Information sheet: illegal liquor

They are making it, selling it, watering it down. Illegal operators across Ontario are bootlegging liquor in every conceivable fashion. This poses real risks to patrons’ health and puts licensees at a disadvantage against dishonest competitors.

Examples of illegal or “bootleg” liquor include:

• foreign products smuggled across the border;
• illegally manufactured (or “home-made”) liquor;
• adulterated or “watered down” liquor (infused liquor to create drinks or change the flavour of liquor through practices such as barrel aging, as long as the customer is informed, is permitted under s. 25(2) of O. Reg. 746/21);
• liquor not purchased from the LCBO, the holder of a Brewers Retail Inc. licence (the Beer Store) or the holder of a brewery licence (in the case of beer) under your liquor sales licence; and
• “Personal” bottles of liquor legally imported to Canada (e.g., under a personal exemption) and sold and served at your establishment.

Licensees found with illegal liquor anywhere on the licensed premises – or in any place used in connection with the sale and service of liquor by the licensee, including the food preparation and storage areas – could face sanctions under the Liquor Licence and Control Act, 2019.

The law also prohibits any person from possessing illegal liquor at the premises (e.g., friends, employees). As a licensee, you are:

• responsible for the liquor in your stock and the actions of your staff and other third parties (s. 35(4), O. Reg. 746/21).

There are two notable exceptions:

1. Patrons who bring sealed, unopened liquor into the establishment which remains sealed and which they will take home (s. 39, O. Reg 746/21); and
2. Patrons who bring wine into an establishment with a “bring-your-own wine” endorsement (s. 35(5), O. Reg. 746/21). This endorsement authorizes a liquor sales licensee to permit patrons to bring sealed, unopened containers of commercially-made wine into the establishment for their own consumption. The wine may be served if the wine is served to the patrons who brought the wine onto the premises. The licensee or one of the licensee’s employees must open the wine, as would be the case if the patron had bought the wine from the establishment. An opened and unfinished container of commercially-made wine may be removed from the premises if the licensee has “securely closed” the bottle (e.g., a screw top bottle re-closed with the original cap). Please see the “Take Home the Rest” provisions under s. 39 of O. Reg. 746/21.

Check your stock today to ensure that all liquor at your premises was legally purchased under your establishment’s licence or transferred in accordance with the requirements of section 35(3). If you have recently taken over an establishment from another operator, ensure that all stock was purchased under the liquor sales licence.

Finally, storing, dispensing liquor from a container other than the container in which it was purchased is illegal, but there are exceptions. For example, in cases where an automatic dispensing equipment is used to serve liquor if all the liquor contained in that equipment comes from a single container of liquor that the licensee purchased OR the licensee stores liquor in and dispenses liquor from a container other than the container in which it was purchased if the liquor is being stored in a different container because it is being modified in accordance with s. 25(2).

Here are some ways that we become negatively impacted by the sale and service of illegal liquor:

• Consumers who unknowingly consume illegal alcohol are placed at risk. Laboratory analysis shows that bootleg liquor is often manufactured, shipped and/or stored in unsanitary conditions. Bacteria has been found growing in confiscated bottles and tests have detected potentially harmful substances (such as lead, pesticide residues, anti-freeze and even rat poison) in some illegal products.
• Canadian workers’ jobs are endangered by the black market. Illegal liquor threatens jobs in the liquor, agriculture, bottling, packaging, transportation, warehousing, advertising, retailing, and tourism industries.
• Honest licensees and their employees are placed at a disadvantage competing with operators that flaunt the law and pocket illegal profits.
• Illegal liquor accounts for millions in lost provincial taxes annually – money that could be allocated to our hospitals, schools and roads – not in the pockets of illegal operators.

Times are tough, and it may be tempting to try to save a few dollars by purchasing illegal liquor. But just how much are you really saving?

And what about the repercussions of dealing in bootleg liquor? A licensee caught with illegal liquor on his or her premises – even if it’s not being sold – may be subject to regulatory sanction by the AGCO, including a monetary penalty or even a suspension or revocation of their liquor licence, as well as risk facing the following consequences:

• Loss of regular or potential customers who take their business to your competitors during a suspension.
• Loss of stock: an AGCO inspector may seize products that he or she reasonably believes not to be in compliance with the Liquor Licence and Control Act, 2019 and its regulations.
• Loss of reputation with your community, the police and the AGCO.
• Legal costs associated with a court appearance for a provincial court offence or attendance at an AGCO hearing.

If convicted of an offence under the Liquor Licence and Control Act, 2019, you may be liable to a fine of up to $100,000 for an individual or$250,000 for a corporation.

The AGCO is working to put black market operators out of business, including by making seizures. Illegal liquor is not worth the loss or suspension of your liquor licence or a serious fine. Protect yourself, your staff and your business – only sell and serve liquor purchased under the authority of your liquor sales licence from the LCBO, the Beer Store or the holder of a brewery licence.

Don’t have anything to do with illegal liquor – it’s not worth the risk. If you are aware of any bootlegging activities, notify local police or an AGCO Inspector.

For more information, please contact AGCO Customer Service anytime via the iAGCO online portal, Monday to Friday from 8:30am-5:00pm at 416-326-8700 or 1-800 522-2876 (toll-free in Ontario) or visit us online at www.agco.ca.