Contract manufacturing

Liquor manufacturers can enter into contracts to make liquor products. This is called "contract manufacturing"; it can be done in two ways:

• one manufacturer contracts another manufacturer to make their product for them
• an agency contracts a manufacturer to make a product

Some terms to know:

• The manufacturer or agency who contracts out the production is called the "contractee"
• The manufacturer who agrees to make the product is called the "contractor"

Between manufacturers

A manufacturer can contract another manufacturer to make their product for them. For example, a small manufacturer reaches capacity at their current facility and wants to continue making their products as they expand their facility. They could contract with another manufacturer with the capacity to keep production going as they transition to a larger space.

There are a few things to know if you enter into a contract with another manufacturer:

• The contractee owns the product; this means that only the contractee can market and sell the product through Connect Logistics or self-distribution
• You cannot just use another manufacturer's facility to make your own product yourself; the contractor must make your product on your behalf; this is because a Class E licence requires that you have legal control of the premises and equipment you're using
• The contractor (or someone they name as their representative) must always be present when manufacturing the product
• The contractee pays for the services of the contractor, not the product; this means that the contractee does not pay any markup when paying the contractor for their services and the markup is paid when a licensee buys the product at wholesale price
• As a contractee, when you get your product back, it's as if you made it yourself; you're still responsible for registering the product as your own
• The contractor cannot sell or deliver any of the product to other licensees or the public

Between a manufacturer and an agency

An agency can contract a licensed manufacturer to make a product for them.

As a manufacturer, if you contract with an agency to make a product:

• The agency owns the product; this means that only the agency can market and sell the product
• The agency must use Connect Logistics to distribute the product
• The contractor (or someone they name as their representative) must always be present when manufacturing the product
• The agency is responsible for registering the product with AGLC
• The agency pays for the services of the manufacturer, not the product; this means that the agency does not pay any markup when paying the manufacturer for their services and markup is paid when a licensee buys the product at wholesale price

Reporting requirements

In a contract arrangement between two manufacturers, both the contractor and the contractee must report the total product volume to AGLC in their Annual Worldwide Production (AWP) form.

If your products require aging

You can age your product at the following locations:

• If both the contractor and the contractee hold a Class E manufacturer's licence, the product may be aged at either licensed manufacturing facility
• If the contractee is a registered agency, the product must be aged at the contractor’s licensed Class E manufacturing facility

If your product requires aging, you (the agency or manufacturer) must email AGLC at LiquorServices@aglc.ca and tell them:

• the address where the product will be aged
• the start and end date of aging
• the name, type and amount of the product