How Government Policies Help Fuel the Illicit Alcohol Trade

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The CEO of Anheuser-Busch InBev, Carlos Brito, took to the pages of the Wall Street Journal to highlight the problems with the illicit alcohol trade around the globe. Brito points out that it's often government policies that help fuel the illicit booze market:

"According to the World Health Organization, about a quarter of all alcoholic-beverage consumption globally is unrecorded. Unrecorded alcohol is a wide category that comprises everything from the beer brewed by aficionados at home to illegal and sometimes destructive bootlegging practices.

Recent studies by Euromonitor International demonstrate that in many countries, particularly emerging markets, the percentage of unrecorded alcohol can sometimes be more than half of the total alcohol market. What’s more, often it is dominated by organizations that control large counterfeiting and contraband operations. In those countries, the illicit alcohol market creates serious safety risks for consumers, erodes the rule of law, denies the government much needed fiscal income and makes growth for legal businesses much harder.

What is the root cause of this illicit market? Poor enforcement is an obvious contributing factor, and indeed improved enforcement is critical. But we would argue that the main drivers, while often well-intentioned, are badly designed public policies that seek to reduce harmful drinking.

To be clear, we are active supporters of policies that reduce harmful drinking. However, as Euromonitor and recent research from the Organization for Economic Cooperation and Development demonstrate, when taxes increase to the point that prices exceed consumers’ purchasing power, then illicit beverages become cheaper alternatives, illegal production blossoms, dangerous products enter the market and fiscal income dwindles..."

Read the whole thing here.

R Street's Kevin Kosar addressed this very issue--including the role of high booze taxes--at length in his recent book Moonshine: A Global History.

New Study Calls for Lowering the Drunk Driving Threshold

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The National Academy of Sciences has released a lengthy report on drunk driving, which recommends, among other things, lowering the blood-alcohol level for what constitutes drunk driving to .05 from .08. Fox News reports:

"A prestigious scientific panel is recommending that states significantly lower their drunken driving thresholds as part of a blueprint to eliminate the "entirely preventable" 10,000 alcohol-impaired driving deaths in the United States each year.

The U.S. government-commissioned, 489-page report by a panel of the National Academies of Sciences, Engineering and Medicine released Wednesday throws the weight of the scientific body behind lowering the blood-alcohol concentration threshold from 0.08 to 0.05. All states have 0.08 thresholds. A Utah law passed last year that lowers the state's threshold to 0.05 doesn't go into effect until Dec. 30.

The amount of alcohol required to reach 0.05 would depend on several factors, including the person's size and whether the person has recently eaten. A 150-pound man might be over the 0.05 limit after two beers, while a 120-pound woman could exceed it after a single drink, according to the American Beverage Institute, a national restaurant group.

The panel also recommended that states significantly increase alcohol taxes and make alcohol less conveniently available, including reducing the hours and days alcohol is sold in stores, bars and restaurants..."

More here.

Both the American Beverage Licensees and the Distilled Spirits Council issued statements opposing the report's call for lowering the threshold, arguing that doing so distracts from efforts to crackdown on repeat drunk driving offenders and heavy binge drinkers, who constitute the majority of drunk drivers on the road today.

As Fox News article notes, Utah recently passed a law lowering its drunk driving threshold to .05, a change which was met with severe resistance (even the founder of MADD opposed the change). In fact, Utah's governor has suggested that the new law might be tweaked in response to the pushback.

From Four Tiers to Three: Oklahoma Set to Overhaul Its Booze Distribution Laws

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While most states operate under a version of the three-tier alcohol distribution system, Oklahoma technically has a four-tier system: producer, distributor, broker, and retailer. But as the Tulsa World's "What the Ale" blog reports, Oklahoma will be transitioning to a more traditional three-tier system later this year:

"A lot of things will change in the beer, wine and spirits world in October, not just cold regular beer and wine in grocery and convenience stores.

The Oklahoma distribution system is changing too. Oklahoma has been a four-tier state for a long time. Now, it is changing to a three-tier state.

The four tiers included producer/supplier, importer/distributor, broker and retailer. Under the new system, the broker will merge into the importer/distributor category.

For the average consumer, nothing changes — in theory.

But the new law will give breweries a choice of which distributor they want to use. For the consumer, it means the product is taken care of because a brewery could move to a different distribution company if they aren’t happy. Breweries will also know what stores their products are going to be in and how long they have been sitting there. Under the current system, they have no idea where their product is unless they make phone calls or visit a liquor store..."

Read the rest here.

