Canadian distillers fight for spirits tax cut
The Canadian Craft Distillers Alliance (CCDA) is calling on the country’s prime minister to lower spirits tax as the sector suffers a “significant structural disadvantage”.
The trade association is urging Canadian prime minister Mark Carney to extend tax relief to the nation’s craft distilleries, following a measure implemented for the beer sector two years ago.
The CCDA represents almost 400 distilleries across the country, where alcohol is predominantly sold through government-controlled liquor boards, with the exception of the province of Alberta.
According to the CCDA, Canadian craft distillers “operate under a significant structural disadvantage” as they pay excise duties up to 14 times higher than those in the US.
This hinders growth, investment, and innovation in Canada’s craft spirits sector, putting businesses at a “severe competitive disadvantage before trade negotiations begin”, the industry body warned.
As such, the CCDA is proposing a “modernisation” of Canada’s current tax system by basing it on volume, similar to the US model implemented in 2017.
On 1 April 2026, the Canadian government introduced an additional two-year extension of the 2% cap on annual excise duty inflation for spirits, wine and beer. It also expanded a 50% duty cut for the first 15,000 hectolitres of beer made in Canada from the same date for the next two years, which was initially introduced in 2024.
The CCDA noted that this “progressive” move for the beer sector has helped microbreweries to “grow, invest and thrive, while continuing to contribute to public revenues”.
The trade body would like to see a similar measure for the Canadian craft distilling industry, which it believes would also support jobs and “generate substantial economic returns”.
“This is a practical, proven solution that Canada already understands and applies successfully in other sectors,” said Tyler Dyck, president of the CCDA.
“At a time when economic pressures are mounting, we have an opportunity, right now, to strengthen Canadian businesses, support regional economies, and ensure our producers are competing on a level playing field. This is not about creating an advantage; it’s about restoring fairness.”
Dyck believes a “modern framework” would enable Canada to “reclaim its place as a global leader in spirits”.
He added: “With the right policy in place, we can build globally competitive brands, drive exports, and create long-term economic value right here at home.”
Since March last year, American spirits have been banned from all but two Canadian provinces due to trade tensions.
This has caused sales in the Liquor Control Board of Ontario (LCBO) – Canada’s largest alcohol market – to fall by CA$100 million (US$73.1m).
In its third-quarter (Q3) update, covering 12 October 2025 to 3 January 2026, LCBO reported total sales of CA$1.88 billion (US$1.37bn). It was down from CA$1.98bn (US$1.5bn) for the same period in 2024/25.
Exports of US spirits to Canada have plunged by 70% since their removal from the shelves of most provinces in March 2025.
Meanwhile, Ontario and Nova Scotia recently agreed to allow direct‐to‐consumer alcohol sales between the two Canadian provinces.
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