not prevent “regulation of liquor stores, imposition of direct taxes on liquor, and the regulation of the age of consumption.”[58] This begs the question as to what level of retail regulation Mr. Blue would find acceptable – why not a government retail system? It also raises the question as to why a direct tax on liquor would be acceptable, but something administratively equivalent to a liquor tax would not be acceptable.

In R. v. Gautreau (1978),[59] the New Brunswick Court of Appeal upheld s. 134(b) in a case with facts similar to Comeau. In Gautreau, 22 cases (264 bottles) of beer were purchased in Quebec by an individual who brought the beer back to New Brunswick. The Court upheld s. 134(b) as intra vires the province (s. 121 was not at issue in the case). The Court stated “It is to be observed that the Liquor Control Act does not in express terms prohibit the importation of liquor but purports to regulate and control liquor when it is within the Province.”[60]

In Air Canada v. Ontario (Liquor Control Board) (1997), the Supreme Court cited Gautreau and noted that while provinces do not have the constitutional authority to completely prohibit the importation of liquor into the province, a province “may effectively limit commerce in alcohol to the mere carrying of spirits through its territory.”[61] The Court recognized the extensive scope provinces have for alcohol legislation.

Provincial pricing and taxation of alcohol

Mr. Comeau was engaged in the functional equivalent of alcohol tax evasion. He was taking beer from a low-price province to a higher price province, thus undermining the public health and public revenue objectives for New Brunswick’s higher alcohol prices. Put simply, Mr. Comeau was engaged in beer smuggling.

Higher alcohol prices reduce alcohol consumption, and consequently the harmful health and social effects of alcohol. Reports have outlined the alcohol taxation and pricing systems in Canada, and the public benefits – including reduced consumption – that arise because of higher alcohol prices.[62] The WHO Global Strategy to Reduce the Harmful Use of Alcohol states that “increasing the price of alcoholic beverages is one of the most effective interventions to reduce harmful use of alcohol”.[63]

Canada’s Chief Public Health Officer states “At least 3.1 million of those Canadians drank enough to be at risk for immediate injury and harm with at least 4.4 million at risk for chronic health effects, such as liver cirrhosis and various forms of cancer”. The Canadian Cancer Society states “[r]esearch shows that drinking any type of alcohol – beer, wine or spirits – raises your risk of cancer. The less alcohol you drink, the more you reduce your risk.”[64] The Heart and Stroke Foundation states that “Heavy drinking and binge drinking are risk factors for high blood pressure & stroke”.[65]

Provincial pricing and taxation of alcohol are complex, in part because of the large variety of alcohol products on the market. Some provinces have specific taxes on alcohol as a component of the price,[66] in addition to the general provincial sales taxes (PST) or the provincial portion of harmonized sales taxes (HST). All provinces have an administrative pricing system implemented through a monopoly distribution system (at least wholesale, and in most provinces also at retail) that increases prices. It is through this system of taxation, pricing, price indexing to inflation, minimum prices,[67] etc., that provinces implement a de facto alcohol tax system.

While all provinces/territories have an explicit tobacco tax statute, in the case of alcohol there is a combination of taxation and administrative pricing that has an equivalent effect. For tobacco, there is no government involvement in tobacco wholesaling and retailing, in contrast to alcohol.

Canada’s Chief Public Health Officer stated in 2016 that “[a]pproaches such as a regulated alcohol industry, policies on pricing and taxation, controls on sales and availability and minimum age laws help reduce the impact on Canadians, especially youth.”[68] He also stated that:

Control of sales and availability also reduces the impacts of alcohol use by restricting eligibility to purchase and sell alcohol as well as restricting the number of alcohol outlets and days/hours of sale. When alcohol sales are not controlled, there tends to be higher availability, more drinking, more alcohol related problems and increased acceptability of alcohol use.[69]

A government monopoly for alcohol wholesaling/retailing is not unique to Canada. In the US, there are 17 states (“control states”) with government wholesale monopolies, at least for spirits, with 13 of these also exercising control at retail. The National Alcohol Beverage Control Association provides the following summary:

The Control Systems

Seventeen states and jurisdictions in Alaska, Maryland, Minnesota and South Dakota adopted forms of the "Control" model. They control the sale of distilled spirits and, in some cases, wine through government agencies at the wholesale level. Thirteen of those jurisdictions also exercise control over retail sales for off-premises consumption; either through government-operated package stores or designated agents.[70]

The 17 states with the control model at the state level are: Alabama, Idaho, Iowa, Maine, Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, West Virginia, and Wyoming.[71]

Globally, the WHO Global Strategy to Reduce the Harmful Use of Alcohol identifies government monopolies and reductions in the number of alcohol outlets as policy options and interventions for governments:

Area 5. Availability of alcohol

[…]

For this area, policy options and interventions include:

(a) establishing, operating and enforcing an appropriate system to regulate production, wholesaling and serving of alcoholic beverages that places reasonable limitations on the distribution of alcohol and the operation of alcohol outlets in accordance with cultural norms, by the following possible measures:

(i) introducing, where appropriate, a licensing system on retail sales, or public health oriented government monopolies;

(ii) regulating the number and location of on-premise and off-premise alcohol outlets;

[…]

(iv) regulating modes of retail sales of alcohol[72]

For tobacco, a government controlled system of tobacco-only stores has long been supported by health organizations as a means to better enforce tobacco laws and to reduce tobacco use.[73] Such a system would be similar to the current alcohol retail system in many provinces. No longer would tobacco be sold in convenience stores, gas stations or grocery stores – tobacco would only be sold in a separate tobacco-only retail system.

Subsection 134(b) is good public policy that is constitutionally valid

Subsection 134(b) provides for a government monopoly on the wholesaling and retailing of alcohol, a measure for which there is a sound public policy rationale. Subsection 134(b) does not say that only alcohol products made in New Brunswick may be sold in New Brunswick. In fact, NBLC sells a vast array of alcohol products from other provinces and from around the world.

There is no indication that the pricing structure used by NBLC is affected by the province/country of manufacture of the alcohol product. If there is such an effect, it is certainly not caused by s. 134(b). The same beer brands (e.g. Budweiser, Coors Light) purchased by Mr. Comeau in Quebec[74] were available in New Brunswick, except at a higher price, pursuant to New Brunswick requirements. Thus the issue was not that the beer brands were unavailable in New Brunswick, but rather the price differential.

