You could be forgiven for assuming that March of 2020 would have been pretty much the worst time imaginable to open a craft brewery in a sparsely populated town in southern Alberta. The provincial government had just closed restaurants and bars, along with every other type of indoor gathering, in an effort to contain the spread of COVID-19.
The Pass Beer Company, by that point, had been three years in the making—and that’s not including the years Tony and Danielle Radak had talked and daydreamed about the idea. The couple didn’t have a canning machine to package the first batches of beer from their new brewhouse, which included a taproom and restaurant at the west end of Blairmore, one of five communities that make up the municipality of Crowsnest Pass. Tony owned and operated a local glass company and installed a take-out window in the front door so they could fill up growlers.
“Beer is essential. Who knew?”
It didn’t take long for the lineups to form. People needed something to do and new ways to connect with each other. Standing in line, even in the chill of early spring in the Rockies, to try beers made right there in town, turned out to be just what the community needed. “We were very, very busy. We didn’t get the days off during COVID. Beer is essential. Who knew?” Danielle Radak told me.
I called Radak, whose official job title is general manager and pizza overlord, in the fall of 2025, to get her perspective on the plan to allow for direct-to-consumer alcohol sales across most of the country. The Alberta government had signed a memorandum of understanding the previous June with eight other provinces and the Yukon to eliminate restrictions on the trade of alcohol within Canada. Officials committed to putting a plan into action by the spring of 2026. The agreement is part of a broader effort to cut all barriers to interprovincial trade, which is itself a strategy to strengthen the national economy in the face of unpredictable tariffs and other threats from the Trump administration in the United States, our largest trading partner.
The push for free trade across Canada would entail abolishing restrictions on the exchange of goods and services and on labour mobility between provinces and territories. Streamlining the national economy, however, could undermine the authority of provincial governments to protect local interests. The craft beer industry in Alberta, for example, benefited from lower tax rates at a critical stage of its development, which encouraged new breweries to start up in communities across the province. Those kinds of policies, ones that safeguard regional priorities, would become harder to implement in a new era of frictionless trade.
Streamlining the national economy could undermine provincial authority to protect local interests.
It’s unlikely any Albertans will buy beer from Newfoundlanders, or vice versa, once the new rules are in place. The cost of beer is relatively low compared to the cost of shipping. The Pass Brewery, however, is only a 15-minute drive from the boundary with British Columbia. But Radak told me she did not envision direct to consumer sales becoming a priority. Her team already has trouble keeping up with demand.
The brewery has flourished since its inception. They employ 45 people during the high season and 26 over the winter. The beer first flows to the restaurant and taproom, which has seating for about 150 during the summer when the patio is open. You can find the beer in cans in Twin Butte and on tap in a couple of bars in Waterton and Lethbridge, Radak said. They’re building a cold storage facility next to the brewery so they can increase distribution, but the focus will remain local. Either she or Tony does all the deliveries. “We’re a small-town brewery,” she said. “We want to keep the personal connection.”
Small, local and personal are not part of the lexicon of proponents of free trade, who tend to think big to maximize economies of scale and the resulting gains in efficiency. There’s a $200-billion pot of gold at the end of the liberalizing trade rainbow, according to a study by Trevor Tombe, an economist from the University of Calgary, and Ryan Manucha, a research fellow with the C.D. Howe Institute. Their report for the Macdonald–Laurier Institute, published in 2022, cites a range of possible gains for the economy of between 4.4 and 7.9 per cent of GDP, or $110-billion to $200-billion. Politicians such as prime minister Mark Carney have latched on to the higher-end estimate, which is now thought to be closer to $250-billion, when presenting internal free trade as a way to offset the losses inflicted by the erratic tariff policies of the United States.
Tombe outlines in the report how the most efficient way for governments to realize this economic potential is through “mutual recognition,” a policy to eliminate duplication in the approval process for goods, services and professional credentials by automatically accepting the standard established in the province or territory of origin. “I’m quite optimistic,” Tombe said, in an interview in early September, “because governments have moved considerably this year with a lot of changes to how they’re approaching the issue.”
He referred to new policies and commitments made by provincial, territorial and federal governments as evidence that the rhetoric around reducing internal trade barriers could translate into meaningful action. Among new legislation brought in by the provinces in 2025, Alberta and Nova Scotia have agreed to recognize credentials across the two provinces, subject to a streamlined review process by local regulatory bodies. Regulators must now process equivalent licences within 10 days so people can get to work faster.
