Is Canada's spirits market opening up?

As two Canadian provinces ink a landmark deal to allow reciprocal DTC alcohol sales, could this be the start of an open market?

Canada’s spirits market operates through government-controlled monopoly systems

As a trade war rages on with its neighbour south of the border, Canada is putting on a united front with its provinces working together to strengthen the country. The nation is seeking to dismantle trade barriers between provinces by forging ahead with new deals, including ones that could open up the alcohol market. The Canadian spirits market is highly fragmented, with each province setting its own distribution and retail regulations. Alberta and Saskatchewan have fully privatised retail systems, while other provinces rely on government‐run liquor boards.

In a major development last month, Ontario premier Doug Ford and his Nova Scotia counterpart Tim Houston signed a deal to allow direct‐to‐consumer (DTC) alcohol sales between the two Canadian provinces. The move will enable consumers in Ontario and Nova Scotia to purchase products directly from distilleries, breweries and wineries in both provinces.

The deal is said to be part of Ontario’s plan to “tear down barriers to interprovincial trade”, providing consumers with more choice and convenience, while “creating more opportunities for producers”.

Since July 2025, Ontario and 10 other jurisdictions have signed a memorandum of understanding (MOU) committing them to advance nationwide DTC alcohol sales by May 2026.

This move comes amid tensions between the US and Canada. Last year, US president Donald Trump placed a tariff on many Canadian goods including a 50% tariff on steel and aluminium. In response, all but two Canadian provinces have banned all kinds of American alcohol from their retail shelves since March 2025. This has caused exports of American spirits to the market to plunge by as high as 70%, hitting the sales of well‐ known brands such as Tito’s and Jack Daniel’s as provinces encourage Canadians to drink local products.

“As a result of the trade pressures from the US, there’s been a call in this country to try and find ways to get the provinces to work more closely and to trade more vigorously,” explains Cal Bricker, president and CEO of trade body Spirits Canada.

He believes this deal “sends a signal” and is more than just alcohol sales. “It’s really more of a signal to everybody about a commitment between the provinces to try and grow the economy by dismantling some of these barriers that exist.”

At the top of Bricker’s priority list is a resolution of the US dispute, which is hurting his members: “We’d like to get back to zero tariffs between Canada, the US and Mexico.”

The DTC deal could also provide a big boost to Nova Scotian producers, as they will have access to Ontario, a major alcohol market with more than 14 million people, compared to Nova Scotia’s population of roughly one million. The Liquor Control Board of Ontario (LCBO) is one of the largest alcohol monopolies in the world.

The CEO of Ontario’s Top Shelf Distillers, John Criswick, described the deal as a “good first step”, despite it being a smaller market for his business. “In the long term, Canada needs to do that. It’s silly to have those blockages to being able to just do business within Canada.”

He also believes that the deal can showcase what Canada has to offer when it comes to whisky. “It’s a really good opportunity for Canada to finally lock down on what types of whisky we have because we’re seen as just Canadian rye, right? Crown Royal and that sort of stuff when there’s a massive craft whisky scene in the country, from British Columbia to Nova Scotia. It’s when those barriers come down, it becomes an opportunity for all of us to better define our whisky flavour, terroirs, and then it’s out into a global scene eventually.”

Criswick also called the deal the “first step to the bigger opportunity, which is all across Canada”.

Red Bank Whisky: move may fast-track a product’s ability to reach markets

A new market

While the deal brings access to a new market for products, there are still some complications when it comes to label regulations within different provinces. As an example, Criswick notes that for its bottle to be sold in Manitoba, the phrase ‘Bottoms up’ had to be removed from the bottle because the province believed it encouraged drinking.

But the deal also has its limitations. Some brands are unable to take advantage of the access to another market because they use a partner distillery to produce their spirits. This is the case for Foxglove Spirits, which uses a third‐party producer in London, Ontario, to make its Valley of Mother of God gin brand. “Like everything else involving liquor in Canada, it’s complicated,” says Malcolm Roberts, co‐founder of Foxglove Spirits. “We can only sell DTC under the new agreement if we hold a licence as a producer/manufacturer.”

Nova Scotia’s DTC regulations specifically state that alcohol must be produced by a licensed manufacturer in the other jurisdiction and purchased directly from that manufacturer by the consumer.

“So contract‐distilled brands may ultimately participate if they meet licensing requirements or structure sales through the distillery partner. For us, the distillery would likely have to be the DTC seller, not the brand owner,” Roberts says. To start selling directly to customers in either province, producers must apply for authorisation via the Nova Scotia Liquor Corporation (NSLC) or the LCBO.

Another, perhaps unsurprising, element of the deal is that alcohol sold between the two provinces will be subject to a mark‐up pricing structure to “ensure fairness and competitiveness for domestic producers” while aligning with existing local tax rates. The provinces already impose a mark‐up on products sold in their stores, which support revenue for the provincial governments.

“This is a great opportunity for any producer that’s currently not in their market, and for those consumers to be able to purchase those products,” says Shawn Hiscott, who co‐founded Nova Scotian brand Red Bank Whisky with actor Kiefer Sutherland.

As Red Bank is already on the shelves in both its home market of Nova Scotia and in Ontario through the LCBO, there is “less of an opportunity” for the brand, but he believes it could increase the presence of other brands. He adds: “It may fast‐track a product’s ability to get into a marketplace,” adding that both the LCBO and NSLC “only have so much shelf space”.

Hiscott also notes the “big increase” in the last year of the ‘staycation’ in Canada, where locals are travelling across the country instead of going to the US, providing a boost to local distilleries. Does the alliance between Nova Scotia and Ontario signal broader change for Canada’s spirits market, paving the way for similar deals to be struck?

Hiscott believes so. “My understanding is that there are conversations happening across the country and they’re trying to see where it makes sense to eliminate or limit bureaucracy and barriers within the country.”

Bricker adds: “Canada [is] trying to modernise its system, given the challenges that we’re currently facing from the US. And so, a number of things that have existed that have created these artificial barriers between provinces, people are looking at them and saying, you know, the time is now to get rid of that stuff because it’s preventing us from growing our economy.”

Whether these early agreements evolve into an open market remains to be seen but momentum is clearly building for a more unified Canadian spirits industry.

Is Canada’s spirits market opening up?

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