If there is an impediment to beer brewed in another province being able to be sold in New Brunswick compared to beer brewed in New Brunswick, then that is a different issue, and s. 134(b) is the wrong provision being challenged. Subsection 134(b) makes no reference to province of origin. A brewer in New Brunswick still has to have its products sold through NBLC, just as is the case for a brewer or other alcohol company from outside the province. Subsection 134(b) is not, as the Supreme Court stated in Murphy v C.P.R. (1958), “in its essence and purpose related to a provincial boundary”[75] because it applies to all beer and all brewers, whether from New Brunswick, another province, or another country.

In Atlantic Smoke Shops (1943),[76] the Judicial Committee of the Privy Council upheld New Brunswick’s tobacco tax as constitutionally valid, dismissing a claim that s. 121 was infringed, and holding that the tobacco tax was a direct tax and not a customs duty. The NBLC administrative pricing system for alcohol is analogous to a tobacco tax, applying to alcohol sold in New Brunswick regardless of the jurisdiction of origin.

Judge LeBlanc did indicate that beer from provinces other than New Brunswick, Nova Scotia and PEI “is handled through the Alcool NB Liquor (the ANBL) warehouse, which attracts a warehouse handling fee, which would be considered, no doubt, to be a tariff trade barrier.”[77] If the fee is material, and does not also apply to beer from New Brunswick, Nova Scotia and PEI, and is not applied to cover an associated cost, then the fee could well be considered a tariff. But the constitutionality of this fee has not been challenged in this case.

There are important public policy reasons for s. 134(b) to require that the importation of alcohol products be done through NBLC, including:

  • To help ensure collection of the alcohol tax equivalent, and the maintenance of higher prices.

  • To ensure that there is a regulated retail system, without private commercial interests, given the harmful nature of the product.

  • To ensure product standards and sales conditions are more effectively met, e.g. bans on selling to minors, bans on selling to intoxicated persons, etc. (In the case of tobacco, despite federal legislation being in force since 1908[78] and provincial legislation being in force for decades if not longer, there is chronically poor compliance with sales to minors legislation, with 1 of 6 tobacco retailers willing to sell tobacco to underage minors when tested.[79] One of 6 stores is sufficient for teenagers to know where they can purchase tobacco illegally.)

For tobacco, the lack of a government controlled wholesale/retail system has, especially in Ontario and Quebec, contributed to illegal tobacco manufacturing, distribution and retail outlets, especially on reserves, that has not only reduced government revenue, but has resulted in lower cigarette prices for many consumers, which in turn increases consumption.

The New Brunswick alcohol wholesaling and retailing monopoly has been effective at helping to control contraband alcohol in the province. In part s. 134(b) prevents breweries, wineries and distillers (from inside and outside the province) from bypassing the monopoly and selling directly to consumers/restaurants/bars at a lower price. Subsection 134(b) prevents restaurants and bars themselves from purchasing or having alcohol unless the alcohol is purchased from NBLC. In the absence of the monopoly, there would be greatly increased risk of the equivalent of tax evasion, including through non-reporting and underreporting of quantities produced, imported, sold and purchased. (This has been the experience with tobacco.) Moreover, there are no longer any illegal “moonshine” facilities producing alcohol products in New Brunswick, at least not in any material way.

If s. 134(b) were struck down, it would mean that vast quantities of beer could be brought into New Brunswick illegally, far more than the 15 cases brought in by Mr. Comeau.

At trial, Patrick Oland, Chief Financial Officer for Moosehead Breweries, testified that ending the NBLC monopoly and opening up importation into the province would lead to contraband:

Q. Well, for example, if, if there was no condition on the importation of beer from anywhere in New Brunswick.

A. Well, certainly, one of the things that we as a brewery are concerned about in the province of New Brunswick is illegal distribution of alcohol, is bootlegging, which we know, which we believe exists today because of the price differential, and we are very concerned that any one way or unilateral changes to the borders in New Brunswick could significantly increase the level of activity of bootlegging, and plain and simple, we as a brewer, we have a vested interest ensuring that our product isn’t distributed by – through illegal means for product integrity, for the social responsibility aspect, which we take very seriously as an industry, we always have.[80]

In the case of alcohol, the administrative pricing approach used by provinces and implemented by government monopolies has a key advantage in the case of First Nations reserves when compared with the tobacco tax approach. For alcohol, most of the higher price structure found off-reserve is also found on reserve (though PST, HST and GST do not apply).[81] This contrasts with tobacco, where tobacco prices are dramatically lower on reserve than off-reserve for First Nations people, resulting in higher consumption. Moreover, a significant problem that arises in many provinces is that non-First Nations individuals go to reserves (mostly in Ontario and Quebec) and purchase tobacco exempt of provincial tobacco taxes for personal consumption or for widespread re-distribution off-reserve. This illegality undermines the public health and public revenue objectives of tobacco taxes. In the case of alcohol, this problem substantially does not arise.

In commenting on Comeau, Asher Honickman writes “no evidence was led at trial that the police were also targeting bootleggers in the province or possession that otherwise did not concern the importation of alcohol from outside the province. In practice, the prohibition against possession was simply a prohibition against importation.”[82]

Illegal alcohol manufacturing/distribution originating within New Brunswick may be not be a problem today, but historically would have been, including in 1927 when the predecessor to s. 134(b) was first enacted.[83] The current situation shows how effective s. 134(b) and the NBLC approach have been in this regard. Subsection 134(b), and the equivalent in other provinces, is of high importance for the effective administration of the alcohol tax and pricing system, and the public benefits that arise.

The trial judgment stated “No one can be charged under section 134(b) unless someone transports liquor or beer across provincial lines.”[84] This is incorrect. A brewery, winery or distiller in New Brunswick (whether legal or illicit) that sells directly to purchasers instead of through the NBLC would infringe s. 134(b).

If bars, restaurants and consumers in New Brunswick were to be allowed to import alcohol directly from an out-of-province supplier, then how would government ensure that alcohol taxes and equivalent pricing were collected? It is simply not reasonable to expect that individuals/businesses would all self-report. Moreover, there would be increased government enforcement and administration costs that would be incurred but that still would be substantially unsuccessful at collecting the revenue that should be collected. It is far more effective to collect tax revenue up the chain.

By way of analogy, for personal income tax, if employees were expected to simply self-report employment income without employer involvement there would be much less personal income tax collected. That is why governments require employers to deduct income tax at source before wages are paid to employees. It is not practical or effective for government to chase after all individuals one by one.

It should not be assumed that companies will be law-abiding, and that mere licensing of businesses and the ability to audit a company’s records would prevent illegal cross-border sales. In part, it is not practical for a provincial government to audit hundreds and potentially thousands of out-of-province and out-of-country vendors.

