MacIver News Service | June 21, 2017
By M.D. Kittle
[Madison, Wis…] – The so-called “drafting instructions” that would further restrict Wisconsin breweries, distillers and winemakers from expanding into other areas of alcoholic beverage sales is still alive and well, sources tell MacIver News Service.Assembly Speaker Robin Vos, R-Rochester, is hosting a meeting Thursday with some of the major stakeholders in the industry to discuss the backroom deal.
The proposal, reportedly crafted by lobbyists, is aimed at “clarifying” the regulations tied to Wisconsin’s long-standing three-tier system.
A special interest provision folded into the 2011 state budget prohibits brewery proprietors from owning and operating a restaurant that sells beer, for instance. The Prohibtion-era three-tiered system in general aims to keep alcohol beverage makers, wholesalers and retailers, including restaurants, bars, and liquor stores, out of each others’ businesses.
“Breweries, wineries, and other alcohol-beverage producers can distribute their products only to independent, licensed wholesalers (also called distributors). These wholesalers then distribute the products only to independent, licensed retailers. Only licensed retailers can sell the products to the public. Thus, under a strict three-tier system, alcohol beverages must pass through both a licensed wholesaler and a licensed retailer before reaching the consumer,” a State Bar of Wisconsin piece summed up.
There are many exceptions to the rules, and apparently that’s what the “drafting instructions” look to clarify.
But Americans for Prosperity-Wisconsin, which obtained a copy of the original draft proposal, and other critics are warning that the plan is to beef up the onerous “three-tier restricting” law. Advocates of the plan have pushed the creation of a new bureaucracy, an Office of Alcohol Beverages Enforcement within the Department of Revenue to enforce the new law.
Brandon Scholz, president and CEO of the Wisconsin Grocers Association, says his group and others have not been invited to Thursday’s closed-door discussions. Grocery stores make up the majority of alcoholic beverage sales in the state.
“I’m very concerned that major retail stakeholder groups have been excluded from multiple discussions about a proposal draft to change elements of the three-tier laws in Wisconsin,” Scholz said. “I hope this discussion moves out into the open in the legislature.”
Sources tell MacIver News that representatives from the Wisconsin Brewers Guild, lobbyists Eric J. Peterson and Scott Stenger, along with Reps. Rob Brooks (R-Saukville), Shannon Zimmerman (R-River Falls) and Dale Kooyenga (R-Brookfield) and Rep. Rob Swearingen (R-Rhinelander) will be in attendance.
“To be clear, Speaker Vos does not support the three-tier proposal,” Kit Beyer, Vos’ spokeswoman, told MacIver News on Wednesday afternoon in an email. “Rep. Swearingen, as chair of the Assembly State Affairs Committee, is holding the meeting to see if there are things that all sides can agree on. Representatives from breweries, distilleries, wineries, Tavern League of Wisconsin, and liquor and beer wholesalers have been invited and Speaker Vos was asked to join the group.”
Peterson represents the Wisconsin Association of Distributors; Stenger, the Wisconsin Tavern League.
Swearingen owns a restaurant and is a member of the Tavern League.
Sources said wineries representatives were late invitees, as were the distillers.
Larger, well-established alcohol producers would have a much easier time complying with the strict three-tier system than smaller producers like microbreweries, small wineries, and boutique distilleries that have become increasingly popular. That increasing popularity also poses a competitive threat to larger alcohol producers and their in-perpetuity distributors.
Distillers, wineries and craft breweries have come out against the proposal. The Wisconsin Brewers Guild, has said the three-tier system is archaic and overreaching. MillersCoors has gone on record opposing the proposed alcohol tsar.
State Rep. Dale Kooyenga, who has been invited to Thursday’s meeting, said he’s asked around and everybody is pleading ignorance on where the proposal is coming from. That includes the speaker, who told Kooyenga that he is not behind the drafting instructions. The Brookfield Republican said the language of the proposal appears to be from a national source.
Wherever the plan originated, Kooyenga says it’s a bad idea and he will work to stop any proposal that restricts entrepreneurism and the free market.
“I’m not against clarification,” he said. But he doesn’t want to see clarification used as a “Trojan horse where you come in and make changes to the detriment of the little guy.”
Eric Bott, state director of AFP-Wisconsin, said the Legislature should not include any provisions in the budget that harm Wisconsin’s craft beverage producers to the benefit of special interests.
“There are a lot of interested stakeholders that have been left out of the discussion, including consumers, who deserve to have a seat at the table,” Bott said.
Rep. Kooyenga talked about the three-tiered proposal with MacIver News on Tuesday: