Sanctions and Decisions

DATE OF HEARING:

HEARING PANEL:

HEARING BEFORE A PANEL OF THE BOARD OF ALBERTA GAMING, LIQUOR AND CANNABIS COMMISSION

IN THE MATTER OF the Gaming, Liquor and Cannabis Act Revised Statutes of Alberta 2000, Chapter G-1, as amended and the Regulation

and

1950805 Alberta Ltd. o/a Surekha’s on the Snye (Applicant) 2 Clearwater Drive Fort McMurray, AB T0H 0J5

APPLICANT / REPRESENTATIVE:

REGULATORY SERVICES DIVISION:

February 23, 2023

Patti Grier, Presiding Member Kent Breedlove, Panel Member Tongjie Zhang, Panel Member

Surekha Kanzig, Owner/Operator Kallie Piercey, Family member

Toni Hazelwood, Hearing Officer

DECISION OF THE HEARING PANEL The Panel finds that Surekha’s on the Snye (the Licensee) contravened section 50 of the Gaming, Liquor and Cannabis Act (the Act).

In accordance with section 94(7)(b) of the Act, the Panel replaces the administrative sanction imposed by the Regulatory Services Division (Regulatory Services) with a 3-day suspension of the Class A-Minors Allowed Liquor licence numbered 777186-1.

The suspension is to be served any Friday-Sunday period of the Licensee’s choosing before Monday, April 17, 2023. The suspension will commence with the normal opening of business on Friday and continue until the normal close of business on Sunday. The Licensee must notify Regulatory Services at least one week prior with the dates of the chosen suspension period.

During the suspension, Surekha’s on the Snye may not provide or serve liquor to patrons and patrons are not permitted to bring liquor into the premises for service. Surekha’s on the Snye may still serve food and non-alcoholic beverages while the liquor licence is suspended.

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Surekha’s on the Snye may choose to communicate the suspension dates or details of resulting reduced operations via social media.

I. Jurisdiction and Preliminary Matters [1] By letter dated November 3, 2022 Regulatory Services of the Alberta Gaming, Liquor and Cannabis Commission (AGLC) advised 1950805 Alberta Ltd., operating as Surekha’s on the Snye, that the Licensee contravened: • Section 50 of the Act: No person may, except in accordance with this Act or in accordance with a liquor licence, manufacture, import, purchase, sell, transport, give, possess, store, use or consume liquor.

[2] Regulatory Services imposed an administrative sanction of a fine of $10,000 or, in the alternative, a 40-day suspension of the Licensee’s Class A-Minors Allowed liquor licence numbered 777186-1.

[3] The Licensee subsequently applied for a hearing before a Panel of the Board of the AGLC pursuant to section 94(1) of the Act.

[4] In accordance with section 11 of the Act, the Board Chair designated three members of the Board to sit as a Panel to conduct the hearing and make a decision – Patti Grier (Presiding Member), Kent Breedlove and Tongjie Zhang.

[5] The parties and the Panel were provided with a record containing various documents pertaining to the issues before the Panel. The Licensee confirmed receipt of the Notice of Hearing dated December 12, 2022 and the attached hearing record. The following documents were entered into evidence: • Exhibit 1 Hearing Record, including Tabs A to D • Exhibit 2 Regulatory Services additional document submissions

II. Issues [6] Did Surekha’s on the Snye contravene section 50 of the Act? If so, should the administrative sanction imposed by Regulatory Services of a fine of $10,000 or a 40-day suspension be confirmed, replaced, or cancelled?

III.

Regulatory Services Submissions

[7] Regulatory Services called two witnesses, Inspector Jilian Hughes and Inspector Scott Harhara to give evidence.

[8] Inspector Hughes acts as a general duties inspector and has been with AGLC for 15 years. She prepared an Incident Report dated November 2, 2022 detailing events that occurred from September 2 to 4, 2022 involving Surekha’s on the Snye (Exhibit 1, Tab B). Inspector Harhara was involved with Surekha’s on the Snye in 2021 and provided background information regarding the incident.

