FAO to look at cost of Ontario expanding alcohol sales early

Ontario's financial watchdog is looking into thecostof Doug Ford government's decision to expandalcohol sales into convenience stores and other retailers ahead of schedule.

The Financial Accountability Office revealed its decision to research the alcohol expansion deal in a letter to MPP Stephanie Brown, the Liberals' finance critic, after she requested thereview.

About 4,000 convenience stores in Ontario began selling wine, beer, cider and ready-to-drink cocktails on Sep. 5. All Ontario grocery and big box stores will also be eligible to sell those drinks by the end of October.

The original plan was to expand the sales of the beverages to more retailers starting in 2026, when the province's 10-year master framework agreement with The Beer Store expired.

The Ford government has said it wanted to provide Ontarians more choice and convenience sooner. The province has saidexpediting the expansion will cost the province $225 million. That's for a one-time payout to The Beer Store for revoking its exclusive right to sell 12- and 24- packs of beer.

WATCH |Convenience stores across Ontario can now sell beer, wine and pre-mixed drinks:

Beer, wine sales begin in Ontario convenience stores

23 days ago

Duration 1:56

Convenience stores across Ontario can now sell beer, wine and pre-mixed drinks as the province loosens alcohol sales restrictions. Hard liquor sales are still limited to LCBO locations and outlets.

The FAO said in itsletter to Brown that it will compare the cost of expanding sales this year to "a scenario where the province expands alcohol access at the expiration of the MFA on December 31, 2025."

The Ontario Liberals estimate the province could be spending more than $1 billion by accelerating the deal.

Liberals say Ford government's deal is costing taxpayers

Experts say the early alcohol sales expansioncould cost the province hundreds of millions of dollars more than the single payout to The Beer Store.

Liberal Leader Bonnie Crombie said in a release Monday that the Ford government is hiding extra costs, and prioritizing expanded alcohol sales over more pressing issues like health care. She called on the Ford government to provide the FAO with easy access to information, so the report can be completed by early next year.

"Given the finance minister [Peter Bethlenfalvy] has admitted he doesn't know the true costs of this boozedoggle," she said in the release, "he should want to support the FAO in getting to the bottom of how much this scheme cost Ontario taxpayers,"

A spokesperson for the Ford government, Colin Blachar, said in an email that the FAO is not conducting an investigation, but a routine research report, and the government welcomes it. In an email, the FAO said it is conducting a "research project."

Moving alcohol sales into convenience stores early, Blacharsaid, is simply how the government is "delivering on its promise to the people of Ontario with the largest expansion of consumer choice and convenience in provincial alcohol sales in nearly [a] century."

At a campaign stop in Windsor Monday, Ford told reporters the province made a "great deal" for taxpayers. He said the FAO is only looking into the cost of the deal at the prompting of his opposition.

Lost LCBO revenue and other costs to be examined

As part of its research, the FAO will consider the potential cost of lost revenue for the LCBO.

The LCBO brings in about $2.5 billion to the Ontario government each year. About 80 per cent of its revenue comes from its retail stores.

When LCBO workers went on strike earlier this summer, one sticking point for the union representing them was the loss of the LCBO's exclusive right to sell ready-to-drink cocktails. The union worried the loss could impact LCBOrevenue.

Bachar, spokesperson for the Ford government, saidLCBO revenues have been growing year over year, and that should continue even as alcohol sales expand.

The FAO will also look at other potential costs associated with the expedited deal, including service fees to the LCBO, rebates to The Beer Store, alcohol license fees and tax revenue changes.

The FAO's report is expected to be completed in early 2025, though Financial Accountability Officer Jeffrey Novak said in his letter that the timeline depends on how quicklythe province provides information to the FAO.