Tennessee Considers Bill to Free Up Sunday Wine and Liquor Sales

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Tennessee has a unique version of a Sunday blue law: Beer is available for purchase on Sundays, but not wine and distilled spirits. Last year, several Tennessee lawmakers introduced a bill to change this, but it ultimately never passed. According to The Tennessean, they plan to try again in the current legislative session:

"Tennessee lawmakers are renewing a push to allow wine and liquor sales on Sunday, a move that could spur opposition from the state's liquor retailers.

The bill, sponsored by Rep. Gerald McCormick of Chattanooga, would align hours of liquor and wine sales with beer sales. Under current law, both grocery stores and liquor stores are not allowed to sell wine and liquor on major holidays and between 11 p.m. on Saturday and 8 a.m. on Monday.

The legislation, similar to a bill filed in 2017, comes less than two years after grocery stores were permitted to sell wine. Consumers celebrated the measure, but wine and liquor store owners fought against it, fearing revenue declines.

McCormick, a Republican, said the legislative efforts stem from consumer demand, as constituents are complaining about the inability to buy wine on Sundays.

'That’s what’s driving it,' McCormick said, expressing optimism his new bill will not see similar infighting as previous alcohol bills..."

Read the rest of the article here.

 

 

South Dakota Considers Overhaul of Booze Laws

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While details remain somewhat scarce, South Dakota lawmakers appear to be on the brink of considering a bevy of bills that would substantially overhaul the state alcohol code. The Capital Journal reports:

The governor and some lawmakers want to rewrite many South Dakota laws on making, distributing and selling liquor, beer, wine and other alcohol and expand some too. The best part: They want it done before the legislative session ends March 26. It’s going to be a big fight that comes as Gov. Dennis Daugaard enters his final year.

Daugaard set things brewing months ago not long after the 2017 session ended. He told the state Department of Revenue to start working with different parties about straightening out various parts of laws that seem inconsistent, are in conflict or need changes to keep pace with other states. Those products appear in two proposals Revenue Secretary Andy Gerlach already filed. A third is coming directly from Daugaard...

HB 1070 is 65 pages with 133 sections covering scores of changes proposed for manufacturing, distributing and retailing. HB 1067 creates a second type of license for farm wineries. Evans said a third measure still without a number is “a governor’s bill” and covers beer breweries in South Dakota. Governor’s aide Patrick Weber is handling it.

Evans identified five other bills by draft numbers. He said legislators would sponsor them..."

Read more here.

Another Step Toward Sunday Booze Sales in Indiana

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As the brouhaha (don't call it a brewhaha) over Indiana's outdated alcohol laws continues, a key legislative committee has advanced a bill that would liberalize the state's current restriction on Sunday alcohol sales:

"For the first time ever, a key Indiana Senate committee has approved a measure allowing carryout Sunday alcohol sales.

The Senate Public Policy Committee, typically a graveyard for such bills, voted unanimously Wednesday to allow convenience, grocery, drug and liquor stores to sell alcohol from noon to 8 p.m. on Sundays.

The measure, Senate Bill 1, now moves to the full Senate.

The historic vote is the most significant step yet in the effort to end Indiana’s Sunday sales ban, which has been in place since federal Prohibition ended in 1933..."

Read more here.

Despite the progress with Sunday sales, Indiana's reform efforts have still been unable to rid the state of its notorious "warm beer" law.  A state Senate panel voted 9-1 against legislation that would have allowed convenience stores and gas stations to sell cold beer, which likely means reform will have to wait another year (at least).

A new self-distributing platform for craft beer?

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As discussed extensively on DrinksReform.org, the three-tiered system of alcohol distribution often blocks or limits the ability of breweries and other alcohol producers to self-distribute their products directly to consumers or retailers. Instead, brewers are often forced to work through a legally-mandated middleman--known as a wholesaler. But according to Sociable, a new online platform is trying to disrupt this market:

Your local bar comes up with a special Friday beer, a new beer from a small brewery with a strange name. It’s a few dollars more but, hey! you take the bet.

You take a sip and the magic happens. Its malty aromas and fruity touches blow you away. A glow of alcohol warms your tongue and palate. Hints of green apples, apricots and banana appear and sparkle. The taste lingers full in your mouth with plenty of body and a long finish of dry and fresh bitters.

Next Friday, after a challenging working week, you’re ready for more of the same delight. But alas! the craft jewel is long gone.

The bartender shrugs his shoulder when you ask for more information. He mentions the distributor; the one in charge...

Bevv, a California-based startup wants to offer alternatives to the ‘three-tier system’. Working within the legal landscape, it offers a self-distributing model, where more parties can benefit from the many independent producers in the growing US-market.

