{"id":112149,"date":"2026-10-14T11:49:03","date_gmt":"2026-10-14T15:49:03","guid":{"rendered":"https:\/\/brocku.ca\/brock-news\/?p=112149"},"modified":"2026-10-14T17:28:23","modified_gmt":"2026-10-14T21:28:23","slug":"opinion-michael-armstrong-discusses-the-cost-of-ontarios-alcohol-overhaul","status":"publish","type":"post","link":"https:\/\/brocku.ca\/brock-news\/2026\/10\/opinion-michael-armstrong-discusses-the-cost-of-ontarios-alcohol-overhaul\/","title":{"rendered":"Opinion: Michael Armstrong discusses the cost of Ontario’s alcohol overhaul"},"content":{"rendered":"

This piece written by Michael Armstrong, Professor of Operations Research at Brock University<\/em>, originally appeared in The Conversation<\/a>.<\/em><\/p>\n

The Liquor Control Board of Ontario (LCBO) generated $1.8 billion for the province\u00a0in 2025-26<\/a>, down\u00a0$358 million from 2024-25<\/a>\u00a0and\u00a0$757 million from 2023-24<\/a>.<\/p>\n

The decline follows the Ontario government\u2019s\u00a02023 decision<\/a>\u00a0to expand alcohol sales to grocery stores, convenience stores and other retailers. The LCBO also incurred an estimated $33.4 million in costs associated with\u00a0holding unsold American alcohol<\/a>.<\/p>\n

The provincially owned LCBO consequently generated $1.2 billion less for taxpayers over the past two years than its\u00a02023-2024 results<\/a>\u00a0might have suggested. That shortfall is five times larger than the\u00a0$229 million<\/a>\u00a0previously forecast by Ontario\u2019s Financial Accountability Office. Meanwhile, private retailers have added $911 million in annual sales, whereas some LCBO stores may close.<\/p>\n

For researchers like me who study\u00a0the alcohol<\/a>\u00a0and\u00a0cannabis industries<\/a>\u00a0and\u00a0their impacts<\/a>, this situation is intriguing. But for Ontario taxpayers, the financial consequences are troubling.<\/p>\n

Overhauling the market<\/strong><\/p>\n

Two years ago<\/a>, LCBO stores dominated Ontario\u2019s alcohol retailing, accounting for 57 per cent of a\u00a0$10.3-billion provincial market<\/a>. The organization also supplied 448 grocers that sold beer and wine at fixed prices.<\/p>\n

Ontario Premier Doug Ford\u2019s government began disrupting that arrangement\u00a0in December 2023<\/a>.<\/p>\n

In a news release, Ford promised to give consumers \u201cmore choice<\/a>\u201d by allowing convenience stores, grocery stores and big-box retailers to apply for alcohol retail licenses. These retailers could sell beer, wine and ready-to-drink beverages like coolers while setting their own prices.<\/p>\n

The expansion drew criticism from the union representing LCBO workers. In 2024,\u00a0the union released a satirical video<\/a>\u00a0mocking the government\u2019s alcohol retailing changes. It featured a fictional billionaire named \u201cCallum,\u201d an apparent reference to Loblaw chairman Galen Weston.<\/p>\n

At the same time, the government expanded the LCBO\u2019s wholesale responsibilities. It also\u00a0paid The Beer Store $225 million<\/a>\u00a0to end its provincial agreement and\u00a0promised $330 million<\/a>\u00a0to Ontario\u2019s wineries.<\/p>\n

Private-sector alcohol retailing subsequently expanded. Although total Ontario retail sales remain\u00a0roughly $10.3 billion<\/a>, around\u00a06,700 convenience and grocery stores<\/a>\u00a0now sell alcohol.<\/p>\n

The financial fallout<\/strong><\/p>\n

The added competition has impacted the LCBO\u2019s retail business. Sales through its own stores fell by 17 per cent in 2025-26, leaving the organization with less than half the provincial retail market. Some stores may no longer be profitable.<\/p>\n

Meanwhile, the LCBO\u2019s wholesale operations grew. The organization handled 10 per cent more product and paid 33 per cent higher operating costs. A changing product mix may also have affected profits as shoppers bought\u00a0more beers and coolers<\/a>\u00a0but fewer higher-margin spirits.<\/p>\n

Some folks would say that these changes were overdue: let businesses handle retailing and give shoppers more convenience.<\/p>\n

