Nova Scotia's craft brewers say unfair regulations stifle their businesses

Almost 25 years after he entered Nova Scotia's craft brewing industry, Brian Titus says he's still fighting many of the same battles with the provincial government.

"It's slightly depressing to think that after 25 years, a lot of what we're fighting for now is the same thing we were fighting for then," said Titus, the owner of Garrison Brewing and the executive director of the Craft Brewers Association of Nova Scotia (CBANS).

When Titus started the Halifax brewery, there were only a handful of microbreweries in the province.

Today, there are around 70 that employ roughly 1,150 people. Titus said this growth is an example of an industry succeeding in spite of government regulations, not because of them.

The association recently released a strongly worded annual report that took aim at several issues it says are unfair, uncompetitive and stifle their businesses.

"Outdated government regulations and punitive new rules are now holding back this industry and making Nova Scotia an increasingly inhospitable place for craft alcohol producers," said a press release announcing the annual report.

Among the issues is what constitutes a microbrewery. In Nova Scotia, a microbrewery is one that produces under 15,000 hectolitres (1.5 million litres) of beer a year.

It used to be that breweries paid reduced markup (40 per cent) if they produced under 15,000 hectolitres of beer that was sold through the NSLC. But they paid 84.5 per cent on all of the beer produced if it exceeded 15,000 hectolitres.

A change introduced last year now means craft breweries may have to pay the higher markup rate at production less than 15,000 hectolitres. Nine Locks Brewing in Dartmouth hit that threshold at 11,000 hectolitres of production, said Titus.

Titus said even the reduced markup rate is the highest in the country, while the production threshold is the lowest.

He said the high markup rates act as disincentives for craft breweries.

"Anybody who is starting to get close to that number is now putting those plans a little bit on hold to see how this plays out," said Titus. "Because if you can't make profit when you sell one ounce over the hectolitre limit, then why would you bother producing that? It doesn't make any sense."

If breweries are selling their products directly to consumers or through private alcohol stores, they pay the NSLC something known as the retail sales markup allocation, which is five per cent of the product cost. They don't pay the markup rates described above.

NSLC spokesperson Beverley Ware said Nova Scotia's markup rates must be looked at within the context of what the corporation does for the craft brewing industry.