Ontario’s alcohol overhaul is costing taxpayers more than expected. The LCBO’s finances explain why

The Liquor Control Board of Ontario (LCBO) generated $1.8 billion for the province in 2025-26, down $358 million from 2024-25 and $757 million from 2023-24.

The decline follows the Ontario government’s 2023 decision to expand alcohol sales to grocery stores, convenience stores and other retailers. The LCBO also incurred an estimated $33.4 million in costs associated with holding unsold American alcohol.

The provincially owned LCBO consequently generated $1.2 billion less for taxpayers over the past two years than its 2023-2024 results might have suggested. That shortfall is five times larger than the $229 million previously forecast by Ontario’s Financial Accountability Office. Meanwhile, private retailers have added $911 million in annual sales, whereas some LCBO stores may close.

For researchers like me who study the alcohol and cannabis industries and their impacts, this situation is intriguing. But for Ontario taxpayers, the financial consequences are troubling.

Two years ago, LCBO stores dominated Ontario’s alcohol retailing, accounting for 57 per cent of a $10.3-billion provincial market. The organization also supplied 448 grocers that sold beer and wine at fixed prices.

Ontario Premier Doug Ford’s government began disrupting that arrangement in December 2023.

In a news release, Ford promised to give consumers “more choice” by allowing convenience stores, grocery stores and big-box retailers to apply for alcohol retail licenses. These retailers could sell beer, wine and ready-to-drink beverages like coolers while setting their own prices.

The expansion drew criticism from the union representing LCBO workers. In 2024, the union released a satirical video mocking the government’s alcohol retailing changes. It featured a fictional billionaire named “Callum,” an apparent reference to Loblaw chairman Galen Weston.

At the same time, the government expanded the LCBO’s wholesale responsibilities. It also paid The Beer Store $225 million to end its provincial agreement and promised $330 million to Ontario’s wineries.

Private-sector alcohol retailing subsequently expanded. Although total Ontario retail sales remain roughly $10.3 billion, around 6,700 convenience and grocery stores now sell alcohol.

The added competition has impacted the LCBO’s retail business. Sales through its own stores fell by 17 per cent in 2025-26, leaving the organization with less than half the provincial retail market. Some stores may no longer be profitable.

Meanwhile, the LCBO’s wholesale operations grew. The organization handled 10 per cent more product and paid 33 per cent higher operating costs. A changing product mix may also have affected profits as shoppers bought more beers and coolers but fewer higher-margin spirits.