This past year numerous press conferences also announced memorandums of understanding (MOUs) between provin-cial governments. Premier Danielle Smith and Ontario premier Doug Ford, for instance, signed an MOU in early June that signals an intention to make it easier for regulated professionals to work in either province, and to reduce barriers to the flow of goods and services such as the interprovincial trade of beer, wine and whisky. These MOUs are not legally binding, but Tombe said they’re an important step towards broader mutual recognition deals. “I take the governments at face value when they say they’re committed to it, that we’re going to see that rolled out,” he said.
Not everyone is so enthusiastic. Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives (CCPA), argued the push to cut trade barriers is mostly political theatre, conjured from arcane economic theorizing. “It sounds good and sounds credible, and it sounds like you’re defending the country and you’re boosting the Canadian economy, but it’s just vapour,” he said in an interview.
And it comes with risk. Lee co-authored a report published this summer called The Premier’s New Clothes about the risks of unchecked trade liberalization. He argued it could set in motion a “race to the bottom” in terms of regulatory oversight for the manufacture of goods and the licensing of professionals. If the goal is a single, pan-Canadian standard, then Lee suggested that governments harmonize up, not down. They should choose the best regulation, the one that has the most merit. “The trick in public policy,” he told me, is that “you’re always weighing the public interest against economic efficiency, and economic efficiency shouldn’t always win. It is just one of the factors you need to think about in terms of providing the good life for people in a particular place.”
In the report, Lee made the case that Canada already has an effective mechanism in place for safeguarding unencumbered internal trade. The Canadian Free Trade Agreement (CFTA) was signed in 2017, replacing a similar accord in an effort to further liberalize trade. The CFTA is an opt-out agreement, meaning a government—provincial, territorial or federal—agrees to zero barriers on everything unless they explicitly list it as an exception.
In June of 2025 the federal government’s Bill C-5 became law and removed all 53 federal barriers to the interprovincial flow of goods, services and workers. The heavy lifting, however, falls to provinces and territories, which among them have many more exceptions, as well as overlapping licensing mandates and regulatory standards. But Lee cited the fact there have been only a handful of disputes filed under CFTA since its inception as proof the agreement is largely working as intended, that it has succeeded in encouraging more goods, services and workers to move freely across the country.
Alcohol represents a fraction of all internal trade in Canada, less than 1 per cent, but it’s an interesting case study because of the colourful history and complex manoeuvring the provinces have undertaken to protect and monopolize their dominion over booze.
When the NDP were in power in Alberta, for example, the government bent over backwards to help the local craft beer industry get up and running. They implemented a series of policy changes from 2015 to 2018 to shield the fledgling industry from competition until it could stand on its own two feet. This exposed the Alberta government to legal action and a challenge levelled against their craft beer policies under the Agreement on Internal Trade, or AIT (the precursor of the CFTA). The provinces, territories and federal government had made the agreement in 1995 to reduce trade barriers. It included a dispute resolution mechanism to challenge rules or policies that undermined free trade.
Under AIT, the NDP policies were found to violate Alberta’s commitments to free trade within Canada. But those policies also succeeded in supporting a new industry at a critical stage in its development. Jason Foster, a beer writer and educator from Edmonton, told me that even breweries that emerged after the policies were abandoned, such as the Pass Beer Company, benefited from the government intervention because it had helped build a market and appetite for craft beer. This tension between frictionless trade and the ability of provincial and territorial governments to protect what they see as the public interest has long been a subplot in Canada’s story.
Take, for example, the case of Gerard Comeau, a 62-year-old retiree from a small coastal town in New Brunswick. He’s famous for a beer run that went sideways and took him all the way to the Supreme Court. Ryan Manucha, the research fellow from the C.D. Howe Institute, writes about the significance of the case in his book Booze, Cigarettes and Constitutional Dust-Ups.
Comeau was pulled over by the RCMP in the fall of 2012 after crossing back into New Brunswick from Quebec with a trunk full of booze. The police confiscated 354 bottles of beer and three bottles of liquor and wrote Comeau a ticket for almost $300 for exceeding his personal limit of what he was allowed to bring across the provincial boundary. He was one of 17 people charged that day for making the short trip into Quebec to take advantage of lower prices for alcohol.
