By now, everybody knows—on May 24, Ontario Premier Doug Ford announced that the province will soon see as many as 8,500 more private retail outlets selling beer, wine, and pre-mixed cocktails.
Many bottles of ink have already been spilt over the province’s decision to pay the Beer Store $225 million, and likely more, to walk away from its 10-year retail agreement so the province could bring in the changes immediately. That agreement was set to expire in 19 months—the province could have waited and paid nothing, but the burning desire to give drinkers more “choice and convenience” was just too great.
In a radio interview after the announcement, the premier argued that moving quickly to expand sales was not costly at all. He said it would actually boost revenues to the province.
“We’re going to create hundreds of millions of dollars of new income,” he said.
But “choice and convenience” doesn’t automatically translate to more revenue. For Queen’s Park, the most lucrative way to sell alcohol is through the LCBO, whose profits go straight into provincial coffers. With more private outlets, a hefty percentage of those profits will go into the pockets of private owners instead.
The current government has also made a point of keeping alcohol taxes low. As a result, provincial tax revenues from beer, wine, and spirits have fallen by 21 per cent (accounting for inflation) since 2018. And the government’s current “targeted review” of alcohol taxes is likely to cut them, not raise them, thereby reducing revenues even further.
Under the new retail regime, the LCBO will earn more money as a wholesaler, but an LCBO projection obtained by CBC News predicts those earnings won’t make up for the combined impact of lost retail sales at the LCBO and lower tax revenues generally. The LCBO expects a net annual revenue loss to government of between $98 million and $150 million, the CBC reported.
Convenience isn’t always good
Regardless of what happens to government revenues, one thing is for sure: if these plans go ahead, Ontarians will soon be drinking more. And that’s not good.
“The main driver of alcohol-related harm is convenience,” says the Centre for Addiction and Mental Health (CAMH).
The cost of this increased consumption will be steep. The research on drinking and its effects is clear: “Decades of research show that increased ease of access leads to more consumption and, in turn, more harm,” CAMH states. “Young people—children, adolescents, and young adults—are among the most affected. Alcohol-related harms include an increase in alcohol dependence, chronic diseases, injuries, violence, suicide, mental health concerns, and social issues like intimate partner violence and impaired driving.”
There’s a reason no one ever says, “I wish I’d had more to drink last night.”
Based on the latest data, Ontarians drink less, on average, than people in any province except New Brunswick. There are many reasons for this, but one important factor is that Ontario has relatively few retail outlets that sell alcohol.
Adding up the number of alcohol outlets at the LCBO, the Beer Store, private wine stores, and at breweries, wineries, and distilleries, Ontario has about 3,000 retail alcohol outlets. That’s about 2.2 stores for every 10,000 people. In order to be average in Canada, we would have to triple that ratio.
The government’s new plan goes far beyond that. We could have 11,500 outlets before long.
This is an expensive proposition. The reason is simple: even at present consumption levels, our fondness for alcohol costs the government more than it brings in in revenue.
Analysis by the Canadian Centre on Substance Use and Addiction estimated the 2020 costs of alcohol consumption to government revenues and the wider economy. Adjusting those numbers for population and inflation, alcohol is now costing the Ontario government $3.0 billion a year in health costs and $2.0 billion a year in criminal legal system costs, for a total of $5.0 billion in direct costs to the government. Other costs, borne by society more broadly, include $3.58 billion in lost productivity at work and $0.76 billion in other direct costs.
In contrast, Ontario’s revenues from alcohol sales in 2022-23 totalled just $4 billion in April 2024 dollars. Clearly, $4 billion in revenue from alcohol does not come close to making up for the actual costs flowing from drinking.
Selling alcohol can be a very profitable business, and the publicly owned LCBO remains an excellent way to make sure the majority of those profits end up in public coffers to (at least partially) fund health care and the legal system. In contrast, expanding alcohol sales to thousands of new private outlets is a failure on two fronts. First, it will increase consumption, and the social costs that come with it. Second, it will decrease the proportion of alcohol revenues going to the government—and make it that much harder to deal with those social costs.
Up to now, critics of the government’s new approach to alcohol have focused, not wrongly, on the unnecessary cost in public dollars. Payments and rebates to the Beer Store combined with wholesale discounts for new retailers will come directly from the provincial treasury. This is especially problematic at a time when the government is visibly neglecting big issues like health care and housing.
Given what’s at stake, though, the debate needs to be larger: if we’re talking about the costs of expanded alcohol sales, we should talk about all the costs—including the costs to families, communities, and society as a whole.
Taking those costs into account, the question we should be asking is this: Do we really want Ontarians to drink more?
