What's going on at Alberta's liquor, gaming and cannabis regulator? The province won't say

"Sammy" was a fixture at Cowboy's Taphouse, but whether he was an employee or just a regular who happened to help out around the bar would become a matter of some dispute, after he was caught selling cocaine to an undercover police officer.

Inspectors with Alberta Gaming, Liquor and Cannabis (AGLC) had been keeping a close eye on the pub — which is not affiliated with Cowboys Casino or Cowboys Dance Hall — for years.

As far back as 2013, inspectors were visiting the pub in the northeast community of Castleridge and interacting with Sammy, who "regularly held himself out as being in charge" and, at one time, used a key to let inspectors into a back office, although the owner would later deny Sammy worked at the bar.

Police, too, had been paying special attention. In July last year, they noticed there had been 132 calls for service in the vicinity of the bar over a six-month period and the "high volume of calls suggested an emerging crime trend requiring attention."

On Sept. 21, 2018, "Constable F" posed as a drug buyer and visited Sammy. The pair met at the bar and negotiated a cocaine purchase, then went just outside the front entrance to complete the transaction. The officer then met Sammy again on Nov. 2 — this time inside the bar, near the VLT machines — and bought more cocaine.

All this information, including the altered names, comes from the written decision of an AGLC panel, which spent days hearing an appeal from the bar owner, after the provincial regulator temporarily shut the place down.

Liquor licence suspensions in limbo

In May, the AGLC suspended the liquor licences of Cowboy's Taphouse and its sister location in Airdrie — indefinitely. It's one of the harshest sanctions the regulatory body can hand down. The bar owners quickly appealed and the suspensions were stayed, pending the outcome of that appeal, allowing both pubs to continue operating in the meantime.

And while the hearing panel found the licensees guilty on three of four offences (narrowly dismissing the fourth on the grounds that it couldn't be proven whether Sammy actually worked at the bar), both Cowboy's locations are still open for business, their liquor licences intact for the time being.

The status of their appeal, described as one of the longest and most complex the AGLC has ever heard, is now unclear, after the UCP government dismissed the majority of the AGLC board in mid-August — including two of the three members on the hearing panel. The move came as part of a widespread purge of more than a dozen boards, commissions and agencies across the province.

Experts in board governance say the purge will, at best, delay the outcome of the appeal and, at worst, undermine the legitimacy of the process, opening up the AGLC's ultimate decision to be challenged, potentially in court.

More broadly, one of the dismissed panel members believes the government acted rashly when it let six trained board members go in favour of four new appointees — two of whom have since resigned. He worries not just about the Cowboy's case, but about the larger implications of so much turnover at the top of a multibillion-dollar organization that oversees Alberta's policies on liquor, gaming and cannabis — just as legal edibles are about to enter the market.

Turnover at the top

Bob Wyatt knew his days on the AGLC board were numbered when the UCP won April's provincial election. Appointed by the previous NDP government in 2018, he figured he would finish out his three-year term, which would then not be renewed.

Instead, he says, he got a phone call from Finance Minister Travis Toews on Aug. 15, thanking him for his service and informing him that his appointment had been rescinded. He was one of four board members to have their positions rescinded, while two others' positions were not renewed.

"I was surprised that six of the seven board members had been removed … rather than keeping some group of us around for continuity," said Wyatt.

The following day, the Alberta government issued a press release announcing the appointment of four new board members — including two who resigned weeks later.

One of those appointees owns a pub in Calgary. The other had worked previously as a senior executive for one of the largest liquor retailers in Canada. Both of these facts were trumpeted in the news release as credentials, which made Wyatt wonder whether the new government had read the Gaming, Liquor and Cannabis Act.

Section 53(1) of the act says no liquor licence may be issued "to or for the benefit of a person who is a member of the board" or "in respect of any premises if a member of the board … holds an interest in the premises."

Does that section of the act preclude a current pub owner from sitting on the board? And could it preclude a former liquor-store executive, if that person still derived any financial benefits, such as a pension or stock holdings, from the company?

The AGLC referred all questions about the legality of these appointments to the finance minister, who is responsible for appointing board members. But Toews declined to be interviewed for this story and his press secretary, Jerrica Goodwin, refused to answer specific questions about whether the appointments were consistent with the law governing the AGLC.