In the case of tobacco, the major tobacco manufacturers were convicted of contraband for actions that occurred in the early 1990s, paid the largest fines in Canadian history totalling $525 million, and agreed to pay $1.175 billion in a civil settlement, resulting in total fines and civil payments of $1.7 billion.[85] These amounts, as substantial as they are, represent just a small fraction of the tobacco tax revenues that were forgone by federal and provincial governments.[86]

Tobacco taxes

All provinces and territories, and the federal government, impose tobacco taxes. Here is a graph and table of comparative provincial/territorial rates.

Tobacco taxes per carton of 200 cigarettes [87]

YT

NT

NU

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Total ($)

50.00

60.80

60.00

47.40

50.00

59.88

67.24

39.11

29.80

60.55

64.95

58.47

58.31

Tobacco tax ($)

50.00

60.80

60.00

47.40

50.00

54.00

59.00

32.95

29.80

51.04

55.04

50.00

49.00

PST/provincial part of HST (estimated) ($)

5.88

8.24

6.16

9.51

9.91

8.47

9.31

PST/prov. part of HST (rate)

n/a

6%

8%

8%

n/a

10%

10%

9%

10%

Provincial tobacco tax rates are set out in provincial tobacco tax legislation.[88] For general sales taxes, there is no provincial/territorial sales tax in Alberta nor the three territories. The BC provincial sales tax of 7% and the Quebec Sales Tax of 9.975% is not applied to tobacco products. Sales taxes apply to the retail price, which includes provincial tobacco taxes, federal tobacco taxes, and manufacturer, wholesaler and retailer pricing. The federal tobacco tax rate per carton of 200 cigarettes is $21.03.

On First Nations reserves, status First Nations people are exempt from paying provincial tobacco taxes, as well as PST, HST, and GST.[89] Federal tobacco taxes apply on reserve, and indeed apply throughout Canada for all purchasers.

As can be seen in the graph and table, tobacco taxes are far lower in Quebec and Ontario compared with other provinces and territories.

The implication of the Comeau trial judgment is that people could bring low cost cigarettes from Quebec to New Brunswick and nothing could be done about it. People could bring even lower priced cigarettes purchased on a reserve in Quebec to New Brunswick, and nothing could be done about it. Indeed Mr. Comeau purchased alcohol on the Listiguj First Nation reserve in Quebec near the New Brunswick border.

Higher tobacco taxes are a highly effective measure to reduce tobacco consumption. This has been recognized by federal and provincial governments as part of the rationale accompanying tobacco tax increases.[90] It has also been recognized by the World Bank[91] and the World Health Organization.[92] As well, the WHO Framework Convention on Tobacco[93] (“FCTC”), the international tobacco control treaty with 181 Parties including Canada, recognizes the international consensus regarding the importance of tobacco taxes, stating:

The Parties recognize that price and tax measures are an effective and important means of reducing tobacco consumption by various segments of the population, in particular young persons.[94]

International guidelines adopted under the FCTC state: [95]

1.2 Effective tobacco taxes significantly reduce tobacco consumption and prevalence

Effective taxes on tobacco products that lead to higher real consumer prices (inflation-adjusted) are desirable because they lower consumption and prevalence, and thereby in turn reduce mortality and morbidity and improve the health of the population. Increasing tobacco taxes is particularly important for protecting young people from initiating or continuing tobacco consumption.

In Canada, when the Tobacco Act was adopted in 1997, there was a very significant mail order business sending cigarettes from low-tax provinces (e.g. Ontario and Quebec) to higher tax provinces, especially in the West. The Tobacco Act responded to this by banning shipments to consumers across provincial borders, banning shipments by mail, and banning advertising of offers to make such shipments. Section 13 of the Tobacco Act states:

13 (1) No person shall, for consideration, cause a tobacco product to be delivered from one province to another or to be sent by mail unless the delivery or mailing is between manufacturers or retailers or the person is otherwise exempted by the regulations.

(2) No person shall advertise an offer to deliver a tobacco product from one province to another or to mail a tobacco product.

The legislative provision was highly successful. The legislation forced the end of a large number of mail order and internet shipment businesses that only existed as a mechanism to evade provincial tobacco taxes in the province of destination. Today, interprovincial tobacco shipments to consumers are immaterial in volume (though there are other types of contraband).

Thus just as interprovincial shipments of tobacco to consumers are banned, interprovincial shipments of alcohol to consumers in New Brunswick are also banned by s. 134(b).[96]

In most provinces, tobacco tax legislation requires a consumer importing tobacco into the province to self-report and submit the applicable tobacco tax to the provincial government.[97] In practice, individuals simply do not do this, and provincial governments do not enforce this provision except in the case of larger scale smugglers.

Tobacco tax legislation contains practical personal use limits. For example, in Manitoba, it is allowed to possess up to 200 cigarettes purchased in another province, provided that the tax markings are compliant with federal requirements.[98] In New Brunswick, an individual may possess a maximum of 5 cartons of cigarettes (1000 cigarettes).[99]

For alcohol, there are also limited personal use exemptions. The New Brunswick Liquor Control Act, s.43, cited in the trial judgment,[100] makes an exception allowing an individual to bring up to 1 bottle of liquor or 12 pints of beer into New Brunswick from another province. This is a practical exception that also applies if the individual is bringing alcohol from outside Canada (e.g. Maine) into New Brunswick.

The trial judgment seems to take issue with the fact that police only took enforcement action if a person was bringing 5 cases of beer or more into the province.[101] This is an understandable approach given police resources. By analogy, police almost never take enforcement action if a person is driving 5 or 10 km/h more than the speed limit; normally the speeding needs to be higher than that for enforcement action to be taken.

Tobacco taxes and s. 121

In Atlantic Smoke Shops,[102] as mentioned, New Brunswick’s tobacco tax was upheld as constitutionally valid, with the Judicial Committee of the Privy Council dismissing a claim, among other claims, that s. 121 was infringed.

In 1994, as a result of widespread tobacco contraband (fueled by the major tobacco companies), the federal government and five provinces (Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island) lowered tobacco taxes dramatically. The reduction in federal tobacco taxes was far greater in these five provinces compared with Western Canada, Newfoundland and the three territories. The result was that tobacco taxes and prices in Western Canada were far higher than in Ontario and Quebec, prompting smugglers to bring cigarettes from low-tax Ontario to the comparatively high-tax West. Manitoba, as neighbour to Ontario, was on the front lines of this tax differential with Manitoba provincial tobacco taxes far higher than in Ontario, and with federal tobacco taxes also far higher in Manitoba than in Ontario. This prompted enforcement action, prosecutions and constitutional challenges. (Between 1994 and 2002, there were a number of federal tobacco tax increases, and by 2002 federal tobacco taxes were again equal across Canada.)

In several cases involving tobacco tax enforcement action in Manitoba, it was held that s. 121 was not infringed.

