You would be forgiven for thinking otherwise, but scores of Ontario grocery stores are required under current rules to accept empty beer and wine containers as a condition of their provincially-issued license to sell alcohol. While every alcohol-selling grocery store in Ontario will be required to participate in the Ontario Deposit Return Program starting January 1st of next year, stores that are more than five kilometres away from the location of a current (or recently closed) Beer Store location are required to accept empties right now. This month, the government has actually started enforcing that rule.
“Of the 78 grocery stores with current ODRP obligations, 7 stores — including one operated by Costco Canada and two by METRO Inc. — have not taken meaningful steps toward compliance despite ample time and support,” the Alcohol and Gaming Commission of Ontario said in an emailed statement to TVO Today. “As a result, the AGCO recently served those seven stores with notices of proposed 14-day suspensions of their liquor sales licences.”
The potential suspension of the license to sell beer, wine, and other alcoholic beverages can be appealed to the province’s License Appeal Tribunal if the retailers choose to do so. The move by the AGCO comes as the government is in the midst of negotiations with retailers about whether they’ll be required to collect empties starting on January 1.
Retailers, particularly the largest companies such as Loblaw, Empire (owner of Sobeys), and Metro have been public in resisting the push to start collecting empties. Finance Minister Peter Bethlenfalvy has said that participating in the deposit return program was always part of the conditions of participating in the alcohol market, and retailers need to get on board.
“My message to the grocers is: comply or give the licence back, your choice,” Bethlenfalvy said last month.
Bethlenfalvy’s office denied Wednesday that the AGCO’s enforcement actions were in any way connected to the ongoing negotiations with retailers. The AGCO is (like TVO) an independent arms-length agency and does not receive direction from elected officials.
“Since modernization began hundreds of grocery stores have signed up to sell alcohol in Ontario. Recycling return has been a public condition of licenses for grocery stores since terms were announced in May 2024 and all grocery stores signed up with that understanding,” said Colin Blachar, Bethlenfalvy’s spokesperson.
“The Ministry of Finance continues to have positive engagement with industry stakeholders to deliver the best results for Ontario businesses and consumers.”
The government and retailers have multiple issues they’re negotiating over the future of alcohol in stores, aside from the basics around deposit return. Two in particular come to mind.
First is the rate of wholesale discount available to retailers: groceries currently get a 10 per cent discount off the LCBO base price, while corner stores, bars, and restaurants get 15. Like deposit return, this was a condition from the announcement of the government’s changes starting in 2024 — but large retailers would obviously prefer the higher discount available to some of their competitors. It would, however, negatively affect the province’s fiscal state; any further discount from the LCBO would reduce revenues that eventually flow back to the provincial dividend.
The province’s financial accountability officer has estimated that the current policies will already cost the government $1.4 billion by 2030, and that’s before any additional discounts.
Retailers have another matter they want the government to address, one that wouldn’t necessarily cost the province directly. They want to be able to sell store brand (“private label”) beer and wine — so Costco would be allowed to sell Kirkland wine, for example. The government has resisted this option, in part because of pressure from Ontario’s existing beer and wine industry that fears having to compete with retailers for their own shelf space.
The government could ignore the retailers’ pleas and stick to its guns on its January 1st deadline. It might offer concessions on either of their other requests, although given the province’s current fiscal state, an expansion of the LCBO discount seems least likely: the deficit for this year is projected to be $14.6 billion and has potential to grow. Retailers, for their part, could live up to their threats to stop selling alcohol entirely rather than be forced to accept empties.
There are 78 days left in the year for retailers and the government to come to an agreement.
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