Distilling on Tribal Lands Is Now Legal in the U.S.

Rep. Jaime Herrera Beutler and Chehalis chairman Harry S. Pickernell Sr. at committee hearing for HR 5317. Image courtesy of SevenFifty Daily and Rep. Beutler’s office.

Rep. Jaime Herrera Beutler and Chehalis chairman Harry S. Pickernell Sr. at committee hearing for HR 5317. Image courtesy of SevenFifty Daily and Rep. Beutler’s office.

Last summer, R Street’s Jarrett Dieterle and Kevin Kosar took to the pages of the New York Times to call for the repeal of an 1834 law that prohibited distilling on tribal lands. At the time, this was the first coverage of this antiquated law in any mainstream outlet, but R Street continued to highlight the law, including in its America’s Dumbest Drunks Laws report (choosing it as the #1 worst law). Now, several months later, a bill repealing the ban has made it through Congress and been signed by the President. Dieterle discusses this repeal effort in an article for the popular drinks site SevenFifty Daily:

To anyone who’s been paying attention, the success of the modern craft alcohol movement is no secret. From the latest chic brewery opening down the street to the new distillery producing that small-batch liqueur you just can’t live without, the fruits of entrepreneurial adventures in alcohol are everywhere. But until just a few days ago, one group in the United States was conspicuously left out of the current craft alcohol renaissance: Native Americans.

Under an 1834 federal law enacted during the Andrew Jackson administration, it was illegal for anyone to set up a distillery on tribal land for the purpose of manufacturing “ardent spirits.” Penalties for violating the law included fines and asset forfeiture. This law remained on the books for almost two centuries until Congress and the president, in a rare bipartisan moment, finally repealed it in early December 2018.

The reasons it took so long to relegate this antiquated law to the dustbin of history are far from glamorous but contain the seeds of a quintessentially American story: A law born from an outdated and offensive view toward Native Americans finally gave way to entrepreneurial desire and irrepressible market forces…

Read the rest here.

Why Georgia Cities Should Embrace Open Container Laws

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R Street has voiced support for modest expansions of open container laws (or, alternatively, open container zones) in cities as a way to spark urban renewal and allow citizens to have responsible fun outdoors. R Street’s Marc Hyden writes for Insider Advantage about why more cities in Georgia should embrace such an approach:

Anything worth doing is worth taking your time to do, according to an old proverb. While there’s a kernel of truth to this platitude, the state of Georgia apparently took this advice to the extreme. Consider this: The United States ratified the 21st Amendment to repeal Prohibition in 1933. Georgia, on the other hand, still hasn’t ratified it. But that may change soon, because Rep. Scot Turner, R-Holly Springs, recently pre-filed HR 4 to formally approve the 21st Amendment.

Thankfully, this isn’t the only long-overdue alcohol regulation that is finally getting attention in Georgia. Indeed, the Peach State has been gradually liberalizing its puritanical alcohol statutes. Lawmakers have relaxed regulations on Sunday alcohol sales and on breweries and distilleries, and have enacted ordinances permitting open container districts in AlpharettaAcworthCantonDuluthSmyrnaStockbridgeSavannah, etc. These efforts coincide with the ongoing national movement to allow open-air drinking in entertainment districts across the country. Now, it appears that Kennesaw might be the next city to modernize its alcohol laws by creating an open container district. There are many reasons why it should consider such a move…

Read the rest here.

UPDATE: Kennesaw, Georgia’s city council heeded Marc Hyden’s call and has officially approved two open container districts within city limits.


R Street's Jarrett Dieterle Explains Tennessee Wine v. Blair SCOTUS case

Oral arguments were held yesterday in the important Supreme Court case challenging Tennessee’s durational residency requirement for liquor licenses (for more on how the oral arguments went see here). The case involves the intersection of the U.S. Constitution’s 21st Amendment and the Dormant Commerce Clause, and R Street’s Jarrett Dieterle filmed the following short explainer video about the case for the Federalist Society:


SCOTUS Hears Oral Arguments In Tennessee Wine v. Blair

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On Wednesday, the Supreme Court heard oral arguments in the important alcohol case challenging Tennessee’s durational residency requirement (previously discussed on DrinksReform.org here). The Tennessee law at issue requires liquor retailers in the state to have had an in-state presence for 2 years before they will be granted a license (and an in-state presence of 10-years in order to be able to renew the license each year). According to the Washington Post, several of the Justices expressed skepticism toward the Tennessee law:

Supreme Court justices indicated Wednesday that they thought Tennessee’s tough residency requirements for those who want to run liquor stores have more to do with protecting in-state economic interests than guarding against the evils of alcohol.

