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The plan — which includes easing restrictions on cannabis storefronts to make them “more welcoming” — is detailed in Thursday’s Ontario budget along with $100 million in tax breaks this fiscal year for Ontario producers of microbrews, spirits, ciders and ready-to-drink cocktails.

The move is aimed at boosting sales and lowering prices for consumers starting Aug. 1. 

It’s part of the continued modernization of the province’s beverage alcohol and cannabis sector that last fall allowed beer, wine, cider to be sold in more than 5,000 convenience stores. It marks the first phase of a review of taxes, markups and fees for alcohol in the province.

But the new regime has come at a price, reducing revenues by $400 million at the LCBO — which pours its profits back into provincial coffers to help offset a budget that will spend $232.5 billion on health care, education, highways, courts and more.  

Finance Minister Peter Bethlenfalvy defended the alcohol tax changes, which follow a removal of U.S. products from liquor stores shelves in retaliation for Trump’s tariffs.

“We’re reducing beer taxes, markups and fees on alcohol so that we put more money back into small businesses, and we put more money back into consumers, making prices lower,” he told a news conference, noting Ontario has higher costs for beverage alcohol producers than some other provinces.

“It’s going extremely well. We’re hearing from convenience stores that this has been a game-changer. Their revenues are up. They’re hiring more people. It’s a winner for consumers who are getting more choice and convenience.”

The Convenience Industry Council of Canada credited the beer and wine in corner stores with average sales increases of over 15 per cent while small brewers applauded the tax and other breaks they have been requesting for years. 

“Today’s changes will make Ontario one of the best places for locally owned craft beer manufacturers to make their amazing beer and grow their breweries,” said Scott Simmons, president of the Ontario Craft Brewers.  

But opposition parties questioned Bethlenfalvy’s rationale.

“Once again we see a government that has their priorities all wrong,” said New Democrat Leader Marit Stiles, arguing people need help with rising rent and grocery prices. “There’s more in here about alcohol sales and alcohol generally. There’s not one mention of child care.” 

Liberal Leader Bonnie Crombie said the foregone LCBO revenue would have been better spent easing emergency room wait times or fixing overcrowded classrooms.

“It’s infuriating to see taxpayer money burned like this.”

On cannabis, the 232-page budget said helping the legal sector grow will “continue displacing the illegal market,” which remains a problem.

Starting this summer, Ontario Cannabis Store — the province’s wholesaler for all legal cannabis products — will issue the new “Ontario Grown” badge to licensed producers. . 

On booze, a slew of changes for taxes and markups on alcoholic beverages will see the wholesale discount for bars, restaurants, convenience stores and LCBO Convenience Outlets increase to 15 per cent on beer, wine, spirits, cider and ready-to-drink cocktails. That’s up from 10 per cent. 

The government is scrapping minimum retail prices for all spirits products, such as whiskey, for retail sale to give suppliers “greater pricing flexibility.”

For distillery retail stores located at their production sites, the budget legislation offers a 50 per cent cut to the basic spirit tax rate on products such as whiskey, gin, vodka and others effective Aug. 1. The rate would drop to 30.75 per cent. 

Cider producers are getting a break with a 47 per cent cut to the LCBO’s basic markup rate, lowering it to 32 per cent, closer to the level for beer from microbreweries. The change should also help apple growers supplying cideries. 

Cuts of 21 to 50 per cent on LCBO markups are coming for ready-to-drink (RTD) cocktails made with spirits or wine, which the government says is a “first step”  to standardizing markups for this fast-growing category of drinks with RTDs that have a beer or malt base. 

A scheduled 4.4 per cent increase to the cost-of-service fee for selling beer through the LCBO is being halted. 

The changes will make Ontario producers more competitive, Bethlenfalvy said.

“We’re just levelling the playing field.”

There is also a $175 million “grape support program” in place until 2030 with a goal of increasing the percentage of Ontario grapes in blended wines also using international grapes. This will help Ontario grape growers.