Lawyers with the Canadian Constitution Foundation approached Comeau to help challenge his fine in court because they saw a chance to question the constitutionality of laws such as the one that limited the amount of alcohol someone could bring into New Brunswick for personal consumption. The legal team based their case on a challenge to how section 121 of Canada’s Constitution had historically been interpreted by the courts. The free trade clause reads:
“All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”
A New Brunswick judge acquitted Comeau, but lawyers for the provincial government appealed the case and it went to the Supreme Court of Canada in the spring of 2018. Section 121, the nine justices unanimously concluded, only applies to the laws and regulations that make trade restrictions their primary goal. The judges recognized the law about personal limits to bringing alcohol into the province could have other justifications, such as a desire to promote public health and wellness and mitigate the risks of addiction.
“The court ruled that section 121 has a limited scope; it does not invalidate all government measures that create barriers to trade,” Manucha writes. “Their decision is baffling, unless one studies our story of internal trade, and starts by reaching back into the political and economic history of Canada.”
Since before Confederation, improving and encouraging internal trade has been a perennial priority for our politicians. Manucha describes in his book how the economies of the colonies of early Canada depended on exports of raw materials, such as fur, timber and grains. Abrupt changes in trade policies by Britain in the mid-19th century wreaked havoc on the colonies, which adapted by shifting focus to the United States. Then the Americans pulled the rug out from underneath Canadian businesses again a couple of decades later. “Twice in twenty years, Canada’s export-reliant economic order was rearranged by external political forces,” Manucha writes.
His book includes a quote from an 1865 speech by George Brown, the founder of The Globe, about the economic potential of Confederation. It reads like a comment that could be made today: “…One of the best features of this union is, that if in our commercial relations with the United States we are compelled by them to meet fire with fire, it will enable us to stop this improvidence, and turn the current of our own trade into our own waters,” said Brown.
Even though the motivation to improve internal trade was baked into Canada’s constitution from the outset, other innate factors make it difficult to implement. “Internal trade barriers in Canada tell a story of our country’s struggle to pursue an enduring singleness, despite a staggering variety in climate, topography, demography and economics,” Manucha writes. The push and pull of unifying the national economy despite inherent regional and cultural differences has long roiled the Canadian soul. In Alberta that conflict erupted perhaps most clearly in the story of craft beer.
Alberta’s first and only NDP government was elected in May of 2015 amid a low point in the oil and gas industry’s habitual see-saw. Rachel Notley and her team came to power with a vision to try to diversify the economy, to seek out and support new industries that could paper over the yawning gap left in the province’s GDP by tanking oil prices. Craft beer was also having a moment, with dozens of new coffee-shop-like breweries opening every year across Canada and the US.
Alberta’s own craft beer boom, however, had yet to take off. Part of the problem, said Jason Foster, the beer expert from Edmonton, is that back in the mid-1990s the Alberta Gaming and Liquor Commission (AGLC) had unilaterally opened our borders to beer imports. “Fill out a two-page form and pay $75 and you’re in,” Foster said. It didn’t matter where the beer was made in Canada, everyone abided by the same set of rules and paid the same fee to earn shelf space at the liquor store.
Other boards in other provinces played a more active role in gatekeeping—picking and choosing which beer would get stocked in which stores. Unlike the AGLC, these agencies retained—and still retain—the power to give preferential treatment for in-province breweries. If you want to distribute your beer in Quebec, for example, you have to build your own warehouse in the province for storing it. The Liquor Control Board of Ontario has a complex application process that includes proving your beer is sufficiently different from other products already in the market. And there is a tasting panel, a team of judges who try the beer and decide whether they like it enough to stock it in the province. “They’re all different ways in which you curtail the importation of out-of-province beer. You make it harder to sell that beer,” Foster said.
The Alberta government changed the markup policy back in October of 2015 to advantage smaller breweries, those that produced less than 10,000 hectolitres, within the three western provinces of the Northwest Partnership Trade Agreement. These breweries were charged $0.10/litre. Everybody else, regardless of size, paid $1.25. Steam Whistle, a brewery from Toronto, filed a lawsuit against the markup in late 2015, which pushed the government to try another approach.
The NDP changed the policy in July of 2016, this time applying the $1.25/litre rate to all beer sold in Alberta, regardless of the brewery’s size or location. The government created the Alberta Small Brewers Grant Program, which provided funds to craft brewers that made up the difference between their previous lower rate and the new flat rate. The grant program gave local craft brewers a competitive advantage, both in liquor stores and when trying to get on tap at a bar or restaurant. It helped to raise their profile, said Foster, and was an attempt “to try and create a little bit of a shield, push back on the beers that are coming in from other provinces by increasing their price point, which gives a little bit of a competitive advantage to the local brewers, which would then hopefully give them some market share.”