In R. v. Pickering (1996),[103] the Manitoba Provincial Court, affirmed on appeal by the Manitoba Court of Queen’s Bench (1999), held that a ban on possessing more than one cigarette carton (200 cigarettes) that did not have a Manitoba tobacco tax marking was not an infringement of s. 121. The Court held that the purpose was to ensure payment of a Manitoba tax, not to impose a customs tariff for imports. The Court also stated that “The evidence that tobacco consumption is a serious danger to health, is overwhelming. The evidence of a direct relationship between price and consumption is also persuasive.”[104]

In R. v. Doer (1999),[105] the Manitoba Court of Queen’s Bench considered s. 97.1 of the federal Excise Tax Act[106] that made it an offence to sell cigarettes marked for sale in one province (in this case Ontario) in another province (in this case Manitoba). The Court held that this provision did not violate s. 121.

In R. v. Estabrook (1999),[107] the Manitoba Court of Queen’s Bench again held that s. 97.1 of the federal Excise Tax Act did not violate s. 121. In denying leave to appeal on the s. 121 issue, Monnin JA of the Manitoba Court of Appeal stated: “The law respecting the validity of s. 97.1 of the Act in light of s. 121 of the Constitution Act, 1867 is a settled matter; there exists no ambiguity in the existing case law; there exists no conflict in decided cases.”[108]

Retail sales tax

Retail sales taxes present further issues. For example, Alberta has no provincial sales tax, but BC and Saskatchewan require that sales tax be paid on purchases made in another province and brought back into the province by residents.[109] The Saskatchewan Government explains that “Residents purchasing taxable goods by e-commerce, mail order or while travelling outside Saskatchewan are required to report and remit the PST directly to the Ministry of Finance, unless it has been paid to the Canada Border Services Agency upon entry into Saskatchewan or to another agent licensed to collect the PST.”[110]

Non-compliance by these returning residents can be expected to be extremely high. For vehicles, comparatively expensive products, the amount of sales tax payable for a vehicle may be substantial. The trial judgement’s interpretation of s. 121 would prevent the sales tax on vehicles and other goods brought into a province by consumers as these would be considered a non-tariff barrier.

Pending legislation for cannabis

Provinces are in the process of developing provincial legislation for cannabis. Some provinces have already signaled that they are looking to implement a monopoly retail distribution system for cannabis similar to what is currently in place for alcohol. This was the recommendation of a New Brunswick working group.[111] Ontario has announced that it intends to implement a government retail and wholesale distribution system for cannabis, administered through an affiliate of the current alcohol agency, the Liquor Control Board of Ontario.[112]

Alberta has announced that it intends to have a government monopoly for the wholesale distribution of cannabis, and is considering whether to allow government or private sector retailers.[113] Thus even in Alberta, a provision similar to New Brunswick’s s. 134(b) would need to be adopted for cannabis. All cannabis sold in Alberta would need to go through the government monopoly wholesaler.

In Colorado and Washington where cannabis has been legalized and sold through private sector retailers, some such stores are selling illegal cannabis: “some illegal activities are able to hide among the legal operations”.[114] The New Brunswick Working Group on the Legalization of Cannabis added:

When Colorado and Washington legalized cannabis, they moved directly to a private delivery model that resulted in a large number of private cannabis businesses. These states have since found it difficult to impose regulation on this private sector and keep out the illegal market. Government-controlled retail could also prevent stores from being set up in lower-income areas or vulnerable communities as experienced in Colorado and Washington.[115]

In a brief to the House of Commons Standing Committee on Health during hearings on Bill C-45, the Cannabis Act,[116] Sam Kamin, Professor of Marijuana Law and Policy at the University of Denver, College of Law, stated that a government-run cannabis retail system would be better than a private sector system:

[…] Canada’s provinces will have an opportunity to experiment with various regulatory approaches in a way that American states did not. Principally, the federal [cannabis] prohibition has kept American states from adopting a government-run distribution model. Because all distribution of marijuana remains criminal under federal law, a state-run model in the United States would place state officials in the untenable position of being required by state law to engage in conduct that violates federal law. There may be many policy advantages to a state-run distribution model like the one used in Canada and elsewhere for alcohol. It allows the government to control price, easily identify unlicensed purveyors, reap profits rather than merely taxing revenue, and control the way the product is marketed. While such an approach is unavailable to US jurisdictions, it should be strongly considered in Canada.[117]

Rick Garza, Director, Washington State Liquor and Cannabis Board, testified during the Bill C-45 hearings that a government agency is a better approach based on the Washington state experience that in 2011 changed the liquor sales system for spirits from a government monopoly to a privatized system:

Without getting into too much detail, until 2011 we were the monopoly for spirits in Washington State but then Costco through an initiative of privatized spirit sales.... But that was typically the model: less access and no advertising. State employees ran the liquor stores with no incentive. Whether they sold 50 bottles that day or 500 bottles, there was no incentive to sell. That model has been there for 12 other states in the nation since 1934. We were the first state that was overturned.

However, there's no doubt that when you have a control model, where the government is involved, access and consumption are lower compared with the licensed states. Typically it's 18% to 20% lower, because you've limited the number of outlets, for one, and you've often limited the hours they can be open. Ironically, that's part of the reason the public said, no, they wanted to be able to buy spirits just like they buy beer and wine.

There's no question that the control model where the government is involved—whether it's in distribution or retail—has the result you want, which is minimizing the negative impacts.[118]

For cannabis taxation, it may be initially that there would only be federal cannabis taxes with revenue shared by federal and provincial governments. But subsequent provincial cannabis taxes are more than plausible. Moreover, differing provincial regulation of cannabis may be anticipated, such as for product potency, banning use of flavours in marijuana cigarettes (e.g. grape, cherry, menthol flavours), etc. For cannabis, Comeau thus raises issues related to evading provincial taxation/pricing and regulatory measures, just as is the case for tobacco.

Opioids/medications

Medications, including prescription drugs, provide a good analogy. These products may have harmful side effects. In New Brunswick and other provinces, professional pharmacists in licenced pharmacies have a monopoly in the retail sale of medications within the province. It may be that an out-of-province pharmaceutical manufacturer would prefer a different retail distribution system, or would want to be able to ship directly to consumers, but that is not permitted by legislation.

Opioids (e.g. Oxycontin, Fentanyl) are medications sold by prescription. At present, there is controlled retail sale through pharmacies for opioids, a product category that can be legally sold but with potentially harmful consequences. There are limits on how opioids can be imported and distributed within provinces. An individual such as Mr. Comeau could not import opioids into New Brunswick in any quantity he chooses, including for re-sale. Judge Leblanc’s interpretation of s. 121 prohibiting all non-tariff barriers, however, would remove the restrictions on Mr. Comeau doing so.