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Background [9] In September 2021, as part of an investigation of a small liquor manufacturer, Inspector Harhara reviewed the public social media page for Surekha’s on the Snye.

[10] Inspector Harhara observed photos of a booth with Surekha’s on the Snye signage at an event called Ribfest (Ribfest 2021). The Licensee’s social media posts thanked patrons for “trying their sangria” at the event.

[11] Inspector Harhara discovered that Surekha’s on the Snye has a Class A liquor licence but that Ribfest 2021 was licensed under a separate Special Event Licence (SEL) – Community Public Resale and not under the Licensee’s Class A licence. Inspector Hughes explained to the Panel that SELs for community public resale are only issued to charities or non-profit organizations; these cannot be issued to or utilized by an individual host.

[12] Inspector Harhara was instructed by his supervisor to follow up with the Licensee on the posts and involvement with Ribfest 2021.

[13] In October 2021, Inspector Harhara contacted the owner/operator, Surekha Kanzig, who confirmed that Surekha’s on the Snye had sold liquor at Ribfest 2021 and that she believed Surekha’s on the Snye was licensed to do so.

[14] Inspector Harhara advised Ms. Kanzig that Ribfest 2021 organizers were issued an SEL that was the only licence at the event with the authority to sell and serve liquor. Inspector Harhara advised Ms. Kanzig that the Class A liquor licence held by Surekha’s on the Snye did not permit the Licensee to sell liquor offsite unless a caterer’s extension was granted.

[15] Inspector Harhara explained to the Panel that a caterer’s extension is applied for through AGLC and would allow a Class A liquor licensee to extend their food and liquor service at a function away from the premises. Licensees must complete an application form and submit it to AGLC at least three weeks prior to the event. He stated that a caterer’s extension would not be approved if the event was taking place at another licensed location.

[16] Inspector Harhara educated Ms. Kanzig on the violation. On October 13, 2021, Inspector Harhara issued a caution for the contravention of section 50 and sent a follow up email to Ms. Kanzig summarizing their conversation regarding Ribfest 2021.

[17] Inspector Harhara advised the Panel that he believed Ms. Kanzig understood the contravention and the limitations of her Class A licence after they spoke.

Incident [18] On July 26, 2022, Inspector Harhara received an email from Ms. Kanzig seeking guidance on the participation of Surekha’s on the Snye in the upcoming Ribfest event (Ribfest 2022). Ms. Kanzig wanted to ensure Surekha’s on the Snye was operating in accordance with AGLC policies because “she did not want to do anything wrong.” Inspector Harhara referred the request to Inspector Hughes for follow up.

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[19] Inspector Hughes responded to Ms. Kanzig on July 27, 2022 and advised her that there can only be one liquor licence for the event. Inspector Hughes offered to speak with the organizers of the event to ensure Surekha’s on the Snye could host using its Class A liquor licence under a caterer’s extension. Inspector Hughes reiterated the steps required for Surekha’s on the Snye to apply for a caterer’s extension to sell liquor at Ribfest 2022.

[20] Ms. Kanzig responded and advised that a caterer’s extension would not be a feasible option as she was not in a position to gain the approvals necessary to license the whole event.

[21] Inspector Hughes found that the Ribfest 2022 organizers, Wood Buffalo Presents Ltd. (Wood Buffalo) received an SEL for the event. She suggested to Ms. Kanzig that since Wood Buffalo held an SEL for the event, Surekha’s on the Snye could participate in the event without serving liquor, unless Ms. Kanzig was willing to ask the organizers to relinquish their SEL and allow Surekha’s on the Snye to host the event under an extension of its Class A licence.

[22] Inspector Hughes and Ms. Kanzig exchanged numerous emails, included as Exhibit 1, Tab B, attachment 1, where Inspector Hughes offered other information and options for participation in the event. The options were:

• • •

Apply for a caterer’s extension of the Class A licence to replace Wood Buffalo’s SEL for the event; Apply for a temporary patio approval to sell and serve liquor on the patio or in the parking lot of Surekha’s on the Snye to draw Ribfest 2022 patrons to the premises; or Participate in Ribfest 2022 providing food only.

