Illinois On the Brink of More Distillery Freedom


Several years ago, Illinois lawmakers enacted legislation that allowed craft breweries to self-distribute a small portion of their beer without having to go through a distributor. (Illinois has generally been on a bit of a reform kick in recent years when it comes to their alcohol laws). Now, several lawmakers are proposing to do the same for craft distillers in the Land of Lincoln. Illinois Policy has the story:

Craft beer’s popularity is being joined by its distilled cousin to become the “next big thing,” and the Illinois House just passed an update to state liquor laws so Illinois doesn’t miss the party.

A bill removing major hurdles for craft distilleries passed the state House, 108-2House Bill 2675 was backed by a bipartisan group of lawmakers including chief sponsor Rep. Tom Demmer, R-Dixon, chief cosponsors Rep. Mike Zalewski, D-Riverside, and Rep. Jonathan Carroll, D-Northbrook…

Under the Liquor Control Act of 1934, Illinois mandates a “three-tier” liquor distribution system that separates producers, distributors and retailers. This bundle of laws protects the middle-man and ensures the functions of each tier don’t mix. Lawmakers moved to allow limited self-distribution for smaller beer brewers in 2011, and HB 2675 has a similar aim for craft liquor.

The ability to self-distribute has been vital to the craft brewery boom across Illinois, and craft distillers hope HB 2675 will bring them the same opportunities…

Read more here.

R Street's Jarrett Dieterle Interviewed About Illinois Beer Reform

IL Gov. Bruce Rauner

IL Gov. Bruce Rauner

Illinois recently enacted legislation allowing breweries in the state to offer products from outside alcohol producers, such as other nearby cideries or breweries. R Street’s Jarrett Dieterle was interviewed by the Heartland Institute about the law:

C. Jarrett Dieterle, a senior fellow with the R Street Institute, says the previous requirement was derived from an outmoded, government-mandated scheme of alcohol transport and sales.

“It all is derivative of the three-tiered system of alcohol distribution," Dieterle said. “There are different manifestations of the three-tiered system, but the general idea is that producers—the brewers and distillers of the world—produce the alcohol and then the distributers distribute it, and then the retailers sell it in stores, restaurants, taprooms, or pubs. The Illinois law was a vestige of that system, in a particularly stringent form, where basically the brewers had to go through a distributer to sell their own beer in their own taproom.”…

More freedom of distribution means more choices for consumers, Dieterle says.

“If you go to a brewery and all they can sell is beer, a gluten-free person can’t drink there, but if they’re allowed to sell cider from a cidery down the road, then it creates a better experience and helps the brewery and the cidery,” Dieterle said. “It’s a beneficial arrangement where the biggest winner is the consumer.”…

The whole article is available here.

Alcohol Producers Benefit From Being Able to Sell Each Other's Products


Many states restrict the ability of craft alcohol producers to sell products from their competitors. While this may seem counterintuitive, many producers benefit from reciprocity laws, as the Seven Fifty Daily explains:

A few years after New Mexico’s reciprocity law was enacted, winegrowers and small brewers have enthusiastically embraced the legislation. Today, at more than 50 winery tasting rooms and brewery taprooms, producers are selling each other’s wares. So you can drink a frothy brew in a winery tasting room, or a glass of wine in a taproom. This liberalization of the sale of alcohol is giving small producers a leg up, with increased sales and revenue streams that extend beyond the tasting room.

New York led the charge for this type of legislation in 2012 with its farm producer license, which allows farm-based producers of all alcoholic beverages to sell beer, wine, cider, and spirits with a single license. The move was championed by New York governor Andrew Cuomo, and the economic impact for craft beverage producers in New York has been substantial, with more than 500 new craft businesses having opened since 2012. “New York has great agriculture,” says Jennifer Smith, who represents the New York Cider Association and the New York State Distillers Guild. “There’s incredible growth in job creation and crop utilization as a result of this legislation. This ties together expressions of place, jobs, and good old-fashioned economic gains.”

New Mexico’s reciprocity law, passed in 2015, allows all New Mexico producers of beer, as well as wine and cider producers who use at least 50 percent New Mexico–grown ingredients, may self-distribute and sell any other New Mexico–made beers, wines, and ciders from their tasting rooms. Chris Goblet, the executive director of New Mexico Wines, who chaired the economic development committee responsible for developing the legislation, says, “I just thought, Wouldn’t it be easy if a local manufacturer could sell to another local manufacturer? We could have true reciprocity.”...

Read the rest here.

Illinois Gives Breweries More Taproom Flexibility

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Several states restrict the type of beer that breweries can pour in their on-site taprooms--oftentimes limiting them to only pouring their own beer, rather than also featuring beer from other nearby breweries. Illinois was one of these states, but just last week Gov. Rauner signed legislation to free up taprooms. The Chicago Tribune reports:

Taprooms at Illinois breweries can offer a wider array of beer and cider as a result of legislation signed during the weekend by Gov. Bruce Rauner.

Before House Bill 4897 became law Saturday, many breweries were restricted to pouring their own beer and beer made on site. The new law allows a brewery to pour beer made at other breweries as well.

Breweries licensed as brewpubs, such as Piece Brewery and Pizzeria or the Off Color Brewing taproom, were already able to pour guest beers. However, the new law allows significantly more breweries to pour beer made at other breweries as well as cider made elsewhere.

