The Thirsty Beagle: Oklahoma alcohol reform scorecard: What we know so far

Monday, March 7, 2016

Oklahoma alcohol reform scorecard: What we know so far

We're officially one month into this year's legislative session, so this seems like as good a time as any to take stock of where we stand on Oklahoma alcohol law reform.

-I blogged last Monday that the Walmart-backed group Oklahomans for Consumer Freedom would likely file its own initiative petition, and on Wednesday, they did. I scoured over the document, which would be State Question 786 if it were to make the November election ballot, and found that is was almost identical to Senate Joint Resolution 68. The major difference was language limiting non-alcohol sales in liquor stores to 10 percent of a store's total sales. SJR 68 would cap such sales at 20 percent.

-Oklahomans for Consumer Freedom had been on the record, even on the same day they filed their initiative petition, voicing support for SJR 68. So why file one document that essentially mirrors the other? OCF spokesman Tyler Moore said the group continues to support SJR 68, but filed SQ 786 "as a back-up option if the legislature does not give Oklahomans the chance to vote on modernization."

-OCF announced a sizable list of entities supporting its state question, including the Beer Distributors of Oklahoma; the Greater Oklahoma City Chamber of Commerce; the Tulsa Regional Chamber of Commerce; the Oklahoma Grocers Association; the Oklahoma Petroleum Marketers and Convenience Store Association; and the group Oklahomans for Modern Laws, among others.

-You may remember that Oklahomans for Modern Laws was the first group to file an initiative petition -- State Question 783. Following the move by OCF, OFML announced they would not pursue their measure any longer.

-That leaves us with SQ 786, SJR 68, and SQ 785. The latter is the initiative petition filed by the Retail Liquor Association of Oklahoma. All three measures would allow liquor stores to refrigerate wine and beer, and would allow for strong beer in grocery and convenience stores.

-SQ 786 and SJR 68 would also allow the sale of wine in grocery and convenience stores. SQ 785 -- while it easily scores as the best document as far as craft beer is concerned -- would severely limit the ability of grocery and convenience stores to sell wine. 

-Under SQ 785, any given chain or company would be allowed to own a maximum of only four wine licenses. Even then, a retail outlet would not be allowed to hold a wine license if it were located within about a half mile of an existing liquor store. Further, nobody would be allowed to secure the licenses necessary to open their own liquor store within about a half mile of any existing liquor store.

-So what would SQ 785 do for craft brewers? First and foremost, it would allow brewers to sell their beer to consumers on the brewery premise. That's a key ask for craft brewers as far as reform goes. Several brewers have told me that the ability to operate a real taproom would be a game changer for their business. Several would-be brewers have told me the lack of ability to operate a true taproom is what keeps them from opening up shop.

-So what would SJR 68/SQ 786 do for craft beer? Well, as far as I can tell, not that much really. Those measures would allow for refrigeration of strong beer, which would help with the integrity of the product -- especially hop-forward styles. So there's that. But on the issue of on-premise sales and/or consumption, the measures defer to the legislature to figure it out. 

-So what exactly does that look like? This is where we will see Senate Bill 424 again. That legislation was authored in the 2015 session by Sen. Brian Crain as a way to allow craft brewers to sell packaged beer out of the brewery. That bill has since been amended and includes very clear language stating that a brewer license allows the license holder to "sell beer produced by the licensee to consumers twenty-one (21) years of age or older on the premises of the brewery." So, if you really want to advocate for craft beer, it appears you need to get on the phone about SB 424.

(UPDATE! After posting this, I was informed that SB 424 will likely not proceed this session. Instead, the language from SB 424 will be rolled into SB 383. Sorry about that mix-up. For the purposes of this post, any reference to SB 424 should really be to SB 383.)

-So if SJR 68 is largely silent on the issue of craft beer, what would it accomplish? In addition to the above-stated retail issues, SJR 68 deals with distribution and wholesaling issues. And that's where things get tricky. The language in SJR 68 is difficult to understand not just for the average chap, but even for seasoned political junkies.

-On that point, Oklahoma City attorney and alcohol industry veteran Danny Shadid penned an interesting op-ed for The Oklahoman the other day. You can read that here. Shadid points out that SJR 68 goes much deeper than just the issue of wine in grocery stores. He claims the measure could increase alcohol prices by 20 to 25 percent and open the door for unsavory out-of-state influences. Give it a read.