[23] Inspector Hughes did not receive a response or a request for clarification on her August 5, 2022 email reiterating the options. Inspector Hughes stated that she believed Ms. Kanzig was looking for an exemption that would allow her to set up a booth at Ribfest 2022 and sell liquor as Surekha’s on the Snye.

[24] On September 6, 2022, Inspector Harhara reviewed the public Instagram feed for Surekha’s on the Snye observing posts and photos showing the Licensee participating in Ribfest 2022, holding up bottles of liquor and offering sangria at a booth with Surekha’s on the Snye signage. He forwarded screenshots of the posts (Exhibit 1, Tab B, attachment 2) to Inspector Hughes for follow up.

[25] Upon receipt of the information, Inspector Hughes contacted the licence coordinator for Wood Buffalo to confirm what involvement Surekha’s on the Snye had in Ribfest 2022. The licence coordinator advised Inspector Hughes that Surekha’s on the Snye had a booth at the event but that they did not sell any liquor. The licence coordinator also informed Inspector Hughes that Surekha’s on the Snye had provided $1,000 to Wood Buffalo to sponsor the event.

[26] When Inspector Hughes followed up with Ms. Kanzig about her participation in Ribfest 2022, Ms. Kanzig confirmed that she was provided a copy of the Wood Buffalo SEL from the event organizers,

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that she purchased liquor from a designated retail liquor store and was permitted to sell the liquor at the Surekha’s on the Snye booth at the event. Ms. Kanzig confirmed that Surekha’s on the Snye kept the proceeds from the booth drink sales.

[27] On September 23, 2022, Inspector Hughes asked the President of Wood Buffalo for a copy of their agreement with Surekha’s on the Snye. Inspector Hughes did not receive a response and on September 27, 2022 she contacted Ms. Kanzig with the same request.

[28] On September 28, 2022, Ms. Kanzig responded and indicated that she had a verbal agreement with Wood Buffalo allowing her to purchase liquor under the authority of the SEL, a copy of which was provided to her by a Wood Buffalo executive. Inspector Hughes informed Ms. Kanzig that purchasing and selling liquor under the authority of a liquor licence that does not belong to you is not permitted under the Act.

[29] At the request of Inspector Hughes, Ms. Kanzig provided copies of the financial documents relating to the involvement of the Licensee at Ribfest 2022 including till receipts, liquor invoices and a spreadsheet outlining expenses and total profit (Exhibit 1, Tab B, attachment 4).

[30] On October 25, 2022, the President of Wood Buffalo provided Inspector Hughes with the details surrounding the monetary sponsorship Ms. Kanzig provided. The community impact sponsorship agreement (Exhibit 1, Tab B, attachment 6) provided that for a monetary sponsorship of $1,000, the sponsor would be able to participate in Ribfest 2022 and receive advertising in the form of a social media post and a digital screen sponsor reel.

[31] The President also confirmed that Wood Buffalo allowed Ms. Kanzig to have a booth, sell liquor and keep the profits to counteract the losses incurred by Surekha’s on the Snye during Ribfest, though no written agreement was provided.

[32] Inspector Hughes examined two other liquor licensees that sponsored Ribfest 2022. She found no evidence that the other sponsors participated in the sale of liquor at the event. When Ms. Kanzig suggested that she believed another Class A licensee was selling liquor at the event beer gardens, Inspector Hughes clarified that Wood Buffalo supplied the liquor for the beer gardens. The Class A licensee sponsor staff volunteered to run the bar and sell drink tickets but the Class A licensee did not keep any proceeds from Wood Buffalo’s liquor sales nor did they have a booth or any signage advertising their business at the event.

