How do I buy a winery in Ontario?

Buying a winery in Ontario is partly a property and equipment purchase and partly a purchase of permissions held by the seller. Three bodies of law sit behind those permissions. The Alcohol and Gaming Commission of Ontario (AGCO) licenses manufacturers under the Liquor Licence and Control Act, 2019. The federal Excise Act, 2001 requires a wine licence to produce or package wine. And Ontario’s Vintners Quality Alliance Act, 1999 controls who may use VQA terms on a label. This page covers Ontario only. It follows the order a buyer meets them: the AGCO licence, the transfer, the federal licence, and the VQA question. For the national overview, see buying a winery in Canada.

What the AGCO winery licence allows

The AGCO’s winery page says that, as a manufacturer, a winery licence allows you to keep (store) wine with the intent to sell, or to sell wine according to the regulations. That is the permission a buyer is really acquiring, so the first question for any winery is which AGCO licence and endorsements the seller holds today. Ask the seller for the licence itself and for the conditions attached to it, and compare what it authorizes with how the winery actually sells. A licence that does not match the way the business operates is a finding to raise before closing, not after.

Who qualifies to hold it

The AGCO’s page for applying for a manufacturer’s licence says that to be eligible for a manufacturer’s licence to sell you must meet a minimum age, be financially responsible, and conduct the business within the law and with integrity and honesty. It also asks for personal disclosures from sole proprietors, all officers and directors, all partners, and any shareholder holding at least the share of the outstanding shares, or of a class of shares, that the page sets out, and for entity disclosure of anyone or any business holding that share of the company. A buyer who plans to bring in investors should work out who falls inside those categories before the application is filed, because each of them is part of what the AGCO reviews.

Transferring the licence at closing

The AGCO’s page on managing a manufacturer’s licence says you can transfer your licence to someone else provided the regulatory requirements are met, subject to the approval of the AGCO, and that the person taking over submits the transfer application. The same documents and information are required as for the original application, together with a consent to transfer from the current holder and proof the purchase has been finalized. The AGCO will not approve a transfer if there is an outstanding monetary penalty or if the person receiving the licence is not eligible. If there is a change in ownership, it must be reported and the applicable transfer applications submitted in iAGCO. Plan the closing date around that process.

The federal wine licence

Section 62(1) of the federal Excise Act, 2001 says no person shall, except in accordance with a wine licence issued to the person, produce or package wine. Subsection 62(2) sets out exceptions, such as the production of wine by an individual for their personal use. For a buyer, the point is that the AGCO licence is not the only one. Ask the seller to show the wine licence under that Act and ask a lawyer or the Canada Revenue Agency, which the AGCO’s application page names as the issuer of the excise licence, how it is dealt with when the business changes hands. Do not assume it follows the AGCO licence.

VQA terms and the licence to process

Under section 6 of the Vintners Quality Alliance Act, 1999, a manufacturer shall not use the terms, descriptions and designations established by the wine authority without its approval, and may apply for approval only if it is a member of the wine authority. If a manufacturer uses them without approval in connection with liquor it produces, no person shall sell the liquor. A winery that markets under VQA terms therefore needs the wine authority’s approval, and membership is the condition for applying for it. Separately, the AGCO’s application page says that if you are making Ontario wines from grapes, peaches, pears, plums or cherries, you need a licence to process, and it lists a copy of that licence among the application documents.

Questions to put to the seller

• Which AGCO manufacturer’s licence, endorsements and conditions does the winery hold, and when does the licence expire?
• Does the winery hold a federal wine licence under the Excise Act, 2001, and who will confirm what happens to it on a change of ownership?
• Does the winery sell under VQA terms, and can the seller show the wine authority’s approval and its membership?
• Is there a licence to process for the fruit used, and is a copy on file?
• Does the seller owe a balance to the Ministry of Finance? The AGCO says any balance owing must be paid before it can renew a manufacturer’s licence.