-And what about that whole Anheuser-Busch deal? One week they're being forced to sell off their distributorships thanks to SJR 68 and then unleashing a massive attack against Sen. Clark Jolley (SJR 68's author). The next week, they've "made a deal" to be able to keep their distributorships, although with language that the legislature can force them to divest later. So how did they secure this deal? I'm working on a blog post that would explain that, but in short, I don't think it was Jolley's fault.

-The Beer Distributors of Oklahoma were one of the biggest supporters of SJR 68 when it included language that forced A-B to sell. How did they feel when A-B struck back? They played it diplomatic, with BDO President Brett Robinson telling me this: "The brewery branch issue is extremely important to BDO members, however the political process at the state Capitol requires negotiation and compromise, especially with an issue that includes multiple stakeholders and is as complex as modernizing Oklahoma's alcohol laws. ... BDO will continue to advocate that a true three-tier system supports market place competition while providing the most choice and convenience for consumers."

And so where do we go from here? As the dust settles somewhat, we see that SJR 68 appears more and more to be a big business vs. little business-type measure, with big business holding all the cards right now. That's not altogether that far off from what I predicted when we came out of the Oak & Ore craft beer summit -- when I said that I feared alcohol reform was being taken over by the regular ol' political and special interest forces. Seeing how little SJR 68 actually does for craft beer only reinforces that.

(UPDATE #2: Man, I must have been asleep at the wheel last night when I was writing this post. While criticizing SJR 68 for not including enough for craft beer, I neglected to mention a point I had already blogged about last week: At least as it appears to me, SJR 68 would likely allow craft brewers to sell packaged beer out of their brewery for off-premise consumption. Can't believe I missed that. You can see there's a lot to keep track of, and I obviously let myself get tripped up, even.)

(Which, again, makes all the claims from Tap Oklahoma and Anheuser-Busch about supporting craft beer all the more disingenuous.)

What still leaves me a little leery is the Walmart-backed initiative petition. If they felt they needed to hedge their bets by filing that, that means they obviously felt at least some concern that the Legislature might not get it done on SJR 68 this year.

And if the Legislature can't get it done on SJR 68, how are we so sure they're going to get it done on SB 424?

2 comments:

  1. So when is SB383 going to be worked and voted upon? Is it only after these other bills have been voted on in November?

    ReplyDelete
  2. Thanks again for an excellent breakdown of the potential legislation and initiatives to reform the way Oklahoma handles alcohol, Nick. You have a good grasp of the issue and have clearly made every attempt to provide unbiased information.
    You are correct that SJR68 is "difficult to understand." I believe this was done purposely to hide its true intent...enriching Clark Jolley's friends. This is also the reason that SJR68 was rushed through committee, forcing them to vote after revealing the language only the afternoon before, and the reason there was no debate or amendments (short of Jolley's own giving Budweiser what they want) when it went to a full vote of the Senate. It appeared that Clark Jolley played "bad cop," threatening and cajoling his colleagues while Stephanie Bice played "good cop," promising everything would be worked out in SB383 after they passed SJR68.

    Jolley is trying to pull the same maneuver in the House by strongly encouraging its House author, Glen Mulready, to run it as quickly as possible. The only reason Jolley might have for getting it done this way, making it a priority over even trying to fix Oklahoma's massive budget deficit, is that he knows the longer it sits out there, the more people will realize what a bad idea it is.
    Putting aside the tell-tale sign that Jolley's bill inexplicably limits retail package stores to selling only 20% of non-alcoholic items (how does this benefit the consumer or improve public safety?), the big reveal is what Mr. Shadid talks about in his op-ed (linked in your article). Simply put, it changes the word "shall," mandating that those who represent 80% of the wines and spirits sold in Oklahoma to offer their products to every licensed wholesaler, into the word "may," which would allow these big distributors to partner with and choose to only sell their product through a single supplier. I have posted the language that is currently in the Constitution as well as the proposed changes in SJR68 at http://rlao.org/SJR68-less-competitive.pdf to offer a clear contrast and explanation.
    I agree that it is hard to understand for the average voter, and even for some folks in the alcohol business but putting all the pieces of the puzzle together reveals what Senator Jolley had promised his rich friends from Day 1; "Let me handle this and you'll all get what you want." Locally-owned retail package stores and consumer be damned.
    - Bryan Kerr, president
    RLAO

    ReplyDelete