Electricity

Many provinces have operated provincial monopolies on electricity. Would these too be invalidated by s. 121? Judge LeBlanc’s interpretation seems to say yes, although there is a separate question as to whether electricity would be considered an article of “growth, produce or manufacture”.

The constitutional question to be considered by the Supreme Court

Finally, it is worth noting that any judgment in Comeau should not be unnecessarily extended beyond the narrow issue of s. 134(b). At trial, in argument, counsel for Mr. Comeau stated that the issue is whether s. 134(b) infringes s. 121. Stated the reply brief at trial on behalf of Mr. Comeau:

In paragraph 3, the Crown correctly states that the issue is whether s. 134(b) of the Liquor Control Act (LCA) violates section 121 of the Constitution Act, 1867 and is therefore of no force or effect as against the defendant. It then creates the straw-man that the Defence is also seeking to prohibit any federal/provincial arrangement that might hamper absolute free trade within Canada, with regulation of alcoholic beverages being not the only target in the Defence’s sights. The Crown is exaggerating. The Defence does not intend to go beyond the facts of this case.[119] (emphasis added)

Moreover, the agreed statement of facts at trial stated in part:

That the sole issue between the parties is the constitutionality of section 134(b) of the Liquor Control Act, and consequently the infringement of the defendant’s section 7 Charter rights, his entitlement to such remedy pursuant to section 24(1) of the Charter, and section 52(1) of the Constitution Act, 1982, as is appropriate.[120]

Further, the pre-trial Notice of Application of a constitutional issue served on the Attorney General of New Brunswick was limited to s. 134(b):

Is section 134(b) of the Liquor Control Act, RSNB 1973, c. L-10, contrary to and in violation of section 121 of the Constitution Act, 1867?[121]

However, before the Supreme Court of Canada, counsel for Mr. Comeau is now seeking to expand the issues contrary to the representations made at trial. The Notice of Constitutional Question filed on behalf of Mr. Comeau before the Supreme Court of Canada raises three questions, two of which explicitly go beyond whether s. 134(b) infringes s. 121:

  1. Does s. 121 of the Constitution Act, 1867 prohibit both tariff and non-tariff interprovincial trade barriers on items of growth, produce or manufacture moving between the provinces, as held by His Honour Judge LeBlanc?

  2. If the answer to question 1 is no, then against what trade barriers does s. 121 protect Canadians?

  3. Does s. 134 (b) of the Liquor Control Act, RSNB 1973, c. L-10 constitute a trade barrier which violates s. 121, as held by His Honour Judge LeBlanc?

The constitutional question to be answered should be confined to question 3, which is similar to the question in the Notice of Constitutional Question filed by the Attorney General of New Brunswick in the Supreme Court:

Does s. 121 of the Constitution Act, 1867, 30 & 31 Victoria, C.3 (U.K.) render unconstitutional s. 134 of the Liquor Control Act, R.S.N.B. 1973, c.L-10, which along with s. 3 of the Importation of Intoxicating Liquors Act, R.S.C., 1985, c. I-3 establishes a federal-provincial regulatory scheme in respect of intoxicating liquor?

Conclusion

Adam Smith, in The Wealth of Nations (1776), stated that "Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which have become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation." Clearly government taxation of tobacco and alcohol has a history that long predates Confederation.

For New Brunswick and other provinces, there is no practical constitutional difference between an alcohol tax and an alcohol administrative pricing system. A provincial direct alcohol tax is constitutionally valid, just as provincial alcohol pricing through administrative means is similarly constitutionally valid. The purposes and effects are the same. Comeau is about beer smuggling, and there is no constitutional right to smuggle beer, just as there is no constitutional right to smuggle cigarettes. Subsection 134(b) does not infringe s. 121 and is fully constitutional.


[1] 2016 NBPC 3, 398 DLR (4th) 123, [2016] NBJ No 87 (QL) [Comeau and “trial judgment”].

[2] Ibid para 11.

[3] RSNB 1973, c L-10, s 134.

[4] The Intoxicating Liquor Act, 1927, SNB 1927, c 3, s 56(2); The Intoxicating Liquor Act, RSNB 1927, c 28, s 56(2); The Intoxicating Liquor Act, RSNB 1952, c 116, s 75(2) (RSNB 1952, c 116, repealed by Liquor Control Act, SNB 1961-62, c 3, s 184(1)); Liquor Control Act, SNB 1961-62, c 3, s 119; Liquor Control Act, RSNB 1973, c L-10, s 134.

[5] Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, Appendix II, No 5.

[6] Trial judgment, supra note 1 at para 32.

[7] Trial judgment, supra note 1 at paras 7, 9, 10, 13.

[8] Trial Exhibit C-1, Agreed Statement of Facts.

[9] Trial transcripts, August 25-28, 2015.

[10] Malcolm Lavoie, “R. v. Comeau and Section 121 of the Constitution Act, 1867: Freeing the Beer and Fortifying the Economic Union” (October 16, 2016) 40:1 Dalhousie LJ 189 (2017) [Lavoie]; Mark Mancini, “The Comeau Decision is a Welcome Example of Serious Doctrinal Analysis” Advocates for the Rule of Law, August 3, 2016; Asher Honickman, “A Marriage Made in Britain: Section 121 and the Division of Powers” CanLII Connects, Oct. 24, 2016 [Honickman]; Benjamin Oliphant, “Originalism, Beer, and Interprovincial Trade Barriers”, Policy Options, May 6, 2016.

[11] R v Comeau, New Brunswick Court of Appeal, Court File No 35-16-CA, Factum of the Respondent (Respondent’s Statement to Leave to Appeal and Notice of Appeal) October 6, 2016, at paras 2, 5, 7.

[12] R v Comeau, 2016 CanLII 73665 (CA), 2016 NBJ 232 (QL) (CA).

[13] Her Majesty the Queen v Comeau, leave to appeal to SCC granted, SCC file no 37398, May 4, 2017.

[14] Her Majesty the Queen v Comeau, SCC file no 37398, Respondent’s Response to Application for Leave to Appeal, at para 34.

[15] Trial judgment, supra note 1 at 158.

[16] Gold Seal Ltd v Alberta (Attorney General) (1921), 62 SCR 424 [Gold Seal]; Atlantic Smoke Shops v Conlon, [1943] AC 550, [1943] 4 DLR 81 (JCPC) [Atlantic Smoke Shops]; Murphy v C.P.R. [1958] SCR 626 [Murphy v C.P.R.]; Re Agricultural Products Marketing Act, [1978] 2 SCR 1198.

