Big Spruce Brewing’s Open Letter to the People of Nova Scotia

By Jeremy White and James Barrie

It is not too often that I start researching for an article and find something that explains the passion and dedication that people involved in the Craft Brewing Industry have for their businesses, their fellow craft brewers and their cu tomer’s as this letter that I came across by Jeremy White, Founder and Alesmith of Big Spruce Brewing of Nyanza, Cape Breton, Nova Scotia, Canada.

I wanted you to be able to read the letter that White wrote back in early October of 2016 in its entirety as it say a lot about the people working in the Craft Brewing Industry and that they look out for each other and wanted to see everyone succeed and have the ability to grow their business, which is probably why this industry is one of the fastest growing business sectors of the economy on both sides of the border.

This is Jeremy’s letter;

October 5 th , 2016

Dear Nova Scotia,

I’ve been meaning to write. Ever since my wife and I fell in love with this province while on our honeymoon, bought a Cape Breton farm sight unseen off the internet, moved here and got into the #NSCraftBeer industry with the launch of Big Spruce Brewing, I’ve been truly amazed. Amazed at just how much pride there is in this province. Amazed at the tasty beer made by NS Craft Breweries. Amazed at the passion shown by nearly 400 (and growing) hardworking Nova Scotians who work in NS Craft Beer. Amazed at the willingness we all have as craft brewers to stop everything we are doing for our own businesses to help a fellow craft brewer in need, regardless of the cost. Amazed at the 30%+ annual growth of the NS Craft Beer industry – Nova Scotians will drive anywhere to seek out great Craft Beer!

There is so much homegrown success in our industry that I have to believe #NSCraftBeer should be the poster child for what Mr. Ivany and his colleagues envisaged for this province going forward in their report…..but herein lies the reason for my letter: you’re being duped.

It amazes me to have to say it, but the Nova Scotian bureaucracy, our elected officials, and a myriad of prohibition-era- esque regulations are making it impossible for us to realize our full potential as a vibrant, leading edge Craft Beer industry. Why does it take elected officials and their disobedient bureaucrats 5 years to make decisions that in the interest of improving the economic outlook of Nova Scotia should take 5 minutes? It is shameful! As a province in need of a new economic blueprint, we need them to do better.

Ready? Here’s the Top 10 Reasons Nova Scotia is getting the bum rush when it comes to Craft Beer:

1. At Big Spruce, and at many NS Craft Breweries with tasting rooms, we wash 4 times as many dishes as we need to. Under the current NSLC issued hospitality permits, we can only serve beer in 4 oz. glasses. It’s embarrassing to have legislation in place that forces us to look in the eyes of a visiting Craft Beer consumer and tell them they can have as much beer as they want but only in 4 oz. glasses. Give me a break!

2. Current regulations disallow NS Craft Breweries to have a second sales location without that second location also having a full brewery on the premises. So why does Moosehead Brewery of New Brunswick have a fully stocked retail location in Dartmouth that doesn’t have a brewery in

it? Because there USED to be a brewery there? That is inconsistent, and unfair to NS Craft Brewers. Furthermore, Moosehead also act as Canadian distributors of Sam Adams, a beer from the largest craft brewery in the USA (Boston Brewing Company). Low and behold, Nova Scotians

can buy Sam Adams at the Moosehead beer store in Dartmouth too! So now the largest craft brewery in North America essentially has an outlet store for their beer in the biggest urban center in the province, without any requirement for an actual brewery. If we local craft brewers decided to open a second location, we’d have to also build a brewery to gain the right. What’s more, we are not even permitted to sell each other’s beer at each of our existing breweries. It’s ridiculous.

3. Why, why, WHY is’t there a Nova Scotian Craft Beer Section at NSLC Stores? In many stores, there is no mention of the word Craft. What’s more, I see wonderful NS Craft Beers on the shelf from Propeller, Garrison, Boxing Rock, Hell Bay, Uncle Leo’s, Spindrift, 9 Locks, and Breton Brewing, mixed in with imposter faux-craft beers from large international brewing companies.

Imposter beers may contain dubious ingredients and are at the very least brewed elsewhere — making money for companies outside this province. It’s confusing to consumers (possibly that is the intent?). I mean come on, I don’t see all the Merlot piled up together on your shelves. Craft beer from Nova Scotia is distinct and unique. Seriously folks, we need our own section.