Others might counter that Ford\u2019s government has effectively spent $1.7 billion \u2014 so far \u2014 just to improve access to six-packs. They might have preferred that money go towards improving access\u00a0to health care<\/a>\u00a0or\u00a0education instead<\/a>.<\/p>\n

Regardless of where people stand on expanding alcohol sales, the LCBO\u2019s estimated $33.4 million cost of holding devalued inventory from the United States warrants scrutiny.<\/p>\n

The cost of unsold U.S. alcohol<\/strong><\/p>\n

Like several other provinces<\/a>, Ontario halted imports of American alcohol in March 2025 in response to U.S. President Donald Trump\u2019s tariffs. Unlike most, however, the Ford government also prohibited the LCBO from selling its existing U.S. inventory.<\/p>\n

That left\u00a0$79.1 million worth of American beverages<\/a>\u00a0unsold. Beyond reporting $2.9 million in write-offs for March 2025, the government did not initially disclose the full cost of holding the inventory.<\/p>\n

In May this year,\u00a0I estimated those costs might approach $20 million<\/a>\u00a0annually. My calculation included product write-downs, warehouse rental and implied interest payments for tied-up money.<\/p>\n

In July, the LCBO belatedly disclosed that\u00a0storage had cost $8 million<\/a>\u00a0so far. But it did not mention that it also wrote down products worth\u00a0$17.5 million four months earlier<\/a>, or that given\u00a0current interest rates<\/a>, simply owning these products was costing taxpayers about $2 million annually.<\/p>\n

As of October 2026, these reports and estimates suggest that inventory write-downs totalled $20.4 million, warehousing costs were approaching $10 million and the implied interest cost was nearing $3 million.<\/p>\n

This puts the estimated holding cost at $33.4 million over 20 months. That\u2019s 42 per cent of the inventory\u2019s original value. Annualized over 12 months, that works out to about $20 million, consistent with my original estimate.<\/p>\n

Halting U.S. imports is a logical trade negotiation strategy, but banning existing product sales is hardly \u201cprudent fiscal management<\/a>.\u201d It is more like taking 42 per cent of the bottles and\u00a0emptying them on the ground<\/a>.<\/p>\n

Instead of continuing to hold the inventory, the Ontario government should allow the LCBO\u00a0to sell it and recover as much as possible of the remaining $58.7 million<\/a>\u00a0investment. Better late than never.<\/p>\n

Keeping businesses in the dark<\/strong><\/p>\n

The Ontario government should also stop withholding economic information that businesses need to understand their market.<\/p>\n

The LCBO finalized its 2025-26 financial statements in June, but the Ontario government did not release them until September. By comparison, Qu\u00e9bec publicized its\u00a0liquor agency\u2019s annual report<\/a>\u00a0in early June.<\/p>\n

Ford\u2019s government has faced\u00a0repeated criticism over transparency and access to information<\/a>. But this specific delay also works against the interests of the businesses\u00a0he claims<\/a>\u00a0his policies support<\/a>.<\/p>\n

The LCBO remains Ontario\u2019s largest alcohol wholesaler and a major retailer. Its financial statements provide valuable information to the province\u2019s\u00a06,700 private-sector retailers<\/a>\u00a0as they navigate a changing market.<\/p>\n

Delaying those reports for three months made it harder for businesses to make informed decisions and for the public to assess the government\u2019s policies. That undermines the government\u2019s stated goals of\u00a0creating the conditions for businesses to grow<\/a>\u00a0and making Ontario \u201copen for business<\/a>.\u201d<\/p>\n

\"The<\/p>\n","protected":false},"excerpt":{"rendered":"

Michael Armstrong, Professor of Operations Research at Brock University, wrote a piece recently published in The Conversation about the ongoing cost of Ontario’s 2023 decision to expand alcohol sales to grocery stores, convenience stores and other retailers.<\/p>\n","protected":false},"author":1,"featured_media":112151,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[39,6],"tags":[594,4395],"_links":{"self":[{"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/posts\/112149"}],"collection":[{"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/comments?post=112149"}],"version-history":[{"count":1,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/posts\/112149\/revisions"}],"predecessor-version":[{"id":112158,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/posts\/112149\/revisions\/112158"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/media\/112151"}],"wp:attachment":[{"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/media?parent=112149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/categories?post=112149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/brocku.ca\/brock-news\/wp-json\/wp\/v2\/tags?post=112149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}