But they also wondered how far they could go, since the Constitution gives states an especially pivotal role in regulating booze…

Several justices, most vocally Sonia Sotomayor and Samuel A. Alito Jr., were skeptical.

Under questioning, [Tennessee Wine attorney] Dvoretzky said neither a 10-year residency requirement nor a hypothetical requirement that an applicant’s grandparents be residents would be a violation of the dormant-commerce clause, nor even a statute that said the restriction was for the “exclusive purpose of protecting in-state retailers.”

Justice Brett M. Kavanaugh said the text of the constitutional amendment gives the states power over the “transportation or importation” of liquor into their states. “Why isn’t that most naturally read to allow states to remain dry . . . but not to otherwise impose discriminatory or, as Justice Alito says, protectionist regulations?” [More here].

As the popular SCOTUSBlog noted, however, it’s still unclear how the case will ultimately come out since several of the Justices were silent and Justice Ruth Bader Ginsburg was absent from the hearing. A final decision from the Court is expected by the summer.

For more on the case and what it entails, check out this explainer video R Street’s Jarrett Dieterle filmed with the Federalist Society.

More of the craziest state alcohol laws

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We at the R Street Institute recently debuted our America’s Worst Drinks Laws report, recounting what we viewed as the 12 worst alcohol laws in America. Insider has gotten into the act with a list of “7 states that have strict laws about how and when you can drink alcohol,” including interesting ones from Alaska, Utah, and Massachusetts:

[E]ach state still has its own unique liquor laws, including where you can buy alcohol and what times you're allowed to buy it. Many states have time restrictions on Sundays and restrictions on obtaining alcohol licenses…

Bars and liquor stores can't open until polls close on election days in Alaska.

On election days in Alaska, businesses that sell alcohol must stay closed until polls close. It is also illegal to be drunk on the premises of a bar or restaurant that sells alcohol, and bars can't sell alcohol at a discounted rate unless the discount is regularly given every day of the week…

In Massachusetts, out-of-state IDs aren't proof of age at bars.

Massachusetts has some of the most strict alcohol laws, including that bars don't have to accept out-of-state IDs as proof of age. Happy hoursfree drinks, and drinking games like beer pong, are also prohibited in the state…

For the rest of the article, see here.

The Good and Bad of Recent Colorado Alcohol Reforms

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Colorado’s recent reform to allow grocery stores to sell beer stronger than 3.2 percent took effect on January 1st of this year. While this ushered in a much-need change, Derek Draplin for Watchdog.org detailed another provision of the reform that’s more problematic (and interviewed R Street’s Jarrett Dieterle about is as well):

Other parts of the new law could spell trouble for smaller retailers, such as those in rural areas or mom-and-pop restaurants that currently sell carry-out cans of 3.2 percent alcohol beer in addition to serving beer.

SB 243 eliminated "on-off premise licenses," which allowed retailers to sell beer for consumption off-site, like a 6-pack of the 3.2 percent beer, and also sell and serve beer, like at a restaurant. The new law requires retailers to pick between the two types of licenses.

Small mom-and-pop retailers like The Last Stand in Weldona now face a tough choice if a legislative fix doesn’t come soon…

Jarrett Dieterle, director of commercial freedom policy for the R Street Institute, which runs the alcohol policy website DrinksReform.org, told Watchdog that flexible licensing schemes are important for localities and states to adopt.

“In general, states and localities should consider ways to increase the flexibility of alcohol licensing options,” Dieterle said. “Creating more flexibility and less rigidity in licensing schemes would allow different types of establishments to adopt models that work for them and their communities.”

Read the rest here. A bill to fix this problem and allow on/off-premise beer licenses in rural areas was just introduced in the Colorado legislature.