About a year after the grant program was implemented, a dispute resolution panel ruled that it violated the province’s obligations under the Agreement on Internal Trade. The complaint had been submitted by Artisan Ales Consulting Inc., a Calgary company that imports beers from Quebec and around the world. The government appealed, but another panel made the same ruling in July of 2018. It ordered the government to repeal or amend Alberta’s small brewer grant program within six months. The government also lost the lawsuit brought by Steam Whistle. “Justice Gillian Marriott held that the Alberta Gaming and Liquor Commission’s tariff and grant policy for Alberta craft breweries was an unconstitutional restraint on interprovincial trade,” wrote lawyer Andrea Stempien, a partner with Bennett Jones, in a summary of the decision.
The judge looked to the decision the Supreme Court had recently made in the case involving Gerard Comeau. The main takeaway from that ruling was that the party challenging the law must show its “essence and purpose” was to restrict trade. “The court concluded that both the 2015 mark-up scheme for Alberta, British Columbia and Saskatchewan, and the 2016 mark-up/grant scheme intended to prefer Alberta craft brewers and restrict trade,” Stempien wrote.
The NDP government scrapped the grant program in December 2018. They had succeeded in giving Alberta craft breweries a three-year runway to get a toehold in the market and start to build brand recognition. “This policy did what it was meant to do, and it was a success, and it was a central component of the craft beer boom in Alberta,” Foster said. His latest official count, from November of 2024, puts the number of these small-scale breweries in the province at 134.
The NDP’s difficulty in getting their craft-beer policies to stick, even though the measures had a public-interest dimension, supports CCPA economist Marc Lee’s argument that the current system already tips the scales in favour of commerce. “The CFTA and its predecessor, the 1995 Agreement on Internal Trade, impose free trade disciplines that significantly constrain how provincial and territorial governments regulate business, investment and labour mobility in their areas of jurisdiction under the Constitution,” his report from this past summer reads. Lee told me he’s skeptical any real economic gains are left to be made in terms of liberalization. The low-hanging fruit has been picked. Arguments for further cutting of trade barriers, such as through mutual recognition policies, Lee said, are based on complex theoretical equations and calculations that don’t hold water outside of an academic, ivory tower context.
Economist Trevor Tombe, in contrast, told me that when determining potential economic gains, he used the standard modelling techniques and equations for calculating the effects of liberalizing trade. He applied the same methods used in the international context. “So that’s the trick, taking the models that exist elsewhere but adapting them to the Canadian context so they can plug into the StatsCan data,” he said. “Statistics Canada, to its great credit, produces the best internal trade data on Earth by a pretty wide margin.”
The small brewers’ grant program “was a central component of the craft beer boom in Alberta.”
Elements of his analysis, however, have not received as much traction in the media and other discourse about internal trade. The economic gains he projects would take decades to materialize. They involve a redistribution of industry. Some provinces would win in some sectors and lose in others. “The pie can be bigger, but the slices get cut up in different ways when we liberalize,” Tombe said. People would have to follow the new opportunities. His models suggest that 1.3 to 1.7 per cent of Canada’s workforce would migrate. And, Tombe acknowledges, perhaps this is a price Canadians are not willing to pay. His goal is to ensure we have the best data possible to make an informed decision. “It may very well be that Canada’s highly decentralized federation might inevitably lead to high internal trade costs, and that might be a cost worth paying,” he said.
Alberta’s craft beer industry is what Tombe might call, in the poetic language of an economist, a legitimate non-economic objective. Bigger breweries, even if they’re outside the province, benefit from economies of scale and can provide cheaper alternatives. But craft beer, even as the sector is undergoing a contraction, is something more than the sum of its parts. It has a cultural dimension. Foster described how a large proportion of the craft breweries in Alberta were started in small towns. They employ local people and buy local ingredients. They contribute to a sense of place. They reflect and shape the identity of communities. It’s no coincidence the NDP government defended its policies to protect craft beer by invoking an image of agrarian Alberta, of the prairies, of a place that grows the best barley in the world. The pitch was infused with patriotism. The trade barrier was a tool to nurture a nascent industry that helps to make Alberta, Alberta.
Doug Horner is the author of Back from the Deep (Steerforth Press, 2024). He lives in Calgary.
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