4. NS Craft Brewers buy brand new 341ml bottles for Oland’s (a subsidiary of AnheuserBuschInBev, a behemoth beverage company headquartered in Belgium and Brazil) every week so that Oland’s doesn’t have to replace their broken bottles. That’s right. We buy them bottles! $500,000 worth per year! In NS, the craft beer industry does not have access to the recycled pool of reusable bottles. NS Resource and Recovery send ALL of the 341ml beer bottles they collect and sort to you guessed it Oland’s. Oland’s pays them a tidy sum of $0.04 per bottle under this nifty system. When NS Craft Brewers need bottles, they pay $0.31 per bottle to buy them new, and get to use them precisely once before they are recycled and bought back by Oland’s at a huge discount. What’s more, NS Craft Beer larger format bottles (such as 500ml and 650ml bombers) aren’t considered reusable by NS Resource Recovery, so they are crushed and often buried in landfill after a single use. Despite years of negotiation with Beer Canada in earnest, this system has not changed. Come on NS Government, help us negotiate back our fair portion of the recycled bottle pool from Resource Recovery. Stop crushing expensive glass and let us reuse it!

5. Last year, NS Craft Brewers self-distributed (i.e. sold beer directly to clients, not through the NSLC) enough beer in this province that it contributed $950,000 in tax revenue to the provincial coffers. (We pay $0.50 per litre to the NSLC on beer we distribute ourselves. Yup, you read that right.) NS Wine makers contributed $150,000 under the same self-distributed remit requirement. The NSLC returns $50k of this remit back to each of the Craft Brewers’ Association of NS and the Winemakers Association of NS to help with funding development in each industry.

This seems disproportionate – we create more than 6 times the tax revenue on self-distributed product for the same amount of funding help! What’s more, the NS Wine industry received $3.5 million in the last provincial budget to help fund a PR Campaign. The NS Craft Brewers were given $0.00 in the same budget. Why are you unfairly helping one industry more than another?

6. The NSLC’s remit rate paid by NS Wineries and NS Craft distillers is 5% of wholesale price, while NS Craft Brewers pay $0.50 per litre. This means NS Craft Brewers are currently paying approximately 100% more production related taxes than NS Wine and Craft Distillers. Why the difference? The Craft Brewers’ Association of NS held government’s hand for 2 years, negotiating a reduction in good faith, paying independent consultants to demonstrate that a reduction to the remit NS Craft Brewers pay would positively impact the growth of the industry, while causing only a minimal short term reduction to treasury revenue ($400k over 18 months)!

Immediately prior to the last provincial budget, NS Craft Brewers even felt we received assurances that this inequality in remit rates was going to be corrected. We were shocked when it was completely left out of said budget. Why does it take government so long to give us what it has already given other similar industries? I can only think that the lobby against us getting a reduction (which can only logically come from large international beer companies) is so intense, that government has succumbed to its pressure. That would seem to indicate a preference to help large multinational beverage companies over the companies the provincial government has vowed to support right here in Nova Scotia.

7. Whether or not the NSLC was ever correctly and legally nominated by the Government of Nova Scotia as the entity empowered to collect beer tax revenue (our remits) on brewery distributed beer in NS is now being legally challenged by one NS Craft Brewery (Unfiltered Brewing). The merits of the Unfiltered law suit await further progress in the Supreme Court of Nova Scotia, but the fact that the case exists, and has been permitted to go forward by the Attorney General, suggests that very foundation on which remittances are structured and paid in NS on craft beer we distribute ourselves are tenuous at best.

8. The fact that the NSLC is currently both the principal NS beer retailer AND the NS Craft Beer regulator puts them often in a position of conflict of interest. For many of us, the NSLC stores are our biggest customer, yet they also have the power to make policy that directly impacts our businesses. This unnecessarily complicates our relationships with the NSLC. The government says they want to transition the regulation of NS Craft Beer to the ministry of Alcohol, Gaming, Firearms and Tobacco, but has taken two years to think about it and do nothing. Hurry up, would you!

9. My next beef further shows NSLC’s complete lack of commitment to fairness and consistency in the NS craft beer industry. In Nova Scotia, there exist private wine, spirit and beer stores (PWSS). For years, NS Craft Beer Companies have been directly supplying PWSS with beer at wholesale prices, so the PWSS could then sell it on to consumers at a profit (but never at a lower price than the NSLC sells it at their stores). It turns out no clear written policy regarding the payment by breweries of the $0.50 per litre remit exists on beer sold to PWSS. (Full disclosure: Big Spruce does not sell beer to the PWSS or the NSLC.) As a result of NSLC’s lack of policy, NS Craft Breweries that were started before about 2008 have never paid the $0.50 per litre remit on beer they sold to the PWSS. This nonpayment totals hundreds of thousands of dollars of savings for some of these breweries. By contrast, for breweries started after about 2008, the NSLC insisted on payment of the $0.50 per litre remit on this beer (despite still NOT insisting older craft breweries start paying it). This obviously resulted in various NS Craft Breweries having an unfair pricing advantage over others.