[17] Canadian Pacific Airlines v British Columbia, [1989] 1 SCR 1133; Dow Chemical Canada Inc. v British Columbia (1992), 13 BCAC 122, 91 DLR (4th) 570 (BCCA); Canadian Egg Marketing Agency v Richardson, [1998] 3 SCR 157; R. v Pickering, [1996] 6 WWR 291, [1996] MJ No 222 (QL) (Prov Ct), affirmed (1999), 135 Man R (2d) 195, 169 DLR (4th) 749, [1999] MJ No 377 (QL) (QB) [Pickering]; R v David Doer (1999), 133 Man R (2d) 161, [1999] MJ No 40 (QL) (QB, Steel J, February 1, 1999) [Doer]; R. v Estabrook (1999), 54 Man R (2d) 235, [1999] MJ No 584 (QL) (QB, Steel J, April 23, 1999), leave to appeal on s. 121 issue denied but granted on other issues, [1999] MJ No 360 (QL) (CA). See also Ontario Home Builders’ Association v York Region Board of Education, [1996] 2 SCR 929, at para 137.

[18] Trial judgment, supra note 1 at para 21.

[19] Agreement on Internal Trade, final consolidated version following the 14th Protocol of Amendment, February 18, 2015.

[20] Canadian Free Trade Agreement, in force July 1, 2017.

[22] Irwin Toy Limited v Québec (Attorney General), [1989] 1 SCR 927 at 1003; Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.), [1990] 1 SCR 1123 at 1170, 1171.

[23] Comprehensive Economic and Trade Agreement, signed by Canada and the European Union October 30, 2016, provisional application in force September 21, 2017.

[24] A list of the effective dates of the 14 Protocols of Amendment can be found in the Foreword to the final consolidated version, supra note 19.

[25] 114957 Canada Ltée (Spraytech, Société d'arrosage) v Hudson (Town), [2001] 2 SCR 241.

[26] Tobacco and Smoking Reduction Act, SA 2005, c T-3.8, s 7.4(1); Tobacco and Smoking Reduction Regulation, Alta Reg 240/2007, ss 1.3, 10.2; Smoke-Free Ontario Act, SO 1994, c 10, ss 1(1), 6.1; General, O Reg 48/06, ss 1.2, 11.1; Tobacco Control Act, CQLR, c L-6.2, s 29.2; Tobacco and Electronic Cigarette Sales Act, SNB 1993, c.T-6.1, s 2.1; Tobacco Access Act, SNS 1993, c 14, ss 3(ba), 7(c), 7(d); Tobacco Access Regulations, NS Reg 9/96, s 8; Tobacco and Electronic Smoking Device Sales and Access Act, RSPEI 1988, c T-3.1, s 3.1; Tobacco and Electronic Smoking Device Sales and Access Act Regulations, EC538/15, s 1.1; Tobacco and Vapour Products Control Act, SNL 1993, c T‑4.1, ss 2(d), 3.4; Tobacco and Vapour Product Regulations, NLR 55/17, s 4. A federal ban on menthol cigarettes came into force on October 2, 2017: Tobacco Act, SC 1997, c 13, Sch, as amended by SOR/2017-45, s 1.

[27] Philip Morris Asia Limited (Hong Kong) v The Commonwealth of Australia, Permanent Court of Arbitration, December 17, 2015, PCA Case N° 2012-12. The text of the decision was published May 16, 2016.

[28] Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v Oriental Republic of Uruguay, International Centre for Settlement of Investment Disputes, ICSID Case No. ARB/10/7, July 8, 2016.

[29] Stacey Kirk, “Tobacco plain packaging likely to be law by end of year - John Key” Stuff.co.nz [New Zealand] February 15, 2016.

[30] Canadian Tobacco Manufacturers’ Council, “Brief of the Canadian Tobacco Manufacturers’ Council In Response to Health Canada’s Proposed Tobacco Act Regulations” March 12, 1999, at 8 and Appendix 2.

[31] Rothmans, Benson & Hedges Inc., “Rothmans, Benson & Hedges Inc.’s (“RBH”) comments on Health Canada’s proposal to increase the size of health warning labels to 75% of the front and back of the pack” March 2010, at 2.

[32] Debra Steger (acting on behalf of Philip Morris International and Rothmans, Benson & Hedges Inc.), “The Standing Senate Committee on Social Affairs, Science and Technology (Bill C-32). Written Submissions of Professor Debra Steger” September 28, 2009.

[33] See e.g. Mudge Rose Guthrie Alexander & Ferdon (Carla Hills), “Letter to R.J. Reynolds Tobacco Company and Philip Morris International Inc. Subject: Legal opinion with regard to plain packaging of tobacco products requirement under international agreements, May 3, 1994; Imperial Tobacco Canada Ltd., “Response to the Consultation on ‘Plain and Standardized Packaging’ for Tobacco Products” August 31, 2016 at 18-19; Imperial Tobacco Canada Ltd., “Submission on Bill S-5, An Act to amend the Tobacco Act and the Non-smokers’ Health Act and to make consequential amendments to other Acts” March 31, 2017, at 15-16.

[34] Trans-Pacific Partnership, Article 29.5. Canada signed the TPP February 4, 2016. The agreement is not in force. The 12 countries that agreed to the TPP are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States of America, Vietnam.

[35] Canadian Free Trade Agreement, supra note 20, Article 806, provides: “This Agreement does not apply to any measure adopted or maintained by a Party relating to tobacco control.”

[36] Liquor Control Board of Ontario, “Purchase Guidelines: Overproof Alcohol 94%” (accessed October 6, 2017).

[37] General, RRO 1990, Reg 1034, s 21.1, under Tobacco Tax Act, RSO, c T.10; Tobacco Tax Regulation, Man Reg 77/88 R, ss 16, 17, Sch 3.

[38] Regulation under the Tobacco Control Act, CQLR, c L-6.2, r 1, ss 6.1-6.3; Tobacco Product Regulation, BC Reg 258/72, s 1, as amended by BC Reg 347/89, s 1, as repealed by BC Reg 216/94.

[39] See e.g. Tobacco Smoking and Reduction Regulation, Alta Reg 240/2007, s 9.1; Tobacco Act, RSQ, c T-0.01, s 19; Regulation under the Tobacco Act, CQLR c T-0.01, r 1, s 6; Smoke-Free Ontario Act, SO 1994, c 10, s 5.

[40] Supra note 26.

[41] Smoke-Free Places Regulation, 2009, YOIC 2009/99, s 11; Tobacco Control Act, SNu 2003, c 13, s 4.