[33] Inspector Hughes advised the Panel that if there were any other liquor-related contraventions or incidents that occurred at the event as a result of Surekha’s on the Snye selling liquor, Wood Buffalo would have been liable as the only actual liquor licensee for Ribfest 2022.

[34] Inspector Hughes advised the Licensee and the Panel that Wood Buffalo received a caution for sharing their SEL with Ms. Kanzig, in contravention of section 3.2(c) of the Public Special Event Licence Policies and Guidelines.

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IV. Surekha’s on the Snye Submissions [35] The owner/operator of Surekha’s on the Snye, Surekha Kanzig, gave evidence on behalf of the Licensee.

[36] Ms. Kanzig submitted that when she received the Notice of Administrative Sanction and enclosed Incident Report by email on November 3, 2022, the attachments referenced in the report were not included. She asked Regulatory Services to also provide the notice by registered mail. When she received it, the attachments to the Incident Report were excluded. Ms. Kanzig did not receive copies of the attachments until she received the Notice of Hearing and hearing record on December 12, 2022.

[37] Ms. Kanzig admitted that she participated in Ribfest 2021 and unknowingly contravened section 50 of the Act.

[38] To ensure compliance with AGLC policies the following year, Ms. Kanzig contacted Inspector Harhara in July 2022 to find out how Surekha’s on the Snye could properly participate in Ribfest 2022.

[39] Ms. Kanzig provided the following reasoning as to why the options provided by Inspector Hughes for Surekha’s on the Snye to participate in Ribfest 2022 were unattainable:

•

•

Regarding the caterer’s extension or participating in the event by serving food only, Surekha’s on the Snye does not have the equipment required nor the $25,000 to $100,000 required to purchase equipment to properly heat and cool food outdoors. Further, Wood Buffalo already had an SEL in place for the event and Surekha’s on the Snye would be unable to licence an event of that magnitude. Regarding the temporary patio, Surekha’s on the Snye would not be permitted to extend its food and liquor service into the parking lot adjacent to the restaurant as the property is owned by the regional municipality of Wood Buffalo. Further, Surekha’s on the Snye is located up the hill from the Ribfest event; it is unlikely patrons would leave the event and make the trek up to Surekha’s on the Snye.

[40] Ms. Kanzig admitted that when she reached out to Inspectors Harhara and Hughes in July 2022, she was hoping that an exemption could be made that would allow Surekha’s on the Snye to extend its Class A liquor licence to “half a mile down to the grassed area” for the three days of the event. However, Ms. Kanzig asserted that Surekha’s on the Snye did not set out to defy Regulatory Services.

[41] Ms. Kanzig felt that she was given impractical options from Inspector Hughes and misinformation from the Ribfest 2022 organizers.

[42] Ms. Kanzig confirmed that she met with a Wood Buffalo executive in August 2021 and again in 2022 who suggested Surekha’s on the Snye set up a sangria and mocktail booth and keep the proceeds from liquor sold. Ms. Kanzig read aloud text message conversations between herself and the Wood Buffalo executives where they confirmed the use of their SEL by Surekha’s on the Snye to purchase liquor through an agreed retail liquor store for sale at the Ribfest 2022 booth.

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[43] Ms. Kanzig sent a text message to the President of Wood Buffalo that read “AGLC gave me a hard time about selling at Ribfest last year. I am not going to put an order in unless I have a copy of the liquor licence and I see it for myself. Even if you can send a photo of it for my file in the event there is an issue in the future.”

[44] Ms. Kanzig also presented text messages between her and the retail liquor store operator, confirming that the purchase of liquor would be under Wood Buffalo’s SEL and not under Surekha’s on the Snye’s Class A liquor licence.

[45] Ms. Kanzig trusted the event organizers as they had successfully held the event for many years. She stated that she did not think to contact Regulatory Services after getting direction from Wood Buffalo to confirm whether they were operating under the right process.

