Conversations with grocery and convenience stores regarding the 3.2 issue took a jump forward March 30 when Uncork representatives changed their position regarding a moratorium on future liquor expansion legislation. 

The retailers groups have said that they are willing to explore a solution to the anticipated changes in the 3.2 cereal malt beverage market but would need assurance that the Uncork proponents would not be pushing further liquor deregulation in the near future.

Spokesmen for Walmart and others initially insisted that such an agreement would be a violation of federal anti-trust laws – restriction of trade  KABR asserted that retailers would need to anticipate a stable regulatory environment for a significant time period. 

Now it appears that the proponents may be willing to state on the record (before the committee and in the committee records) that this 3.2 proposal satisfies their legislative agenda and they would agree that a ten year timeframe is reasonable to allow for the impact of the new law on all licensees to be evaluated and reported by the Division of ABC – before the Legislature considers additional, substantive changes to state law regarding where alcohol products are offered for sale.

KABR proposed language ordering the Division of ABC to submit a report after ten years to the Legislature in order to establish that timeframe.  That report would include numbers of licensees on an annual basis over ten years, tax revenue/sales numbers from CMB and liquor products, density issues – impact on rural markets, social impact – DUIs, theft, etc.

Other issues are:

• 6.0 Alcohol by Volume beer sales allowed for cmb retailers. Uncork requested 8.99 ABV – the Oklahoma law.  The beer wholesalers indicate that the number should be 6.0 ABV.  The Committee Chairman’s recommendation was 7.5%, but he has indicated he had picked up that number from conversations and is not committed to it.  (Liquor retailers sell CMB.)
• Allow liquor stores to sell other products, up to 20% of their sales could come from these other items.  Tobacco and lottery would be allowed, but not considered part of the 20% calculation. This was proposed by the Chairman. Convenience stores oppose the tobacco portion, but will accept it for a 2019 implementation date.
• Implementation date:   April 1, 2019.  Retailers suggested implementing the law in 2020, but Uncork insisted it happen by or before January 1, 2019.  The parties debated this issue back and forth.  January is a difficult month for retailers and pushing it back should allow for transition activities during slower months of the year.  The Oklahoma law begins October 1, 2018 and the Colorado law begins January 1, 2019. CMB retailers have been told that the supply of 3.2 will be in doubt by 2019 because of these law changes.  Read more about this below.
• Moratorium suggested language – “Do the members of Uncork believe this is a reasonable timeframe to allow for the impact of this law on all licensees to be measured before the Legislature considers additional, substantive changes to state law regarding where alcohol products are offered for sale?”
• Rules and regulations amended to apply price nondiscrimination rules across licenses (i.e. for CMB and liquor retailers).
• Division of ABC will have authority to implement rules and enforce them in CMB outlets.
• No CMB retailer could sell for less than acquisition cost plus applicable tax except as otherwise provided by law and rules.  (Same as liquor retailer.)
• Distributors request provision to establish minimum order quantities by case or dollar value.
• Distributors request provision to grandfather CMB and strong beer franchises/definitions as of January 1, 2017.
• Wine is removed from the legislation.

The discussions have been directed and facilitated by the Speaker of the House and the House Commerce Committee Chairman.  The Speaker would like to see a public committee hearing scheduled before the Legislature goes home for First Adjournment April 7.   Things are moving quickly and KABR will keep you informed.

The Board of Directors will vote on this issue during the Monday teleconference at 4:30.  All members are encouraged to participate in the bimonthly KABR teleconferences. 

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Amy Campbell, Lobbyist  785-969-1617 Email Lobbyist

Brian Davis, President 316-990-1425  email Brian