[42] See e.g. Smoke-Free Ontario Act, SO 1994, c 10, s 7; Tobacco Control Act, CQLR c L-6.2, s 19.

[43] See e.g. Energy Efficiency - Appliances and Products, O Reg 404/12.

[44] See e.g. Energy Efficiency Act, RSBC 1996, c 114; Energy Efficiency Standards Regulation, BC Reg 389/93; BC Ministry of Energy and Mines, “B.C. aligned efficient light bulb standards with Canada” March 12, 2012 (news release); CBC News, “Consumers hoard light bulbs amid B.C. ban” January 25, 2011.

[45] See e.g. Cleaner Gasoline Regulation, BC Reg 498/95; Motor Vehicle Emissions Control Warranty Regulation, BC Reg 116/96.

[46] See e.g. Highway Traffic Act, RSO 1990, c H.8, ss 85-100; Safety Inspections, RRO Reg 611; Motor Vehicles Inspection Stations, RRO Reg 601; Vehicle Permits, RRO Reg 628; Classification of Vehicles as Irreparable, Salvage and Rebuilt, O Reg 376/02; Ontario Ministry of Transportation, “Passenger / Light-Duty Vehicle Inspection Standard. Reference Handbook” October 2015.

[47] Animal Health Act, 2009, SO 2009, c 31, s 33.

[48] See e.g. Elevating Devices, O Reg 209/01.

[49] See e.g. Upholstered and Stuffed Articles, O Reg 218/01.

[50] See e.g. Farm Implements Act, RSO 1990, c F.4; General, RRO 1990, Reg 369.

[51] See e.g. Amusement Devices, O Reg 221/01.

[52] Consumer Protection Act, CQLR c P-40.1, ss 248, 249; Regulation Respecting the Application of the Consumer Protection Act, CQLR c P-40.1, r 3, ss 88-91.

[53] Trial judgment, supra note 1 at para 161.

[54] Trial judgment, supra note 1 at paras 78, 185.

[55] See e.g. Reference re Anti-inflation Act, [1976] 2 SCR 373, including Beetz J (dissenting, but not on this point) listing many prior cases at 441.

[56] Lavoie, supra note 10.

[57] Lavoie, supra note 10 at 194.

[58] Ian A Blue, “Free Trade Within Canada: Say Goodbye to Gold Seal” Macdonald-Laurier Institute for Public Policy, May 2011, at 21.

[59] 21 NBR (2d) 701, 88 DLR (3d) 718 (NBCA).

[60] Ibid at 722 DLR.

[61] Air Canada v Ontario (Liquor Control Board), [1997] 2 SCR 581 at para 55.

[62] Chief Public Health Officer “The Chief Public Health Officer’s Report on the State of Public Health in Canada 2015. Alcohol Consumption in Canada” Public Health Agency of Canada, January 2016, at 37 [Chief Public Health Officer's Report]; Gerald Thomas, “Price Policies to Reduce Alcohol-Related Harm in Canada” Alcohol Price Policy Series, Report 3 of 3, Canadian Centre on Substance Abuse, November 2012; World Health Organization, “Global Strategy to Reduce the Harmful Use of Alcohol” 2010 [WHO Global Strategy to Reduce the Harmful Use of Alcohol]; Regarding the taxation and pricing system, see also Debra J. Aron, “The Price of Beer in Ontario and Quebec” May 2014.

[63] WHO Global Strategy to Reduce the Harmful Use of Alcohol, ibid at 16.

[64] Canadian Cancer Society, “Alcohol and cancer” (accessed Oct. 6, 2017).

[65] Heart and Stroke Foundation, “Lifestyle risk factors” (accessed Oct. 6, 2017).

[66] See e.g. The Liquor Consumption Tax Act, SS 1979, c L-19.1; Liquor Tax Act, RSY 2002, c 141.

[67] Ontario has a regulation for minimum alcohol pricing, with inflation indexing: Minimum Pricing of Liquor and Other Pricing Matters, O Reg 116/10.

[68] Chief Public Health Offficer's Report, supra note 62 at 3.

[69] Chief Public Health Officer's Report, supra note 62 at 37.

[70] National Alcohol Beverage Control Association, “The Control Systems” (accessed October 6, 2017).

[71] National Alcohol Beverage Control Association, “Alcohol Beverage Control Jurisdictions: A Community Choice” June 2015 at 6.

[72] WHO Global Strategy to Reduce the Harmful Use of Alcohol, supra note 62 at 14.

[74] Trial judgment, supra note 1 at para 9.

[75] Murphy v C.P.R., supra note 16 at 642.

[76] Atlantic Smoke Shops, supra note 16.

[77] Trial judgment, supra note 1 at para 32.

[78] Tobacco Restraint Act, SC 1908, c T-12, as repealed by Tobacco Sales to Young Persons Act, SC 1993, c 5, s 11; Tobacco Sales to Young Persons Act, SC 1993, c 5, s 11, as repealed by Tobacco Act, SC 1997, c 13, s. 65; Tobacco Act, SC 1997, s 8.

[79] Ipsos Reid and CRG Mystery Shopping, “Evaluation of Retailers’ Behaviour Towards Certain Youth Access-to-Tobacco Restrictions. Final Report” Prepared for Health Canada, March 2015.

[80] Trial Transcript, August 25, 2015, at 41-42.

[81] However, through enablement of federal legislative provisions, some First Nations (mostly in BC) have implemented a 5% First Nations Goods and Services Tax, or a First Nations Sales Tax, that applies to alcohol, among other products: First Nations Goods and Services Tax Act, SC 2003, c 15, s 67.

[82] Honickman, supra note 10.

[83] Supra note 4.

[84] Trial judgment, supra note 1 at para 27.

[85] “Imperial Tobacco Canada Limited and Her Majesty the Queen in Right of Canada and the Provinces Listed on the Signature Pages Attached Hereto, Comprehensive Agreement” July 31, 2008 (all 10 provinces signed); “Rothmans, Benson & Hedges Inc. and Rothmans Inc. and Her Majesty the Queen in Right of Canada and the Provinces Listed on the Signature Pages Attached Hereto, Comprehensive Agreement” July 31, 2008 (all 10 provinces signed); “JTI-Macdonald Corp. and Her Majesty the Queen in Right of Canada and the Provinces and Territories Listed on the Signature Pages Attached Hereto, Comprehensive Agreement” April 13, 2010 (all 13 provinces and territories signed); “R.J. Reynolds Tobacco Company and Her Majesty the Queen in Right of Canada and The Provinces and Territories Listed on the Signature Pages Attached Hereto, Comprehensive Agreement” April 13, 2010; “Agreement Respecting Certain Funds Received from ITCL and RBH”, July 31, 2008 (Agreement between Canada and all 10 provinces); “Agreement Respecting Certain Funds Received from JTI-Macdonald Corp., R.J. Reynolds Tobacco Company, Northern Brands International Inc., or on their behalf” April 13, 2010 (Agreement between Canada and all 13 provinces and territories); Canada Revenue Agency, “Federal and Provincial Governments Reach Landmark Settlement With Tobacco Companies” July 31, 2008 (news release); Canada Revenue Agency, “Federal, Provincial, and Territorial Governments Conclude Landmark Settlements With Tobacco Companies” April 13, 2010 (news release).