The NSLC has realized the error. As brewers we’ve spoken to them about it, and yet they have done nothing to formally correct the mistake, nor have they formalized a proper written policy regarding payment of remit on beer sold to PWSS! If those NS Craft Breweries that didn’t pay remit on PWSS sales over the last number of years were correctly never required to, and the NSLC’s subsequent insistence that newer breweries pay the remit on PWSS supplied beer was in error, doesn’t the NSLC owe the newer breweries their $0.50 per litre back? I can only assume the embarrassment over the incorrect administration of nonexistent policy has left the NSLC unwilling to address the issue with NS Craft Brewers, or with the public. Well, NSLC, say hello to the general public!

10. So this one is for the many great destination craft beer bars, pubs, and restaurants in Nova Scotia, to whom so many craft brewers owe their very existence. Why is there such a massive penalty tax on the importation of craft beer into Nova Scotia? Hasn’t the recent Supreme Court judgment in favour of Gerard Comeau’s legal importation of beer into New Brunswick from Quebec demonstrated that the Canadian Constitution provides for the tax free import/export of beer into one province from another? New Brunswick’s subsequent lowering of their beer prices so as to compete with cheaper beer in Quebec would seem to recognize this. I’m not saying charge nothing on the importation of other craft beer. Charge something fair. Like what you charge NS Craft Brewers, for example. An importer of a $200 keg of craft beer from Portland, Maine, or Quebec should not have to pay the NSLC $200 worth of taxes on that beer (approximate current rate). It’s clearly policy meant to prevent outside competition in our industry, and it should be abolished. We should welcome other great Craft Beer here. High tides float all boats!

This is all so Peculiar, so hard to Fathom! In fact, it’s dow right Dirty and All Falc’d Up! I am done with all this Deception, and I refuse to say Uncle! It’s driving me Shack Wacky! Tell the provincial Government to move Full Steam ahead and support NS Craft Beer. This Honey Wagon has gone far enough! Vicar’s Cross your lucky North stars that the Knotty Buoys and girls with their hands on the Rudder of this Tall Ship we call our province do not inadvertently lead us down the path of Revolution! When it comes to innovative policy regarding Craft Beer, the province doesn’t know what the Hell Bay is going on! They should show some Class and strive to be the Burban Legend that leads us across the Iron Bridge to Canadian Craft Beer supremacy. In the interests of all Nova Scotians, they should take a Chimney Swift to these multinational Red Coats and beat them back from whence they came! NS Craft Beer is here to stay, and you all Bitter Get’er India! Bureaucratic complacency, political status quo, and archaic legislation are stifling the NS Craft Beer industry. Government MUST react quickly in support of good news stories as they occur.

Nova Scotia is missing a chance here. A chance to say: “Hey World, we’re the best Craft Beer jurisdiction in this great country of ours! Craft Beer junkies wanted!”

On December 20 th , 2016, shortly after White’s letter to the people of Nova Scotia, the province announced changes to the fee charged to craft brewers addressing one of the issue on White’s list (#6) which pushed the government’s efforts to level the playing field for Nova Scotia’s alcohol manufacturers. Premier Stephen McNeil announced that his government was changing the NSLC’s Retail Sales Mark-up Allocation (RSMA) charged to craft brewers from 50 cents per litre to 5 per cent of wholesale. This is a change that White and The Craft Brewers Association of Nova Scotia had been asking of the government for more than a year now to reduce.

“Hey World, we’re the best Craft Beer jurisdiction in this great country of ours! Craft Beer junkies wanted!”

In the announcement made at the Garrison Brewery in Halifax, McNeil said, “This was the recommendation from the entire industry.” Then McNeil went on to say that, “Really it was to bring it in line with the wine and spirits industry in the province, and for us, it’s about trying to treat people equally.” Emily Tipton, president of the Craft Brewers Association of Nova Scotia said at the time that this change would give brewers “a little bit more leeway to be able to reinvest in our businesses.”

The government says the change, effective April 2017, will put $800,000 back into the pockets of brewers. Tipton estimates savings of about $600,000.

In an interview after the announcement, Jennifer Gray, of NSLC, admits that there have been growing pains, but it’s a work in progress. “We continue to be committed to doing all we can to help local industry be successful. It’s a challenge to keep pace with the growth this sector is enjoying and it’s going to take some time for the policy and regulation to keep pace. We are confident we’ll get there – it will just take some time.”

It is easy to see that there is lots of work to do as this industry is showing no signs of slowing down in Nova Scotia or elsewhere for that matter and all those working in the industry just want it to be fair for everyone in the business to grow and succeed, which is good for the brewers, their customers, the industry and the government.