Its platform for craft beer aims to increase profit margins. Smaller breweries that couldn’t retail otherwise have their beers stay on tap. Retailers can reduce costs and offer a wider and more flexible selection. And consumers have a more affordable access to more tastes of craft beers..."

More here.

So far, however, it appears that Bevv will be limited to certain states that permit self-distribution and direct-to-consumer alcohol shipments. R Street's Jarrett Dieterle has written before about the many barriers in place that are currently blocking a true online booze marketplace from taking off.

 

Mississippi Legislator Introduces Bill to Allow Direct Wine Shipments

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Amidst the ongoing debates surrounding direct-to-consumer wine shipments, a state legislator in Mississippi has introduced a new bill that would allow direct wine shipments from wineries and retailers to Magnolia State consumers:

"Charles Busby, R-Pascagoula, introduced a bill that would allow direct shipment of wine to Mississippi homes. It is similar to the bills he introduced the last two years when neither got out of committee. In 2015, Sen. Michael Watson, R-Pascagoula, introduced a broader bill that would have allowed direct shipment of wines that also would have allowed wine-only package stores and wine tastings. It met a fate similar to Busby’s bills.

Busby’s bill has several safeguards to try to prevent underage people from getting their hands on the alcohol, which has been a concern of opponents. It would require the boxes the wine to be “conspicuously labeled with the words ‘Contains alcohol: Signature of person age 21 years or older required for delivery.”

Fourteen states, including neighboring Louisiana, and the District of Columbia allow direct shipments of wine from retailers. Forty-five states allow direct shipments from wineries. Busby’s bill would allow shipments from both provided the shipper obtained a permit from the Department of Revenue..."

Read the rest here.

Ohio Liquor Regulators Set to Eliminate Booze Brands From State Stores

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The Ohio Division of Liquor Control has announced that it will cut prices on 700 types of alcohol sold in the state, but also will eventually stop carrying the brands entirely. The Buckeye State is dubbing it the "Last Call Campaign," and the Division of Liquor Control's website has a list of the to-be-discontinued brands. While the state claims that the items are being discontinued to make room for more popular alcohol types and brands, the result will be shutting Ohio consumers out from brands they may enjoy. Columbus Business First has the full story:

"The Ohio Division of Liquor Control began cutting prices on around 700 different bottles of spirits this week, creating discounts of 25 percent to 40 percent on the selected bottles.

It's part of the division’s Last Call campaign, meaning these bottles will no longer be sold in Ohio.

Goodbye Alaska Outlaw, Admiral Nelson and Corner Creek?

'Once it’s gone, it’s gone,' spokeswoman Lindsey LeBerth said...

The delisting involves both brands and sizes. So some brands may still be sold by the state, but certain size bottles of those brands will not. Consult the full list here..."

Read more here.

Allowing consumers to purchase exotic or lesser known brands of alcohol online would be one way to ensure that consumers can access more types of liquor while also recognizing that stores may not want to carry such niche products. Unfortunately, as R Street's Jarrett Dieterle has written, the state of shipping laws across America makes shipping alcohol almost impossible.

 

Kentucky Moves to (Slightly) Liberalize the Secondary Booze Market

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As DrinksReform.org has covered in the past, the secondary market for alcohol remains heavily restricted in the United States. In fact, R Street has previously advocated for freeing up this market as a way of preventing sellers from turning to the black market. According to renown whiskey writer Chuck Cowdery, Kentucky recently enacted a Vintage Spirits Law that will at least slightly liberalize the secondary market for booze in the Bluegrass State:

"On January 1, Kentucky’s new ‘Vintage Spirits Law’ took effect. The new law (actually, revisions to the commonwealth’s existing alcoholic beverage statute) says, “A person holding a license to sell distilled spirits by the drink or by the package at retail may sell vintage distilled spirits purchased from a nonlicensed person upon written notice to the department in accordance with administrative regulations promulgated by the department.”

It further defines ‘vintage distilled spirit’ as “a package or packages of distilled spirits that are in their original manufacturer's unopened container; are not owned by a distillery; and are not otherwise available for purchase from a licensed wholesaler within the Commonwealth.”

As of the January 1 start date, ‘the department’ (i.e., the Kentucky Alcoholic Beverage Control Department [KABC]) had issued no administrative regulations or guidelines. As of now, what you see above is all the guidance there is. Retail license holders who want to take advantage of it will have to interpret the new law for themselves, with advice of counsel, of course...

Kentucky's new law is revolutionary in terms of bringing at least the ‘vintage’ part of the whiskey secondary market out of shadows. It could be a significant boon to tourism..."

Read the rest of the post here.