The Thirsty Beagle: SB 424 may be most important bill

Friday, April 15, 2016

SB 424 may be most important bill

Don't call it a comeback, but Senate Bill 424 may just end up being the most important piece of alcohol legislation this session.

At least as far as craft breweries are concerned.

SB 424, if you haven't been following along, contains the one thing that Oklahoma's craft brewers -- and would-be craft brewers -- want probably more than anything else: Language that would allow them to sell full-strength beer by the glass at their brewery.

I blogged several weeks ago that SB 424 may be the key bill to watch as we move forward and seek the craft beer holy grail -- on-premise sales by the glass. In short order, however, I learned that the key elements in SB 424 would likely be included in Senate Bill 383.

At that time, I believed SB 424 to be a dead bill, for all intents and purposes. I even posted an update on my blog post and on Facebook saying that we probably should forget about SB 424.

Now, it appears things have changed.

There is at least the hint of action concerning SB 424. On Tuesday, seven state senators were named as Senate conferees on the bill -- essentially meaning they were named as a committee that would look at the bill and possibly change or amend it.

Now, that doesn't mean in and of itself that SB 424 will be passed this session. Or at all. But it does at least mean it's clearly not dead at this point.

So, why would SB 424 be so important anyway? It's really simple economics.

Say a brewer wants to sell a four-pack of 12-ounce cans. And let's say that four-pack will end up costing like $8 at the liquor store. A brewer doesn't sell the beer to the distributor for $8. He must sell it for like $6 (I'm just making up numbers here, but the illustration works). Then the distributor sells the beer to the retailer for $7, then the retailer to you for $8. So really, in this example, the brewer is making only $1.50 per can on that transaction.

Again, these are rough numbers, but we know that by the glass, a brewer could sell 12 ounces of beer for anywhere from $4 to $8, depending on the beer. It's not hard to see how a brewer could make three, four or five times more money selling beer by the glass at the brewery.

All the sudden, the idea of being a brewer becomes a significantly more profitable venture. For the existing craft brewers, that profit would be turned into expansion, more production and more jobs, almost assuredly.

It's not hard to imagine that another outcome would be a boom of brick-and-mortar commercial brewers, micro-breweries and brew pubs. I don't think it's unrealistic to think that two or three breweries/brew pubs would open in short order in each of Oklahoma City's districts.

You'd be talking about a huge amount of construction, goods and services, jobs and sales taxes. Not to mention beer tourism, if Oklahoma City were to gain steam as a thriving craft beer destination.

This all sounds pretty craft-beer-Utopic, but I'm telling you, it's not all that far-fetched. I firmly believe this would be the outcome of the passage of SB 424 and its provisions for on-premise sales and consumption. The atmosphere is just right for this type of thing in Oklahoma City, especially.

So will SB 424 be passed?

It's not a sure thing, but I've talked to some key players at the Capitol who say they want to get it passed this session. We know that anything included in Senate Joint Resolution 68 -- should it make it onto the ballot and be passed by voters -- won't go into effect until 2018. (By the way, we should know by the end of next week if SJR 68 will make it through the House.)

And I expect that SB 383 will be a bear -- a complete rewrite of our alcohol statutes and probably north of 200 pages. With that level of complexity, there's no guarantee it gets passed this year (although if SJR 68 makes it, there's no doubt SB 383 will eventually be updated and passed prior to SJR 68's enactment). Thus you see the risk of rolling SB 424 into SB 383.

Point being, my understanding is there's at least some sentiment growing at the Capitol to pass SB 424 on its own so that craft brewers don't have to wait until 2018 or depend on SB 383 to be passed to get on-premise sales/consumption.

You might say, "But I've heard both SB 383 and SB 424 need SJR 68 to change the constitution first before they can work?" I've been operating under that assumption myself. However, I've since learned that there are some at the Capitol who believe the opposite, that SB 424 can stand on its own.

You may also say, "But I heard people last year say that SB 424 was just flat-out unconstitutional?" Yes, people said that. But not everyone agrees with that. And even if that were true, it doesn't mean the Legislature wouldn't still try to pass it. After all, the idea that a bill may be unconstitutional has historically not proven to be a significant deterrent for the Oklahoma Legislature. I'm not saying that's good or bad. I'm just sayin'.

So, things will get hot and heavy next week at the Capitol, with a possible House vote on SJR 68 and a possible introduction of the new language of SB 383.

But let's also keep our eyes on SB 424.

2 comments:

  1. Are there any updates on SB 424?

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  2. Last I heard any action was on April 20 when it was assigned to committee.

    ReplyDelete