Danielle D’Alessandro, executive director of the Illinois Craft Brewers Guild, which pushed for the legislation, said breweries likely won’t be surrendering large numbers of taps to competitors but will likely embrace the flexibility.

Read the rest here.

Shipping Interstate Wine is a Class 4 Felony in Illinois


In recent months, states have begun aggressive crack downs on interstate wine shipments from retail stores. According to Crain's Chicago Business, Illinois even passed a law earlier this year that made interstate wine shipments a felony:

"Say you live on the North Shore and frequent Pantheon Wine Shoppe, where you plan to buy a nice, rare Bordeaux for a valued New York client. Sorry, but unless you plan to deliver it yourself, you're out of luck.

For years, regulators have looked the other way while wine shops skirted a law prohibiting interstate liquor shipments. Many shops and wine auction houses here operated in a fuzzy gray area that allowed them to ship without consequence. But the gray area went black at the start of the year, after Gov. Bruce Rauner signed a bill that stiffened the penalty for interstate liquor sales, making it a Class 4 felony. For those of you keeping track, that puts the 'crime' on par with aggravated assault and stalking.

As if the fear of a felony charge and confiscation of the wine weren't enough, the nail in the coffin of interstate wine sales came when, in recent months, FedEx and UPS stopped accepting liquor shipments unless the booze is bound for one of only 14 states that permit it..." 

Read the rest here.

Illinois Policy, a think tank based in Illinois, also chimed in on the law:

"[P]unishing Illinois consumers’ demand for wine sold by out-of-state retail merchants isn’t just ill-advised for its counter-productive protectionism. The state, by repelling imports, will also forego millions in potential tax revenues, the National Association of Wine Retailers estimates.

At a time when Illinois ought to be working to attract businesses and facilitate commerce, it instead cements its position among states hostile to out-of-state alcohol shipping.

Consumers and retailers alike are fighting back against the sweeping interstate prohibition trend, including in Illinois. A Cook County resident, for example, was listed as a plaintiff in one lawsuit filed against the state by an Indiana-based wine merchant. The suit was dismissed by a U.S. District Court judge in Chicago; however, lawyers plan to appeal, according to Crain’s.

Perhaps Illinois retailers and consumers should ring in 2018 with a toast to efforts to repeal these restrictive laws..."

More here.

R Street's Jarrett Dieterle previously wrote about interstate wine shipments, the internet, and the alcohol industry for Forbes (here).


Could Illinois Start Losing Booze Sales to Indiana?

After years of stagnation, Indiana lawmakers are making noise about reforming the Hoosier State's onerous alcohol regulations (in case you haven't heard, they don't allow gas stations to sell cold beer, as R Street's Jarrett Dieterle has written about). If Indiana follows-through, Illinois fears it could lose annual alcohol sales to its neighbor since many Illinois residents will likely hop over the border to avoid Illinois' much higher booze taxes. The Illinois News Network reports:

"With high alcohol taxes in Illinois and neighboring Indiana showing an interest in relaxing strict alcohol regulations, Illinois distributors fear alcohol sales could move out of state.  

In Indiana, cold beer can be sold only in liquor stores and no alcohol sales are allowed on Sundays except at restaurants. In a recent poll, though, 71 percent of Indiana supported allowing more cold beer sales and 65 percent approved of Sunday alcohol sales.

Bob Myers, president of the Associated Beer Distributors of Illinois, emphasized that changes to Indiana’s alcohol sales laws could bring tougher times to retailers in Illinois benefiting from patrons crossing the border.  

'When Indiana changes those laws, it's going to end, causing more competition for our Illinois retailers, and it could end up having a very adverse effect on sales,' Myers said..."


Illinois: Alcohol Bill Aimed to Help Special Interests, Further Status Quo

Joe Kaiser writes for Illinois Policy:

"Illinois’ liquor laws, more than 80 years on the books, have long been restrictive for businesses, with the exception of the politically connected. And new legislation in the Illinois House might continue that trend.

House Bill 3164, introduced by state Rep. Juliana Stratton, D-Chicago, would make oddly specific carve outs in access to liquor licenses for businesses, likely to exempt specific Chicago liquor stores, restaurants or bars – but not others – from the longstanding law.

HB 3164 would amend the Liquor Control Act of 1934 to authorize the issuance and renewal of a license to sell liquor at premises located within 100 feet of specific “places of worship and schools in the City of Chicago.” But the legislation does not simply relax the rules for any business hoping to sell alcohol within 100 feet of churches or schools. Rather, it provides extremely specific guidelines..."

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Suburban lawmaker, distillery push law to bypass liquor distributors in Illinois

Bob Susnjara of the Chicago Daily Herald reports:

"On a busy night, a bar across the street from Fred Robinson's small suburban distillery might call asking for a quick delivery of a few extra bottles of whiskey, rum or gin.

State law, however, prohibits Robinson from filling that order.

Instead, Robinson, co-owner of Copper Fiddle Distillery in Lake Zurich, and all other hard liquor manufacturers must go through a distributor to get their products into Illinois bars, restaurants and retailers.

'It could be a week or two before they get restocked over there,' Robinson said.

That doesn't make sense to Robinson, and now a suburban state lawmaker is taking his case to [the state capitol in] Springfield..."

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