[86] Non-Smokers’ Rights Association, “What Were They Smoking?” 2014.

[87] In the graph and table, the applicable provincial sales tax (PST) and provincial portion of the Harmonized Sales Tax (HST) are necessarily estimated given that there are price variations depending on the brand and retail location.

[88] Tobacco Tax Act, RSBC 1996, c 452, s 2(2); Tobacco Tax Act, RSA 2000, c T-4, s 3(1)(a); The Tobacco Tax Act, 1998, SS 1998, c T-15.001, s 3(2)(a); The Tobacco Tax Act, CCSM c T80, s 2(1)(a); Tobacco Tax Rates, O Reg 5/05, s 1(1), under Tobacco Tax Act, RSO, c T.10; Tobacco Tax Act, CQLR c I-2, s 8(a); Tobacco Tax Act, RSNB 1973, c T-7, s 3(j); Revenue Act, SNS 1995-1996, c 17, s 34(1)(a); Tobacco Tax Act, RSPEI 1988, c T-3.11, s 2(1)(a); Revenue Administration Act, SNL 2009, c R-15.01, s 8(a); Tobacco Tax Act, RSY 2002, c 219, s 3(1.01)(b); Tobacco Tax Act, RSNWT 1988, c T-5, s 2(1), Tobacco Tax Regulations, RRNWT 1990, c T-14, s 11(4); Tobacco Tax Act, RSNWT (Nu) 1988, c T-5, 2(1)(a).

[89] This exemption arises from s. 87 of the Indian Act, RSC 1985, c I-5, which exempts First Nations people from taxes on reserve. However, through the enablement of federal legislative provisions, some First Nations (mostly in BC) have implemented a 5% First Nations Goods and Services Tax, or a First Nations Sales Tax, that applies to tobacco, and some First Nations (mostly in Manitoba) have adopted a First Nations tobacco tax with rates equal to the provincial tobacco tax rate: First Nations Goods and Services Tax Act, SC 2003, c 15, s 67.

[90] For example, the 2014 federal Budget Plan stated “Reducing tobacco consumption is an important health objective, and a key tool in achieving this objective is the excise duty on tobacco products.” Department of Finance Canada, “The Road to Balance: Creating Jobs and Opportunities” Tabled in the House of Commons by the Honourable James M. Flaherty, P.C., M.P., Minister of Finance, February 11, 2014, at 208.

[91] World Bank, “Brief. Tobacco Control Program” July 19, 2017.

[92] The theme in 2014 of World No Tobacco Day, organized by the World Health Organization, was “Raise Taxes on Tobacco”.

[93] WHO Framework Convention on Tobacco Control, 21 May 2003, 2302 UNTS 229. For a list of Parties, see United Nations Treaty Collection, WHO Framework Convention on Tobacco Control (accessed October 6, 2017).

[94] Ibid Article 6.1.

[95] Conference of the Parties to the WHO Framework Convention on Tobacco Control, “Guidelines for Implementation of Article 6 of the WHO FCTC, Price and tax measures to reduce the demand for tobacco” 2014.

[96] See also Importation of Intoxicating Liquors Act, RSC 1985, c I-3, s 3.

[97] See e.g. Tobacco Tax Act, RSBC 1996, c 452, s 3; Tobacco Tax Act, RSA 2000, c T-4, ss 3(1.01)-(1.03); The Tobacco Tax Act, 1998, SS 1998, c T-15.001, s 6; Revenue Act, SNS 1995-96, c 17, s 35. In some provinces, a provincial licence may be required to import: see e.g. Tobacco Tax Act, CQLR c I-2, ss 2, 6.

[98] The Tobacco Tax Act, CCSM c T80, ss 1(1), 3.1(3)(a.1).

[99] Tobacco Tax Act, RSNB 1973, c T-7, s 2.2. Also, see e.g. Tobacco Tax Act, RSA 2000, c T-4, s 4(4).

[100] Trial judgment, supra note 1 at para 12.

[101] Trial judgment, supra note 1 at para 175.

[102] Atlantic Smoke Shops, supra note 16.

[103] Pickering, supra note 17.

[104] Pickering, supra note 17 at 9.

[105] Doer, supra note 17.

[106] RSC 1985, c E-15.

[107] Estabrook, supra, note 17.

[108] Estabrook, supra note 17 at para 6.

[109] Provincial Sales Tax Act, SBC 2012, c 35, s 49; Provincial Sales Tax Act, RSS 1978, c P-34.1, s 5(9).

[110] Saskatchewan Department of Finance, “Common Questions about Provincial Sales Tax” (accessed October 6, 2017). See also British Columbia Ministry of Finance, “Provincial Sales Tax (PST) Bulletin” Bulletin PST 308, Issued June 2013, Revised July 2017.

[111] New Brunswick Working Group on the Legalization of Cannabis,Report of the New Brunswick Working Group on the Legalization of Cannabis” June 2017.

[113] Alberta Government, “Proposed Alberta Cannabis Framework released” October 4, 2017 (news release); Alberta Government, “Alberta Cannabis Framework” October 2017, at 13, 14.

[114] New Brunswick Working Group on the Legalization of Cannabis, supra note 111, at 4.

[115] New Brunswick Working Group on the Legalization of Cannabis, supra note 111, at 6.

[116] Bill C-45, Cannabis Act, 1st Sess, 42nd Parl, 2017 (first reading April 13, 2017) [Bill C-45].

[117] Sam Kamin, Vicente Sederberg Professor of Marijuana Law and Policy University of Denver, College of Law, “Brief regarding Bill C-45: An Act Respecting Cannabis and to Amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts. Lessons for Canada from Colorado”, published on the Standing Committee on Health’s website, September 7, 2017, at 5.

[118] House of Commons Standing Committee on Health, Evidence, September 12, 2017.

[119] Reply Brief on Behalf of Gerard Comeau to the Post-Trial Brief on Law of the Crown, New Brunswick Provincial Court, at 1.

[120] Agreed Statement of Facts, supra note 8.

[121] Quoted in the trial judgment, supra note 1 at para 20.