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.Overhauling the marketTwo 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 financial falloutThe 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. Annual alcoholic beverage sales by the LCBO and other Ontario retailers, plus the LCBO’s actual and forecast profits, in billions of Canadian dollars per fiscal year. (Liquor Control Board of Ontario/Statistics Canada/Financial Accountability Office of Ontario), CC BY Some folks would say that these changes were overdue: let businesses handle retailing and give shoppers more convenience.Others might counter that Ford’s government has effectively spent $1.7 billion — so far — just to improve access to six-packs. They might have preferred that money go towards improving access to health care or education instead.Regardless of where people stand on expanding alcohol sales, the LCBO’s estimated $33.4 million cost of holding devalued inventory from the United States warrants scrutiny.The cost of unsold U.S. alcoholLike several other provinces, Ontario halted imports of American alcohol in March 2025 in response to U.S. President Donald Trump’s tariffs. Unlike most, however, the Ford government also prohibited the LCBO from selling its existing U.S. inventory.That left $79.1 million worth of American beverages unsold. Beyond reporting $2.9 million in write-offs for March 2025, the government did not initially disclose the full cost of holding the inventory.In May this year, I estimated those costs might approach $20 million annually. My calculation included product write-downs, warehouse rental and implied interest payments for tied-up money.In July, the LCBO belatedly disclosed that storage had cost $8 million so far. But it did not mention that it also wrote down products worth $17.5 million four months earlier, or that given current interest rates, simply owning these products was costing taxpayers about $2 million annually.As of October 2026, these reports and estimates suggest that inventory write-downs totalled $20.4 million, warehousing costs were approaching $10 million and the implied interest cost was nearing $3 million.This puts the estimated holding cost at $33.4 million over 20 months. That’s 42 per cent of the inventory’s original value. Annualized over 12 months, that works out to about $20 million, consistent with my original estimate.Halting U.S. imports is a logical trade negotiation strategy, but banning existing product sales is hardly “prudent fiscal management.” It is more like taking 42 per cent of the bottles and emptying them on the ground.Instead of continuing to hold the inventory, the Ontario government should allow the LCBO to sell it and recover as much as possible of the remaining $58.7 million investment. Better late than never.Keeping businesses in the darkThe Ontario government should also stop withholding economic information that businesses need to understand their market.The LCBO finalized its 2025-26 financial statements in June, but the Ontario government did not release them until September. By comparison, Québec publicized its liquor agency’s annual report in early June.Ford’s government has faced repeated criticism over transparency and access to information. But this specific delay also works against the interests of the businesses he claims his policies support.The LCBO remains Ontario’s largest alcohol wholesaler and a major retailer. Its financial statements provide valuable information to the province’s 6,700 private-sector retailers as they navigate a changing market.Delaying those reports for three months made it harder for businesses to make informed decisions and for the public to assess the government’s policies. That undermines the government’s stated goals of creating the conditions for businesses to grow and making Ontario “open for business.”Michael J. Armstrong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.