[46] Ms. Kanzig has a good understanding of the legislation, regulations and policies as they relate to her Class A liquor licence. She admitted that she now knows she did not have enough of an understanding of the SEL policies and guidelines. She refuted that Inspector Harhara advised her in 2021 that SELs are non-transferable.

[47] Ms. Kanzig suggested that Surekha’s on the Snye was singled out after this event. She advised the Panel that Inspector Hughes contacted Surekha’s on the Snye almost daily during her investigation even while Ms. Kanzig was within the timelines for producing requested information.

[48] Surekha’s on the Snye operates at a loss each day of the Ribfest event and the Licensee’s participation in the event was driven by the need to recoup funds and to allow Surekha’s on the Snye to give back to the community that it is a part of.

[49] Surekha’s on the Snye made $2,281.20 (including tips) from the sale of sangria (containing liquor) and non-alcoholic mocktails. Ms. Kanzig noted that the revenue generated for Surekha’s on the Snye from the Ribfest booth was small, and the per cent of sales from liquor alone was negligible.

[50] Ms. Kanzig listed multiple financial setbacks that she and her family, some of whom work at Surekha’s on the Snye, have faced in the past to demonstrate the reason for the Licensee’s participation in Ribfest 2022 to offset further losses. Some setbacks included:

• • • • •

•

A death in the family; COVID-19 pandemic protocols and closures; Eviction issues related to the Surekha’s on the Snye landlord; Patio closures due to maintenance by the landlord; Flooding in Fort McMurray, resulting in loss of power to coolers and $18,000 lost in spoiled food; and A recent fire outside the licensed premises.

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[51] Ms. Kanzig felt that the information Inspector Hughes obtained from Wood Buffalo regarding the monetary sponsorship from Surekha’s on the Snye was irrelevant to the issue before the Panel. However, Ms. Kanzig shared that Wood Buffalo did not honour the sponsorship agreement.

V. Summation Regulatory Services [52] The matter before the Panel is a contravention of section 50 of the Act which states that no person may manufacture, import, purchase, sell, transport, give, possess, store, use or consume liquor except in accordance with a liquor licence and the Act.

[53] The evidence provided by both Inspectors Harhara and Hughes indicates that Ms. Kanzig was advised that the Class A liquor licence could not be extended to give Surekha’s on the Snye authority to sell liquor at Ribfest 2021 or Ribfest 2022. The Licensee chose to participate in the purchase and sale of liquor at the events despite having been told it was not permissible.

[54] Regulatory Services is of the opinion that Ms. Kanzig opted to ignore the caution issued in 2021 and the repeated attempts by the Inspectors to educate her about the limitations of Surekha’s on the Snye’s Class A liquor licence.

[55] Wood Buffalo is a non-profit community group that was issued an SEL after fulfilling AGLC’s application process. Wood Buffalo was responsible for the general area, including health and safety code requirements, as well as the sale, storage, service and consumption of liquor at the event. Wood Buffalo was issued the SEL with the understanding that Wood Buffalo would have care and control of the liquor service at the event.

[56] The text messages referenced by Ms. Kanzig provided clarity on the communications Surekha’s on the Snye had with the Wood Buffalo executives but they were not provided to Regulatory Services as part of their investigation or in advance of the hearing.

[57] Wood Buffalo was issued a caution and was educated regarding the transferring and sharing of an SEL. However, this does not negate that Surekha’s on the Snye operated at Ribfest 2022 without a valid liquor licence.

[58] Regulatory Services is concerned that Surekha’s on the Snye profited from a non-profit community event and that generating revenue was the primary focus of Surekha’s on the Snye.

[59] Regulatory Services is of the opinion that Ms. Kanzig wanted an exemption from policies and did not want to accept any of the options provided to Surekha’s on the Snye because they required time, resources and approvals to obtain.

[60] Regulatory Services takes the position that the education and caution provided to the Licensee after Ribfest 2021 did not work as a deterrent. Regulatory Services suggests that the administrative sanction of a fine of $10,000 or a 40-day suspension is necessary to serve as a deterrent and to ensure future compliance.