The Saskatchewan government is in the final stage of shutting down provincially owned liquor stores, marking the end of an era.
The permits for the 35 stores have all been sold at public auction, bringing in just over $45 million.
Some of the winning bids were surprisingly high. The top was in the northern town of La Ronge, where the successful bidder paid $3.27 million for a permit to run a liquor store. The lowest was in the town of Carlyle, where the permit went for $450,000.
One economics professor who studies liquor policy said he is surprised at some of the numbers.
“Some of them I can see being quite valuable, but the majority of them not,” said Jason Childs of the University of Regina. “If they’ve overpaid, they'll probably get squeezed out by competition.”
Government liquor stores have been landmarks in many Saskatchewan communities for decades, although in 2016 the province significantly reduced their number, while increasing the number of private stores.
The last government stores will be closed on March 11.
Lori Carr, the minister responsible for the Saskatchewan Liquor and Gaming Authority (SLGA), called the sale of the permits a success.
The province maintains declining revenue prompted the change. The government says in 2018-19, profits from liquor retail reached $9.4 million, but by 2021-22, that had dropped to $3.2 million, and further declines were expected
However, the union representing the more than 400 workers who are losing their jobs said the “incredible amount of interest” referenced by Carr means the province could have made money by staying in liquor retail.
“If the stores were losing profits, how could the auction permits alone bring in $45 million?” said the Saskatchewan Government Employees Union (SGEU) in an emailed statement to The Epoch Times. “By privatizing our public liquor stores, the SaskParty government is turning that income and those profits over to the private sector and large corporations.”
“Our members are experiencing the full range of emotions that come with this decision,” the union added. “This is a decision based on a misguided ideology.”
‘Government Retail Challenging’
When the move was announced, SGEU mounted a protest campaign, but Childs is not surprised the provincial government went through with its plan, although he suspects politics played a role.“I have no reason to believe that the government of Saskatchewan is better at running retail outlets than Sobeys,” he said. “Government retail is always really challenging, because costs tend to rise really rapidly in that environment.”
And he pointed out the province is still going to make a lot of revenue from alcohol, through wholesale and distribution.
“The bulk of the money from liquor is going to come in via the markup at the wholesale level. ... so you’re still going to see Saskatchewan SLGA make a lot of money and remit a lot of money to the provincial coffers,” he said.
While there are now two provinces that have dropped the retail liquor business, Childs is doubtful other provinces will follow suit.
“Nova Scotia, New Brunswick, P.E.I. are the ones that still maintain a really tight monopoly over alcohol sales, and I don’t see them changing course anytime soon,” he said. “If there was going to be a next domino, I think it would probably be Ontario … but I think that’s going to be a pretty big, fat domino that’s going to be pretty hard to knock over.”
Childs argued private stores do offer some advantages over small producers trying to get into the market.
“Since Saskatchewan has opened up to private liquor retailers, selection has exploded,” he said, adding small producers told him it was often easier to get their products into a private store than into the government stores.
“So what are we doing? Why are we doing it? And does the government have a meaningful comparative advantage in running retail?” he asked. “And my answer is no.”
SGEU, however, says the province is looking at the loss of 400 well-paying jobs that paid for themselves through alcohol sales.
“The revenue from public liquor stores in turn has been used to pave our highways and invest in healthcare and education,” the union said in its statement.
Meanwhile, the government says successful bidders still face a variety of steps before opening their stores.
“Prospective retailers must meet all SLGA licensing requirements to hold a permit,” it said in the release.
It says retailers also have to secure locations, hire staff, and make other preparations.
“Successful bidders have 18 months to obtain their permit and open their business. Bid amounts must be fully paid before a permit is issued.”