Goodwin would only say in, an email, that both resigned "to pursue personal business interests and opportunities." She did not reply to repeated questions asking whether these appointments were consistent with provincial law in the first place, if the minister believed they were legal or if the law had anything to do with the resignations.

Google Street View

Legalities aside, having people with connections to the liquor industry on the AGLC board could be problematic because it could create a conflict of interest, or at least the appearance of one, says George Cuff, an Edmonton-based consultant who advises organizations on good governance.

"It strikes me that you would be really on thin ice," Cuff said.

"Somebody could readily say you're in a conflict of interest. And normally the perception of conflict of interest is almost as damning as the conflict itself."

That's no longer an issue, given the two board members resigned in September. But Wyatt worries the additional turnover may further delay some of the AGLC's critical functions, including the outcome of the Cowboy's Taphouse matter.

Pick up where old panel left off, or do it 'all over again?'

It's unclear what happens next with the appeal.

While the hearing panel had reached a decision on the licensees' violations — which include lying to AGLC investigators — it didn't have a chance to decide on the proper penalty, including whether to uphold the indefinite liquor-licence suspensions.

Given "the seriousness of the matter," the original panel wanted to convene another hearing "for the sole purpose of addressing the issue of sanction," but two of the three panel members were removed from the AGLC board before that could happen.

The AGLC says it would be "inappropriate" to comment on the status of the case, since it is ongoing.

Wyatt, who was a member of the original panel that spent four days hearing evidence and arguments from 12 witnesses and three lawyers, believes the entire process will need to be re-done.

"As far as I understand it, they'll have to have the hearing all over again," he said. "The new panel cannot simply accept the evidence or accept the decision of the previous panel."

Cuff, however, believes it would be possible for the old panel's decision on violations to be maintained and for a new panel to be convened to determine the sanction, alone. But, he says, the unusual nature of such a procedure could provide an opportunity for the licensees to challenge the entire process.

"A good lawyer is going to say ... 'Look, we've got a whole new case here. We need to go back and start from the start or, given the amount of time that's gone by, let's waive it altogether,'" Cuff said.

"So I think whoever's involved in this instance is probably rubbing their hands together, thinking that this process is likely flawed as result of the change in government, and therefore their chances of getting a more favourable hearing have just shot up."

Priyambia Bedi is described in the original panel's decision as the majority shareholder of the Cowboy's Taphouse in Airdrie and bookkeeper and manager of the Calgary location. Reached by CBC News, she said she expects another hearing "very soon" but didn't want to comment further, other than to say she is not upset by the way the process has unfolded.

"I don't have any complaints," she said. "It's all good."

Cannabis and other AGLC matters

Beyond the Cowboy's matter, Wyatt worries about other implications that could stem from the period of upheaval atop the AGLC.

The AGLC typically convenes about 30 panels a year to hear appeals, but board members are responsible for more than just deciding these cases. They also must guide the organization's strategic direction and monitor its business plans.

Wyatt expects cannabis will continue to be one area where the new board will need to focus its attention, in particular, especially with edible products recently legalized and due to hit the market soon.

Three new board members were appointed last week through an order-in-council, more quietly than before. No press release accompanied the appointments this time.

All three of the newest appointees have previous experience on other types of boards, and Cuff says people in that position can typically get up to speed on a new board quite quickly.

And while the additions will bring the board's size to six members (plus the president and CEO, who isn't eligible to sit on hearing panels), Cuff believes that's still too small. For an operation with the scale and scope of the AGLC, he says there should be at least nine and as many as 11 members.

Travis McEwan/CBC

"This is one of the largest government agencies that there is," Cuff said. "It has a very significant impact in terms of the funding that flows from AGLC to the provincial government."

The AGLC employs about 1,000 people and, last year alone, it directed $2.3 billion to the provincial government's coffers, through its various revenue streams, primarily gaming and liquor. Its cannabis operations, so far, are running at a net financial loss.

"So you're not talking about your run-of-the-mill public sector agency; you're talking about one that has a huge impact," Cuff said.

"The government has to be very, very careful in terms of who it appoints."