Ohio Cracks Down on Secondary Alcohol Sales

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Secondary market booze sales (i.e., sales of alcohol that was previously purchased, even if still unopened) is mostly illegal in the United States. R Street’s Kevin Kosar has written about why this market should be legalized and brought out of the shadows. While states like Kentucky have recently made modest moves toward liberalizing their secondary alcohol markets, Ohio has escalated a crackdown of such sales according to the Freemont News Messenger:

In December, agents with the Ohio Investigative Unit (OIU) teamed up with Ohio Liquor Control (OHLQ), charging five people throughout Ohio after an investigation into secondary market liquor sales.

Secondary market liquor sales often take place on web sites, such as Craigslist and Facebook groups and Marketplace. An example of secondary sales is when sellers go to other states, purchase bottles of liquor not found or difficult to find in Ohio and turn around to resell them. In Ohio, consumers may only purchase spirituous liquor from authorized sources such as an OHLQ location, which are private businesses that sell the product on behalf of the state of Ohio or permitted retail establishments, such as bars and restaurants…

Read more here.

It's Time to Repeal Utah's 'Weak Beer' Law

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Utah is one of just two states in the country that permits grocery stores to only sell beer with 3.2-percent alcohol content or less. R Street’s Jarrett Dieterle took to the pages of The Salt Lake Tribune to call on Utah lawmakers to repeal this outdated restriction:

As Utah lawmakers begin the 2019 legislative session, they may be forced to finally confront one of the state’s most notorious legal relics. Utah remains one of only two states in America to forbid grocery convenience stores from selling beer containing more than 3.2 percent alcohol. Any beer with a higher alcohol content — which, in this era of craft brewing, is most modern beers — can only be sold at state-run liquor stores. Utah legislators would be wise to recognize this law for what it is: A woefully outdated rule that handicaps market forces and limits consumer freedom.

So-called “weak beer” laws trace their heritage back 85 years to the end of Prohibition. In an underappreciated historical moment, President Franklin Roosevelt and Congress passed a law called the Cullen-Harrison Act March 22, 1933, nearly nine months before Prohibition was officially repealed. The act allowed states to pass legislation that would permit the production of 3.2-percent beer — a big step forward at a time when alcohol production was prohibited across the country. The Cullen-Harrison Act was eventually superseded when Prohibition was repealed in toto, but many of the state-level 3.2-percent beer laws it permitted stayed on the books.

Over the last several decades, more and more states have taken steps to repeal these laws, but Utah has remained a stubborn outlier…

Read the rest here

Will Direct-to-Consumer Shipping Expand for Distilled Spirits?

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As R Street’s Jarrett Dieterle has previously discussed, it’s very difficult for the alcohol industry—especially distilled spirits and beer—to participate in the direct-to-consumer (DtC) shipping boom. Most states restrict the ability of brewers and distillers to ship their products directly to customers, although Kentucky recently passed a DtC law that could spread to other states. An article for RaboResearch lays out the current state of play:

In a world where consumers can get anything they want, however they want, the spirits industry is at a real disadvantage. Direct-to-consumer (DtC) shipments and e-commerce have driven growth in the wine category, but spirits face restrictive rules around shipping and retail that limit distillers’ ability to operate online. As we approach the holiday season – the most important time of year for wine and spirits sales – we want to highlight the structural challenges facing spirits in a world increasingly defined by e-commerce.

In 2018, wine shipped DtC will represent 7 percent of the total US wine market – more than USD 3 bn. About 95 percent of US consumers can go online to buy and ship wine DtC across state lines. The laws for shipping spirits DtC are, however, much more restrictive: Only five states allow DtC spirits shipments, with 5 percent of the US population having access to the channel. In fact, shipping laws are so complex and the market so small that common carriers won’t even ship spirits in states that do permit distilleries to ship DtC.

If the spirits industry had the same access to consumers as wine, they could build a market worth billions of dollars. Recognizing the opportunity, distillers are pushing state legislatures to change their shipping laws, and believe it or not, they are making progress. Kentucky, perhaps aspiring to its state slogan 'unbridled spirit', passed a law to legalize DtC spirit shipping in 2018. Other states will likely follow. As Eric Gregory, president of the Kentucky Distiller’s Association, told Insider Louisville “... once other states realize Kentucky has broken the ice... we’re going to see a lot of movement with other states coming on board.”…

Read the rest here.